Bangalore District Court
And Advocate For vs No.1) On The Award Amount on 16 August, 2021
1
Com.AS.No.73/2011
IN THE COURT OF LXXXII ADDL.CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH.83)
THIS THE 16TH DAY OF AUGUST 2021
PRESENT:
SRI.DEVARAJA BHAT.M., B.COM, LL.B.,
LXXXII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.AS.No.73/2011
BETWEEN:
M/s Mangalore Refinery &
Petrochemicals Ltd., A
Company registered under
the Companies Act 1956,
having its place of
business at (P.O.)
Kuthethoor, via Katipalla,
Mangalore - 575 030,
Karnataka.
: PLAINTIFF.
(Represented by M/s GKM
Associates - Advocates.)
AND
1. M/s. Matharoo
Associates, A Sole
Proprietary Firm
represented by Sri.
Gurjeet Singh Matharoo
being its Sole Proprietor
having its place of
business at 24-E, Capital
Commercial Center,
2
Com.AS.No.73/2011
Ashram Road, Ahmadabad
- 380 009.
2. National Institute of
Design, A Public Trust
registered under the
Bombay Public Trusts Act
and the Indian Societies
Registration Act, having
its Office near Sardar Patel
Bridge, Paldi, Ahmadabad
-380 009, Gujarat.
3. Hon'ble Mr. Justice P.
Gururajan, Sole Arbitrator,
Former Judge, Hon'ble
High Court of Karnataka,
5th Floor, Chitrapur
Apartments, 15th Cross,
Malleshwaram, Bengaluru
- 560 055.
: DEFENDANTS
(Defendant No.1 is
represented by M/s Gerahalli
Law Offices - Advocates,
Defendant No.2 is
represented by M/s Khaitan
Co LLP -advocates)
Date of Institution of the 15.09.2011
suit
Nature of the suit (suit on
pronote, suit for Petition for setting aside Arbitral
declaration & Possession, Award
Suit for injunction etc.)
3
Com.AS.No.73/2011
Date of commencement of
recording of evidence - Nil -
Date on which judgment 16.08.2021
was pronounced
Date of First Case - Not held -
Management Hearing
Time taken for disposal 27 days
from the date of
conclusion of arguments
Total Duration Year/s Month/s Day/s
09 11 01
(DEVARAJA BHAT.M),
LXXXII Addl. City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
This is a Petition filed by the Plaintiff under Section 34 of the Arbitration & Conciliation Act, 1996 for setting aside the Arbitral Award dated 18.06.2011 passed by the learned Sole Arbitrator.
2. For the sake of clarity and convenience, the parties are hereinafter referred by their ranks and status, i.e., M/s Mangalore Refinery & Petrochemicals Ltd., as Plaintiff and M/s Mathroo Associates as the Defendant.
4Com.AS.No.73/2011
3. The Defendant had invoked the Arbitration Agreement and preferred certain claims against the Plaintiff. In response to the statement of Claim preferred by the Defendant, the Plaintiff along with its response to the Statement of Claim also preferred Counter-Claim against the Defendant.
4. The Brief Facts leading to the case are as follows:-
That the Plaintiff is a Public Sector Undertaking and is a subsidiary of Oil & Natural Gas Commission (ONGC) of Government of India, that the Defendant is a registered Architect and is practicing the profession of Architecture under the name and style of "Mathroo Associates", that the Defendant No.2 is a formal party in the Arbitral Proceedings and hence, is being added as Defendant No.2, that the Plaintiff desired certain designs to be built in for the proposed Retail Outlets at Mangaluru and Ahmadabad, which designs were ready with the Defendant No.2, that the Defendant was recommended and selected as a contract for the design of the Retail Outlets by the Defendant No.2 and accordingly, worked for the Defendant No.2 at the designing stage, that several other parties were also involved in the designing stage in addition to the Defendant, that on 17.01.2005, a Work Order bearing No.WQA-025 was 5 Com.AS.No.73/2011 placed by the Plaintiff with the Defendant, for carrying out work with respect to the Retail Outlets at Mangaluru and Ahmadabad, the terms and conditions of which were accepted in totality by the Defendant, that a Work Order was also issued on 08.06.2006, bearing No.WQA - 132, in respect of Panvel Retail Outlet, that Clause-5.1 of the Work Order dated 17.01.2005 provided that Retail Outlet at Mangaluru would be handed over to the Plaintiff in working condition, complete in all aspects on or before 08.03.2005, that however with respect to the Retail Outlet at Ahmadabad, it was specified in Clause 5.2 that the same would be handed over to the Plaintiff within eight weeks from the date of handing over the site, that the payments were released from time to time by the Plaintiff as per the Contract, that the last payment was released by the Plaintiff on 20.04.2005 i.e., within a month of completion of work by the Defendant on 19.03.2005, that as per records, the Plaintiff has paid the Defendant a sum of Rs.4,74,27,772/- by 20.04.2005, which exceeds and covers the complete value of the work done by the Defendant against the Retail Outlet at Mangaluru and the Plaintiff is not liable to pay any further amount towards the said Contract, that on the other hand, the Plaintiff was entitled to receive from the Defendant a sum of Rs.16,14,370/- as and by way of refund for excess payments made, that in respect of Ahmadabad Retail Outlet, the Plaintiff had furnished the 6 Com.AS.No.73/2011 Defendant a mobilisation advance of Rs.22,55,463/- , that as the Plaintiff could not get statutory clearances, the project did not commence and hence, there was no question of 'handing over' of the site to the Defendant and the amount furnished towards mobilisation advance was adjusted by the Plaintiff in its accounts and appropriated towards payments to be made in respect of Mangaluru Project, that there arose a dispute between the parties in respect of payments and the Defendant preferred Arbitration, that the Plaintiff filed Counter-Claim for Rs.26,40,669/- from the Defendant, that after recording evidence and hearing the arguments, the learned Sole Arbitrator has passed the Impugned Award on 18.06.2011 and partly allowed the Claim of the Defendant and dismissed the Counter-Claim of the Plaintiff as 'barred by time'.
5. Being aggrieved by the said Arbitral Award, the Plaintiff has challenged the same on several grounds, which will be discussed later in the body of the Judgment.
6. The Defendant has filed a detailed Statement of Objections on 29.01.2013, and the contentions taken by the Defendant in the said Statement of Objections will be considered while discussing the various grounds urged by the Plaintiff, in the body of the Judgment. The 2nd Defendant has also filed his 7 Com.AS.No.73/2011 detailed Statement of Objections on 06.02.2013.
7. I have heard the arguments of the Advocate for the Plaintiff and Advocate for Defendant. The Advocate of the Plaintiff has filed Written Arguments on 18.02.2020. The Advocate for the Defendant has filed Written Arguments on 18.02.2020.
8. Based on the above contentions of both parties, following Points arise for my consideration:-
1. Whether there are grounds to set aside the Impugned Award under Section 34 of the Arbitration & Conciliation Act?
2. What Order?
9. My findings on the above points are as follows:-
Point No.1:- In the Affirmative.
Point No.2:- As per the final Order for the following reasons.
REASONS
10. Point No.1: - The Defendant has preferred a Claim Petition before the Learned Arbitrator for the following reliefs:-
8Com.AS.No.73/2011
(a) To award a sum of Rs.4,89,61,730/- payable to the Claimant (i.e., the Defendant No.1) as damages/compensation and dues etc., up to November 2008.
(b) To award 30% amount (plus surcharge etc.) on the actual "Award Amount", awarded by the Arbitral Tribunal, towards the "Income Tax" payable by the Claimant (i.e., the Defendant No.1) on the Award Amount, as stipulated in Clause No:4 of the Work Order (Contract) dated 17.01.2005.
(c) To award interest at 18% per annum from December 2008 onwards till the date of recovery of all dues.
(d) To Award Cost of the Arbitration Proceedings, as per the Cost Memo filed by the Claimant (i.e., the Defendant No.1), on conclusion of the proceedings or as decided/determined by the Arbitral Tribunal itself.
(e) To Award any pecuniary relief or reliefs, as deemed fit and proper, by the Learned Arbitrator.
11. The Plaintiff has preferred Counter Claim before the Learned Arbitrator.
9Com.AS.No.73/2011
12. The Learned Arbitrator has partly allowed the claims of the Defendant and dismissed the Counter Claim of the Plaintiff in the Impugned Award.
13. The Plaintiff has challenged the said Impugned Award in this proceeding. The Hon'ble High Court in the Judgment dated 17.04.2021 in Com.A.P.No.25/2021 (Union of India vs. M/s Warsaw Engineers) has laid down certain guidelines/principles about the writing of Judgments in a Petition filed under Section 34 of the Arbitration & Conciliation Act. Keeping in my mind the said guidelines, I now propose to examine each and every ground urged by the Plaintiff specifically with reference to the submissions made by both Advocates.
14. The First ground is that the Impugned Award is ex-facie erroneous, opposed to public policy, patently illegal and contrary to Justice. This ground being a general ground, the same will be discussed later, after discussing about all other specific grounds.
15. The Second ground is that the Arbitrator erred in failing to appreciate that the present claim filed by the Defendant was barred by limitation.
10Com.AS.No.73/2011
(a) According to the Defendant the right to sue arose in favour of the Defendant against to the Plaintiff on or about 20.04.2005, when after the last payment of Rs.4,58,58,702/- by the Plaintiff, balance amount due and payable to Defendant was withheld by the Plaintiff, that as per Section 43 (2) of the Arbitration & Conciliation Act, the Arbitral proceedings for the purpose of limitation are deemed to have commenced on the day on which the request for the dispute to be referred to Arbitration is received by the Plaintiff as provided under Section 21 of the Arbitration & Conciliation Act, that in the present case the request of the Defendant to refer the dispute to arbitration was addressed to Plaintiff on 10.07.2007 as per Ex.C28, that was received by the Plaintiff on or about 12.07.2007 as per Ex.C30, that therefore, the Arbitral proceedings has commenced with in the period of 3 years from the day of right to sue arose under Article 137 of the Limitation Act and the claims are not barred by limitation.
(b) The Learned Arbitrator has framed Issue No.2 about the said facts and discussed the effect of Section 43 (2) and Section 21 of the Arbitration & Conciliation Act, and has held that the claim of the Defendant is well within the limitation. The said finding is neither perverse nor contrary to any law. Hence, the said ground is not available for the Plaintiff under Sub-Section 11 Com.AS.No.73/2011 (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
16. The Third ground is that the learned Arbitrator has ex facie erred in failing to appreciate that the signing of the Clearance Certificate and Completion Certificate did not mean that the Plaintiff had admitted the amount of the Work Order value claimed by the Defendant as per the terms of the Contract between the parties.
(a) In order to appreciate this ground, the facts of the case have to be discussed. The Plaintiff intended to establish oval shaped proto type retail outlet of dispensing of petrol and diesel and other petroleum products all over India since they are the subsidiary of ONGC. On the advice of ONGC, the Plaintiff decided to interest the construction of retail outlet unit to the Defendant. As an experimental basis, they have decided to entrust the construction of outlets in two places one at Mangaluru and another at Ahmadabad. On approval the same was communicated to the Defendant as per Ex.R1. The Defendant categorically undertaken that they will assists the Plaintiff technically in obtaining building permission and 12 Com.AS.No.73/2011 sanction though the responsibility of obtaining the sanction will be that of the Plaintiff as could be seen from Ex.R2. Work Order was placed on the Defendant as per Ex.C1. Value of the work was modified incorporating certain additional work and total was increased up to Rs. 5,15,43,302.52 + taxes. Retail outlet at Mangaluru was completed on 18.03.2005. The Work Order was changed as per Ex.C7, Ex.C8, Ex.C9 and Ex.C10 from time to time. The Work Order as per Ex.C10 the amount agreed is Rs. 5,07,55,403. The Site Clearance Certificate and Completion Certificate were issued as per Ex.C13 & 14 on 18.03.2005. In the Clearance Certificate, it was mentioned actual work executed is Rs. 5,15,43,302.52. However, the same is not taken as the value of work in the Award as could be seen from Page No. 59 to 61 and 87 & 88 of the Award. The Learned Arbitrator has taken Rs. 4,66,95,599/- as the value of the Mangaluru Project. Therefore, this ground is highly misconceived. Hence, the said ground is not available for the Plaintiff under Sub- Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
13Com.AS.No.73/2011
17. The Fourth ground is that the learned Arbitrator ought to have appreciated that the Defendant issued a Final Bill for the total Order value of Rs.4,66,95,599/- which has been fully paid by the Plaintiff after making requisite deductions and adjustments.
(a) The Defendant has denied that Rs. 4,66,95,599/- was the final bill or that the Plaintiff has paid the same amount or that the deductions are justified. As could be seen from Ex.C21 the Plaintiff paid Rs. 4,51,72,309/-. The same is also discussed at Para No. 15.4 in Page No. 85 of the Award and that the Learned Arbitrator has clearly held that Rs. 4,66,95,599/- is the billed amount in terms of Ex.C1 and an amount of Rs. 4,51,72,309/- has been paid to the Claimant/Defendant. The Plaintiff has not rebutted the said findings by showing any other documents and hence he has not established his contentions under this ground. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
18. The Fifth ground is that the learned Arbitrator has ex- facie erred in failing to appreciate that all the deductions made 14 Com.AS.No.73/2011 in respect of Mangaluru Project by the Plaintiff were correct and proper.
(a) By a Letter dated 27.06.2006, as per Ex.C21 the Plaintiff had resorted to some deductions. Among the same, the deduction based on Ex.R7 for Rs. 5,67,544/-, is rejected by the Learned Arbitrator at Page No. 59 & 60 of the Award. The reason for rejection is that the author of Ex.R7 is not examined and that the same is not counter-signed by anybody. The said reasoning cannot be considered as perverse. The another deduction towards error in Invoicing for Rs. 2,69,353/- is allowed by the Learned Arbitrator and discussed at Para No. 10.10 in Page No.60 of the Award. Similarly, another deduction towards Crane Hiring Charges for Rs. 45,300/- is allowed by the Learned Arbitrator and discussed at Para No. 10.11 in Page No. 61 of the Award. However, the deduction towards Mobilization Advance of Rs. 22,55,463/- is rejected by the Learned Arbitrator and discussed at Para No. 10.12 & 10.13 in Page No. 61 & 62 of the Award. All these aspects were considered in detail by appreciating the evidence on record and hence the same cannot be considered as perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, 15 Com.AS.No.73/2011 the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
19. The Sixth ground is that the learned Arbitrator has ex- facie erred in holding that there was no clause providing a deduction for one project bill to another bill and that each project is separate in character despite there being a common order.
(a) The Learned Advocate for the Plaintiff has argued that the Ex.R.2/ L.O.I. was accepted on 12.01.2005 wherein the Defendant had also undertaken to assist the Plaintiff technically in obtaining building permission and sanction, that as per Clause 5.2, it was agreed that the retail outlet at Ahmadabad will be handed over to the Plaintiff within eight weeks from the date of handing over of the Site to the Defendant, that in this regard, the Plaintiff had paid a sum of Rs. 22,55,463/- towards mobilisation advance for Ahmadabad Project, that the said amount of mobilisation advance was adjusted towards the project at Mangaluru. The said adjustment of mobilisation advance of Ahmadabad project of Rs. 22,55,463/- is rejected by the Learned Arbitrator as there was no provision in the Work Order dated 17.01.2005 for adjustment of advance given against one project against amounts due under another project.
16Com.AS.No.73/2011
(b) The Learned Advocate for the Plaintiff has attacked the same by relying on a decision reported in A.I.R. - 1963 - Karnataka - 64 (Life Insurance Corporation of India vs. T. Subramanyam) , wherein it is held that the mode of payment of debt may be more than one, it may be by actual payment, it may be by adjustment or it may be by any other means as agreed to by the debtor and creditor. He has also relied on another decision reported in A.I.R. - 1964 - M.P. - 231 (State of Madhya Pradesh vs. Raja Balbhadra Singh), wherein it is held that on general principles a person is entitled to pay himself that amount which is due to him from another if he has in his hand, money belonging to that other, provided that his dues are legally recoverable and that although that the question will be adjudged adjusted by the court of law when it arises, he not obliged to sue for the recovery of the money which he is in already in possession of the said money.
(c) The Learned Advocate for the Defendant has argued that the Learned Arbitrator has considered the said aspects in detail at Para No. 10.12 and 10.13 of the Award and hence the rejection of the said claim based on finding of facts which cannot be considered in this proceedings as held in 2010 (1) - S.C.C. - 409 (Ravindrakumar Gupta and Company vs. Union of India), 2012 (1) - S.C.C. - 594 (P.R. Shah, 17 Com.AS.No.73/2011 Shares and Stock Brokers Private Limited vs. B.H.H. Securities Private Limited and Others), and 2015 (5) - S.C.C. - 739 (Swan Gold Mining Limited vs. Hindustan Copper Limited. By relying on the said decisions the Learned Advocate for the Defendant has argued that the finding of fact and the interpretation cannot be substituted by this court by sitting as an Appellate Court merely because another view is possible to be given.
(d) It is to be noted that the Arbitrator is a creature of contract and he cannot travel beyond the terms of the contract. When he has given a finding that there was no terms in the contract between the parties to adjust the mobilisation advance of one project as against another project and hence the said adjustment is contrary to the terms of the contract, the said finding cannot be reversed in this proceedings just because another view is possible to be taken. Therefore the ratio of the above-mentioned decisions which are relied by the Learned Advocate for the Plaintiff is not applicable to the facts of the present case. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
18Com.AS.No.73/2011
20. The Seventh ground is that the learned Arbitrator has ex-facie erred in holding that the sum of Rs.22,55,463/- paid towards mobilisation advance for the Ahmadabad Project cannot be adjusted in respect of the Mangaluru Project, despite noting that the Ahmadabad Project was not taken up at all by the parties.
(a) The Learned Advocate for the Plaintiff has argued that on 15.04.2006 the Town Planning Department submitted Ex.C34/ Letter to the Municipal Commissioner informed that the plan cannot be sanctioned in view of 11 KV Electrical Grid Line passing through and distance of 80 meter form Road has not maintained, that a note was also made indicating that the plan can be approved subject to conditions stipulated, that ONGC addressed Ex.C40/ Letter to AMC on 28.04.2006 to grant permission to maintain distance of 50 meters from plot boundary on a road junction after giving undertaking to comply with the conditions imposed, that on 01.05.2006 the note was submitted to the Municipal Commissioner informing about the conditions incorporated who clarified that the distance of 50 meter instead of 80 meter requires approval from the State Government and they cannot give any permission, that the Defendant addressed Ex.R.5/ Letter on 23.06.2006 to the Plaintiff indicating that the conditions imposed by the AMC is 19 Com.AS.No.73/2011 not feasible to implement and suggested an alternative to have the project at a different site, that in view of restrictions imposed by the State Authorities and prohibition under law, the plan was not sanctioned, that the alternative site suggested by the Defendant was not viable and project could not be implemented, that the retail outlet could not be constructed without obtaining the license and sanctioned plan in accordance with AMC Act and bye-laws, that the plan was not sanctioned in view of the location of the property and the distance between the road and the plot, that it was impossible to implement the project as per the specification, that the contract was frustrated as per the Force Majeure Clause contained in Ex.C1, that the as the contract was frustrated the pass of advance amount paid for the said project was adjusted towards Mangaluru Project and the Defendant was requested to refund the balance amount.
(b) The Learned Advocate for the Plaintiff has further argued that the Learned Arbitrator ought to have appreciated the well established position in law that in the absence of pleadings and/ or evidence of any loss, a party was not entitled to the compensatory relief purported to be claimed. In support of his arguments he has relied on the decision reported in 2015 (3) - S.C.C. - 49 (Associate Builders vs. Delhi Development Authority), which particularly deals with the 20 Com.AS.No.73/2011 fact that when the Arbitrator wanders outside the work/ Contract and deals with the matter, the Award should be set aside as one which is unreasonable and shock the conscience of the court. He submits that the said principle is applicable to the present case and hence the impugned award is in contravention of public policy of India being in contravention of the fundamental policy of Indian Law.
(c) The 1st Defendant has contended that it is factually incorrect that the Ahmadabad project was not taken up at all by the parties, that the work was undertaken but prevented from doing so due to non-compliance of 3 conditions for re-issuance of Raja Chitti (permission) has indicated in Ex.C36/Letter dated 08.05.2006 issued by the Municipal Corporation, that the fulfillment of the said requirements were the sole responsibility of the Plaintiff, that as for as adjustment of mobilisation advance is concerned, the Plaintiff cannot judge its own cause in as much as it cannot under law and equity to derive a right to adjust amount paid for one project against amount due under another project when such right not under the contract and when the two projects are independent of each other. He has further contended that about running amount payment is concerned is has no bearing on the issue raised, that the Plaintiff had no right or authority to adjust Rs. 22,55,463/- of 21 Com.AS.No.73/2011 Ahmadabad project against payments due to the 1 st Defendant under Mangaluru project as was done under Ex.C21/Letter dated 27.06.2006, one and half year after completion and handover of Mangaluru Project on 18.03.2005, that the conduct of the Plaintiff was completely illegal and without authority
(d) As per the finding of the Learned Arbitrator the Ahmadabad Project was taken up and drawings were provided time to time and other works were also undertaken and hence rejected the said adjustment at Para No. 74 & 75 of the Award. The Learned Arbitrator after appreciating the oral evidence of RW.1 & RW.2 and has observed that from the material on record it is clear that the Claimant/Defendant has produced drawings and those drawings were also approved to a certain extent by AMC, that AMC has not given final approval on account of inaction on the part of the Respondent No.1/ the present Plaintiff in the matter, that the Respondent No.1/ the present Plaintiff has also not terminated, canceled or stated anything with regard to any further action to be taken by the Claimant/Defendant in continuation of the project, that on the other hand it is admitted before the Learned Arbitrator that the project is virtually given up or abandoned on account of want of statutory approval, that the Respondent No.1/ Plaintiff has thus proved that the project in Ahmadabad never took place in the 22 Com.AS.No.73/2011 light of no permission by the AMC. After the said observations, the Learned Arbitrator has given the finding as follows:-
"In the circumstances, I am of the view that the Claimant has done some work and the contract has been unilaterally abandoned without notice to the Claimant. The Claimant is therefore entitled for some compensation in the given circumstances."
(e) Further while giving such a finding at Para No. 13.4 of the Award at Page No. 75 of the Award, the Learned Arbitrator has mentioned that in fact he had seem the place at the time of examination of RW.2. Much argued by the Learned Advocate for Plaintiff about the said observation/ finding about his visit and has argued that the personal knowledge of the Arbitrator was imported in the Award as against the evidence on record, which is not permissible. However, the Learned Arbitrator has clearly mentioned that he had visited the spot at the time of examination of RW.2, who is the witness of the Plaintiff himself. When such being the case, the Plaintiff is estopped from contending otherwise.
(f) Therefore, the material on record, the Learned Arbitrator has given such a finding and hence the same is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the 23 Com.AS.No.73/2011 Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
21. The Eighth ground is that the learned Arbitrator has ex facie erred in failing to appreciate that the Mangaluru and Ahmadabad Projects were on running account evident from the details of payments and bank statements at Ex.R.1.
(a) This ground is nothing but repetition of the earlier grounds, i.e., Ground No. 6 & 7. I have already discussed in detail about the said facts while answering Ground No. 6 & 7. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
22. The Ninth ground is that the learned Arbitrator has erred in failing to appreciate that the adjustment of Rs.22,55,463/- been rightly permitted, the Plaintiff would have been entitled to receive the sum of Rs.7,32,173/- rather than being held liable to 24 Com.AS.No.73/2011 make payment of Rs.12,08,710/- and the said disallowance of adjustment/deduction by the learned Arbitrator constitutes a failure of justice.
(a) The Invoice No. 8 & 9 as per Ex.C15 & 16 was issued towards the work at Mangaluru. The amount claimed is Rs. 1,76,92,652 i.e., after deducting the paid amount of Rs. 3,38,50,650 in the claimed amount of Rs. 5,15,43,302.52. The Learned Arbitrator has upheld the deduction of Rs. 45,300/- towards crane hiring charges.
(b) The Learned Advocate for the Plaintiff has argued that the retail outlet at Mangaluru was completed on 18.03.2005, that the Work Order was changed as per Ex.C7 to Ex.C10 from time to time, that the value of the Work was modified incorporating certain additional work and total was increased to Rs. 5,15,43,302.52 + taxes, that Site Clarence Certificate and Completion Certificate were issued as per Ex.C13 and Ex.C14 on 18.03.2005, that in the Clearance Certificate, it was mentioned that the actual value of work executed is Rs. 5,15,43,302.52/-, that the Ex.C15 & Ex.C16 invoices were issued towards the work at Mangaluru, that the amount claimed is Rs. 1,76,92,652/-, that on 21.06.2005 a meeting was convened and it was decided that the total amount will be Rs. 4,76,75,599/-, 25 Com.AS.No.73/2011 that thereafter the Defendant sent revised bill and on negotiation they have given deduction on supervision charges and reduced the amount to Rs. 4,66,95,599.01, that on 27.06.2006 Ex.C21/ Letter was issued intimating that the amount payable for Mangaluru Project has been completely paid after adjusting the advance amount paid towards Ahmadabad R.O. and the Defendant has to refund the excess amount, that the Plaintiff sent Ex.C30/ Letter on 04.08.2007 furnishing the details and requested to refund excess amount of Rs.16,14,370/-. He has further argued that there was a mistake in measurement and the same was noticed that there is a mistaken addition of Rs.5,67,544/- and that the same requires to be deducted out of the amount payable, that there was an arithmetical error while tracing invoice amounting to Rs. 2,69,353/-, that while sending Ex.C1/ Letter the said amount was deducted along with Debit Note for Rs. 45,300/-, that the total amount claimed after adjustment of aforesaid amount and advance amount paid for Ahmadabad Project is Rs. 16,14,370/-, that the Statement indicating the same is attached to Ex.C21, that the actual amount payable works out to Rs. 4,58,58,702/-.
(c) The Learned Arbitrator has held that there is no evidence on record to substantiate any fraudulent promise, 26 Com.AS.No.73/2011 pressurization etc., leading to the above mentioned meeting dated 21.06.2005 at Page No. 53 to 57 of the Impugned Award.
(d) The disbursement of Rs. 22,55,463/- took place in May 2005. The counter claim seeking refund of the amount was filed on 16.05.2009. Hence, there is a delay of 4 years hence the same was rejected as time barred by the Learned Arbitrator. The said findings cannot be considered as perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
23. The Tenth ground is that the learned Arbitrator has ex- facie erred in failing to direct the Defendant to refund the sum of Rs.22,55,463/- to the Plaintiff herein.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 9. I have already discussed in detail about the said facts while answering Ground No. 9. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-
27Com.AS.No.73/2011 Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
24. The Eleventh ground is that the learned Arbitrator has committed an error apparent on the face of the Impugned Award by completely ignoring the issue of refund of the sum of Rs.22,55,463/- and failing to direct the Defendant to refund the said mobilisation advance of Rs.22,55,463/-, or alternatively to adjust the same towards the payments due.
(a) This ground is nothing but repetition of the earlier ground , i.e., Ground No. 9. I have already discussed in detail about the said facts while answering Ground No. 9. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
28Com.AS.No.73/2011
25. The Twelfth ground is that the learned Arbitrator has erred in granting liberty to the Defendant to claim payment of tax arrears subject to production of proof of payment and to the satisfaction of Defendant.
(a) The Learned Advocate for the Plaintiff has argued that having concluded that the arguments of the Defendant about the said tax arrears did not appeal to the Learned Arbitrator and there was no material to claim in respect of the said taxes he has erred in grant liberty to make future claims by the Defendant, that the grant of liberty constitutes an act beyond the jurisdiction of the Arbitrator and is contrary to law and opposed to Public Policy of India.
(b) The Learned Advocate for the Defendant has argued that the Learned Arbitrator has given finding at Para No. 12.1 to 12.6 and he has also referred to Clause 4 of Ex.C1 and Ex.C2. The Defendant has denied that the grant of liberty constitutes an act beyond the jurisdiction of the Learned Arbitrator. According to the Defendant it is a clear mandate under Clause 4 of the Work Order dated 17.01.2005 that the Plaintiff is entitled to all taxes, duties and levies will be paid extra at actual, that in the Arbitral proceeding the Defendant had produced various details for a tax claim of Rs. 48,27,025/- of which the Learned 29 Com.AS.No.73/2011 Arbitrator has granted Rs. 5,70,648/- towards refund of works tax with interest thereon at 18% from 3.11.2006 till realisation. The Plaintiff had contended that unless assessment order is produced, no reimbursement towards taxes paid under Clause 4 could be made. The Respondent has contended at the time of hearing of the matter various tax assessments were pending or not completed, hence the Tribunal has granted liberty to Defendant in the regard which is just and proper, and that the Learned Arbitrator as instead of granting reimbursement of amounts towards taxes has deferred it subject to submission of valid documents which is equitable having regard to Clause 4 of the Work Order.
(c) Under Clause 4 of Work Order dated 17.01.2005, it is mentioned that "All taxes duties and levies will be paid at actual". In the Arbitral proceedings the Defendant has produced various details for a tax Claim of Rs. 48,27,025/-, of which the Learned Arbitrator has granted only Rs. 5,70,648/- towards refund of works tax with interest thereon at 18% from 3.11.2006 till realization. The Plaintiff has contended unless Assessment Orders are produced on record no reimbursement towards taxes paid under Clause 4 could be made. At the time of hearing of the matter of various tax assessments were pending or not completed. Hence the Learned Arbitrator has 30 Com.AS.No.73/2011 granted liberty to the Defendant in this regard. The Learned Arbitrator instead of granting reimbursement of amounts towards taxes has deferred it subject to submission of valid documents. The said direction cannot be considered as contrary to the terms of contract or contrary to the Public Policy, as contended by the Plaintiff. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
26. The Thirteenth ground is that the learned Arbitrator has erred in purporting to grant liberty to the Defendant to make future claims upon the Plaintiff, which constitutes an act beyond jurisdiction of the learned Arbitrator and is contrary to law.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 12. I have already discussed in detail about the said facts while answering Ground No. 12. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the 31 Com.AS.No.73/2011 setting aside of Arbitral Award on this count is thwarted and rejected.
27. The Fourteenth ground is that the learned Arbitrator has erred and has acted in a patently illegal manner in purporting to reserve the right of the Defendant to produce documentary evidence and in directing the Plaintiff to look into those documents in respect of claims for tax, despite holding that there was nothing on record to support the claim in that regard.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 12. I have already discussed in detail about the said facts while answering Ground No. 12. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
28. The fifteenth ground is that the learned Arbitrator erred in holding that the Plaintiff had not placed any acceptable arguments for denial of the claim of Works Contract Tax.
32Com.AS.No.73/2011
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 12. I have already discussed in detail about the said facts while answering Ground No. 12. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
29. The Sixteenth ground is that learned Arbitrator has erred in holding that the material on record would reveal that the three conditions for re-issuance of the RC had not been complied with by the Plaintiff, without elucidating the basis for arriving at the said conclusion or how the same was revealed from the material on record.
(a) The Defendant has contended as per Ex.C36/ Letter dated 08.05.2006, the Plaintiff has to comply with three conditions for re-issuance of Raja Chitti, that the fulfillment of which was the sole responsibility of the Plaintiff and that the Plaintiff did not comply with the conditions which was a material 33 Com.AS.No.73/2011 breach of Ahmadabad project by the Plaintiff that prevented the Defendant from completing the project.
(b) The Learned Advocate for the Defendant has argued that the Learned Arbitrator has referred to Ex.C.36 at Para No. 13.2 and based on the said document, the Learned Arbitrator has given finding at Para No. 13.3.
(c) On perusal of said findings of the Learned Arbitrator and my observations, discussions and findings, while answering seventh ground and for the same reasons, the said findings are not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
30. The Seventeenth ground is that the learned Arbitrator erred in failing to appreciate the fundamental condition of the Work Order in respect of Ahmadabad Project which was that the work would commence and be completed within eight weeks from the "handing over of the site" and hence, as the said handover had never taken place and the contract had never 34 Com.AS.No.73/2011 fructified and thus there was no question of the Defendant having done any work in respect of thereof.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 16. I have already discussed in detail about the said facts while answering Ground No. 16. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
31. The Eighteenth ground is that learned Arbitrator erred in holding that there was breach of contract by the Plaintiff and has failed to appreciate that in respect of Ahmadabad Project, the contract would effectively come into operation only upon handover of the site and hence, no claim could be made in respect of any work alleged to have been done prior to the handover of the site.
(a) The Learned Advocate for the Plaintiff has argued that the award is also bad for the reason of wrong application of 35 Com.AS.No.73/2011 Section 73 of the Contract Act, that it was necessary for the Learned Arbitrator to consider that there was no breach or violation of any of the terms of the contract by the Plaintiff in the facts and circumstances of the case, that as recorded at Page No. 76 of the Award, the Learned Arbitrator has assumed that the Plaintiff committed breach of contract, that the Learned Arbitrator went on to say that as per Section 73 of the Contract Act that the Plaintiff is liable to pay damages to the Defendant despite the fact that there was no such averments in the statement of claims and there was no piece of evidence to determine so, that the Learned Arbitrator should have applied Section 56 of the Contract Act and hence the Impugned Award is unsustainable and liable to be set aside.
(b) In support of the said arguments, the Learned Advocate for the Plaintiff has relied on a decision reported in A.I.R. - 1954 - S.C.- 44 (Satyabrata Ghose vs. Mugneeram Bangur and Company and Another), wherein it is held that the word impossible has been used not only in the sense of physical or literal impossibility, but also covers cases where the performance may be impractical, useless from the point of view of object and purpose, which the parties had in view.
36Com.AS.No.73/2011
(c) He has also relied on a decision reported in A.I.R. - 2007 - Orissa - 56 (Syed Khursed Ali vs. State of Orissa and another). In the said case the Petitioner applied for a Certificate under the Cow Slaughter Act, which was not granted and therefore could not supply beef as per the agreement. The Hon'ble High Court held that the Doctrine of frustration of venture will be applicable to the facts of the case where doctrine is based not upon the existence of any actual impossibility in fact but upon the existence in circumstances of the case, of any implied condition, which must be absolutely necessary to give effect to the transaction which the parties must have intended.
(d) He has also relied on a decision reported in 2007 (3)
- ARBLR - 314 (Delhi) (Delhi Jal Board vs. Esskay Kohli), wherein is held that where the obtaining of permission was a requirement of law, it was not open for any of the parties to have waived that condition and insist on performance of contrary to the said provision, that the condition was a vital one, it became impossible for the parties to complete the transaction has contemplated by the parties in its absence.
(e) According to the Defendant, the Plaintiff has issued Ex.C4/ Letter dated 11.02.2005, with approved drawings and 37 Com.AS.No.73/2011 Raja Chitti for the Ahmadabad project in acknowledgment of handing over of the site under the Work Order with the direction to Defendant to commence the project which is on record and hence the contention that the handover of the site was not took place is denied. He has further contended that the Defendant commenced the work and the Plaintiff also released mobilisation advance of Rs.22,55,463/- in favour of Defendant on 20.01.2005/-, that various works undertaken by the Defendant are part of record.
(f) The Defendant has contended that failure of the Plaintiff to take steps in pursuance to letter dated 08.05.2006 was a material breach of the terms of the Work Order of Ahmadabad project as the Defendant had undertaken work and was ready and willing to do the project. According to the Defendant admittedly the Plaintiff failed to take any steps in pursuance to Ex.C36/Letter and hence the unilateral action of not taking any steps in pursuance to Ex.C36 is a material breach of the terms, as Defendant had taken necessary steps to execute the project and was ready and willing to do but was prevented due to breach of the Plaintiff.
(g) On perusal of the findings of the Learned Arbitrator with reference to the Ex.C36 and evidence adduced before him 38 Com.AS.No.73/2011 and my observations, discussions and findings, while answering seventh ground and for the same reasons, the said findings are not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
32. The Nineteenth ground is that the learned Arbitrator has erred in holding that the Plaintiff is liable for non-grant of permission by the Ahmadabad Municipal Corporation, that since the non-grant of permission was beyond the control of the Plaintiff, the Plaintiff could not be held liable for any consequence arising there from.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 18. I have already discussed in detail about the said facts while answering Ground No. 18. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the 39 Com.AS.No.73/2011 setting aside of Arbitral Award on this count is thwarted and rejected.
33. The Twentieth ground is that the Sole Arbitrator wrongly placed reliance on A.T. Brij Paul Singh's case as in that case where the contractor had executed a part of the works contract and hence it was held that he would be entitled to damages by way of loss of profit and that in the present case the work had not commenced and hence the same is not applicable to the facts of the present case.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 18. I have already discussed in detail about the said facts while answering Ground No. 18. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
34. The Twenty-first ground is that the learned Arbitrator erred in holding that in the present case the facts would permit 40 Com.AS.No.73/2011 10% loss of profit to be awarded and that there is no reasoning or finding given by the learned Arbitrator to support the said computation of percentage of loss of profit, which is totally arbitrary and without any basis.
(a) This ground is nothing but repetition of the earlier ground , i.e., Ground No. 18. I have already discussed in detail about the said facts while answering Ground No. 18. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
35. The Twenty-second ground is that the learned Arbitrator has erred in failing to appreciate that the Judgment of the Hon'ble Supreme Court clearly holds that the claim for loss of profit ought to be proved by evidence.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 18. I have already discussed in detail about the said facts while answering Ground No. 18. Hence for 41 Com.AS.No.73/2011 the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
36. The Twenty-third ground is that the learned Arbitrator ought to have appreciated the well established position of law that in the absence of pleadings and/or evidence of any loss, a party was not entitled to the compensatory relief purported to be claimed.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 18. I have already discussed in detail about the said facts while answering Ground No. 18. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
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37. The Twenty-fourth ground is that the learned Arbitrator has erred in granting sums towards loss of profit, supervision fees and architectural charges without any evidence of actual loss having been caused to the Defendant and without any computation, pleadings or evidence to support the frivolous claims.
(a) This ground is nothing but repetition of the earlier ground , i.e., Ground No. 18. I have already discussed in detail about the said facts while answering Ground No. 18. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
38. The grounds mentioned at 25 to 28 are related to the supervision fees and architectural consultancy fees. In order to avoid repetition of facts I discuss the same jointly.
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39. The Twenty-fifth ground is that the learned Arbitrator has erred in awarding the Defendant a sum of Rs.3,00,000/- as and by way of supervision fees.
40. The Twenty-sixth ground is that the grant of the so-called nominal sum of Rs. 3,00,000/- is admittedly not supported by any pleadings or proof, and the same constitutes an arbitrary and unsustainable exercise of jurisdiction by the learned Arbitrator.
41. The Twenty-seventh ground is that the learned Arbitrator has erred in holding that the Defendant "must have done some work with regard to designing the drawings as an Architect", without there being any material or documents on record to support the said findings.
42. The Twenty-eighth ground is that the learned Arbitrator erred in granting architectural charges to the tune of Rs.5,61,093/- without giving any reasoning, findings or explanation as to the basis on which the measure of 2% was determined, which appears to be purely at the arbitrary discretion of the learned Arbitrator.
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(a) The Defendant has contended that the Work Order stipulates for the supervision fees and the Council of the Architecture (Professional Conduct) Regulations, 1989 provides for architectural fees. The Claimant/Defendant has claimed a total sum of Rs. 4,89,61,730/- as damages payable to him, which includes the said supervision fees and architectural fees as could be seen from the calculations made at Para No. 12 of the Claim statement. When such being the case, the contention of the Plaintiff that there are no pleadings about the same cannot be accepted. Further, at Para No. 13.10 of the Award, the Learned Arbitrator has in detail discussed about supervision fees and has granted a nominal fee with regard to said aspect. Similarly at Para No. 13.11 & 13.12 of the Award he has discussed about Architectural fees also. By considering the said aspects, the said finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
43. The grounds mentioned in 29 & 30 are co-related to Panvel Project and hence in order to avoid repetition of facts, I discuss the same jointly.
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44. The Twenty-ninth ground is that the learned Arbitrator erred in grating the claim relating to the Panvel Retail Outlet to the tune of Rs.3,56,720/- by relying upon the evidence of Defendant No.1, while failing to appreciate that the Defendant had furnished no basis for claiming the said amount.
45. The Thirtieth ground is that the learned Arbitrator erroneously awarded the aforesaid sum of Rs.3,56,720/- merely on the say-so of the Defendant, while failing to appreciate the fact that the only work done in respect of the Panvel Project for which a bill (Ex.C-20) has been raised by the Defendant was for a sum of Rs.84,160/-, which has admittedly been received by the Defendant.
(a) The Learned Advocate for the Plaintiff has argued that the Panvel Project is not the subject matter of L.O.I and it was also not a subject matter of Arbitration, that among ten issues framed by the Learned Arbitrator did not include any issues about Panvel Project, that the Impugned Award deals with dispute not contemplated by and not falling within the scope of the submission to Arbitration and is totally a case of Arbitrator wandering beyond his jurisdiction, that Ex.C23/ Work Order in respect of a two-storied building at Panvel was issued on 08.06.2006 and the amount claimed is Rs. 1,68,360/-, that no 46 Com.AS.No.73/2011 evidence has been produced to substantiate the claim of the Defendant or to prove the extent of work done on this, except the say of CW.1 nothing is available on record, that it was categorically stated by the Plaintiff that the Defendant was paid to the extent of work done by him, that the Defendant during his cross-examination has admitted that the Plaintiff paid Rs. 84,180/- for the said work, that after realizing that the Defendant totally failed to establish that he did any work in commensuration of the said claim, that the Learned Arbitrator awarded an amount of Rs. 3,56,720/- and 18% interest thereon and the same is in contravention of Public Policy and fundamental policy of Indian Law.
(b) The Defendant has contended that as per the evidence on record he had claimed consultancy fee for the designing work as per Ex.C19, that the professional consultancy work entailed nineteen drawings as per Ex.C59, that the bill for the professional service of RS 3,56,720/-, was raised at Ex.C31, that there is no rebuttal to the work done for the Panvel project and accordingly the Learned Arbitrator was allowed the said claim.
(c) The learned Arbitrator has discussed about Panvel Project at Para No. 14.1 and after referring to Ex. C59, Ex.C31, 47 Com.AS.No.73/2011 and Ex.C19 & Ex.C20 with the evidence of Sri. Ajay Kumar, Engineering charge as held that the Claimant/Defendant is entitled for a sum of Rs. 3,56,720/- for Panvel Project. He has also observed that the Plaintiff has stated that he has paid the Claimant to the extent of work with respect to Panvel Project and there are no dues, but failed to prove the said aspects. The said findings cannot be considered as perverse and against to the public policy as contended by the Plaintiff. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
46. The Grounds No. 31 to 35 and 39 & 40 are co-related in respect of Award of Interest by the Learned Arbitrator and hence in order to avoid repetition of facts, I discuss the same jointly.
47. The Thirty-one ground is that the learned Arbitrator erred in holding that interest @ 18% per annum under Section 31(7) of the Arbitration & Conciliation Act, would apply to both per- reference and also pendente lite interest, as the said Section 48 Com.AS.No.73/2011 only refers to post Award interest at 18% per annum and therefore, the finding in this regard is contrary to law.
48. The Thirty-two ground is that the learned Arbitrator erred in holding that because the Plaintiff had claimed interest @ 18% per annum, it is ipso facto implied that the Plaintiff accepted 18% per annum to be reasonable rate.
49. The Thirty-three ground is that the learned Arbitrator erred in taking into account and/or awarding pre-reference interest when admittedly no such prayer was made by the Defendant, the learned Arbitrator erroneously exercised jurisdiction which is contrary to law and public policy.
50. The Thirty-four ground is that the learned Arbitrator erred in failing to appreciate that the Defendant has held the Plaintiff's mobilisation advance paid towards the Ahmadabad property to the tune of Rs.22,55,460/- had has earned significant interest thereon till date and hence, the interest awarded to the Defendant should have been much lower than 18% which has been granted by the Arbitrator.
51. The Thirty-five ground is that the learned Arbitrator erred in holding that the Defendant had claimed interest for the pre-
49Com.AS.No.73/2011 reference period from April 2005 till November 2008, when the prayers and pleadings in the Statement of Claim nowhere reflect a claim for pre-reference interest and hence, the award of pre-reference interest is erroneous exercise of jurisdiction by the learned Arbitrator, which is contrary to law as being beyond the pleadings of the parties.
52. The Thirty-Ninth ground is that the learned Arbitrator erred in awarding pre-reference interest when the same was not prayed for by the Defendant.
53. The Forty ground is that the learned Arbitrator erred in directing the interest to be paid on the Works Contract Tax from the date of Assessment Order dated 03.11.2006, when admittedly the Assessment Order was produced for the first time before the learned Arbitrator on 31.07.2010 and was not furnished to the Plaintiff prior thereto, is unconscionable and opposed to the public policy.
(a) The Learned Advocate for the Plaintiff has argued that the grant of Interest which has not been prayed for is an erroneous exercise of jurisdiction by the Learned Arbitrator and is contrary to law and public policy that the Arbitrator has lost 50 Com.AS.No.73/2011 site of the fact that the Plaintiff is a Government Company and by any stretch of imagination awarding of 18% Interest or any Interest against it, it is highly unjustified in the facts and circumstances of the case, wherein no fault of the Plaintiff is found by the Learned Arbitrator from the evidence adduced before him by both the parties. The Learned Advocate for the Plaintiff has further argued that while erroneously holding that the Plaintiff has retained the money legally payable to the Defendant from 2005 till date, the Learned Arbitrator erred in failing to appreciate that the Defendant has held the Plaintiff's mobilisation advance paid towards Ahmadabad property to the tune of Rs.22,55,460/- and he has earned significant interest thereon dill date, that in the said circumstances the award granting such unconscionable and unimaginable interest is in conflict with the most basic motions of justice.
(b) The Defendant has contended that even though under Section 31(7) of the Arbitration & Conciliation Act, interest at 18% per annum is to be imposed for pendente lite, the same rate can also be imposed for the pre-reference period, that in the Statement of Claim pre-reference interest at 18% per annum has been specifically prayed for from April 2005.
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54. In this case, there are no terms in the contract for the payment of interest. The Learned Arbitrator at Para No. 15.3 of the Award has observed that since there is no quantification of interest is available in terms of contract, interest at 18% per annum in terms of Section 31(7) of the Act is payable by the Plaintiff and that this interest at 18% per annum would apply to both pre-reference and also pendente lite interest. At Para No. 15.4 the Learned Arbitrator has observed that the Claimant has claimed interest for pre-reference period from April 2005 till November 2008, pendente lite interest from December 2008 till date of Award and future interest after award till realization.
55. However, in the Statement of Claim filed by the Claimant/Defendant in Prayer Column, at Column No. (c), he has claimed to award interest 18% per annum from December 2008 till the date of recovery of all dues. However at Para No. 12 the Claimant/Defendant has calculated the amount to be awarded and in the said calculation he has claimed interest at 18% per annum from April 2005 to November 2008.
56. Under Section 31 (7) of the 1996 Act, the power of the Arbitral Tribunal to award interest has been clearly provided. Section 31(7)(a) of the 1996 Act deals with interest that the Arbitral Tribunal can award "for the whole or any part of the 52 Com.AS.No.73/2011 period between the date on which the cause of action arose and the date on which the award is made". This period thus includes the entire period prior to making of the award which is, for case of reference referred to as pendente lite. The interest can therefore be awarded by the Tribunal, for example from the date when the first claim is raised by the contractor or when a legal notice is issued or when the arbitration clause is invoked or the protest against the non- clearance of certain amounts as part of a bill. Thus, the entire period from the date when the cause of action arises till the date of award i.e., passing through all stages of correspondence, invocation of arbitration clause, reference is made, Arbitration Tribunal entering reference, pendency of proceedings, and passing of the award is included in the scope of this clause.
57. Section 31(7)(b) of the 1996 Act, however refers to interest payable "from the date of award to the date of payment" i.e. the period after the passing of the award which is for case of reference referred to as future interest.
58. In the decision reported in (2009) 12 - S.C.C. - 26 (Sayeed Ahmed & Company vs. State of Uttar Pradesh & Others), the Hon'ble Supreme Court has categorically held that 53 Com.AS.No.73/2011 by virtue of Section 31(7), there exists no difference between pre-reference period and the pendente lite period. The relevant portion of the said decision is as follows:-
"13. The legislature while enacting the Arbitration and Conciliation Act, 1996, incorporated a specific provision in regard to award of interest by arbitrators. Sub-section(7) of Section 31 of the Act deals with the arbitrator's power to award interest. Clause (a) relates to the period between the date on which the cause of action arose and the date on which the award is made. Clause(b) relates to the period from the date of award to date of payment. The said sub- section (7) is extracted below :
"31. (7)(a) Unless otherwise agreed by the parties, where and insofar 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 eighteen per cent per annum from the date of the award to the date of payment."
Having regard to sub-section (7) of Section 54 Com.AS.No.73/2011 31 of the Act, the difference between pre-
reference period and pendente lite period has disappeared insofar as award of interest by arbitrator. The said Section recognises only two periods and makes the following provisions :
(a) In regard to the period between the date on which the cause of action arose and the date on which the award is made (pre-reference period plus pendente lite), the Arbitral Tribunal may award interest at such rate as it deems reasonable, for the whole or any part of the period, unless otherwise agreed by the parties.
(b) For the period from the date of award to the date of payment the interest shall be 18% per annum if no specific order is made in regard to interest. The arbitrator may however award interest at a different rate for the period between the date of award and date of payment.
14. The decisions of this Court with reference to the awards under the old Arbitration Act making a distinction between the pre-
reference period and pendente lite period and the observation therein that arbitrator has the discretion to award interest during pendente lite period in spite of any bar against interest contained in the contract between the parties are not applicable to arbitration governed by the Arbitration and Conciliation Act 1996."
59. Thus, as per this decision, the difference between the Arbitration Act, 1940 and 1996 Act is clear insofar as it relates 55 Com.AS.No.73/2011 to the periods for which the interest can be awarded prior to the passing of the award, no longer exists. In the decision reported in (2010) 8 - S.C.C. - 767 (Sree Kamatchi Amman Constructions vs. Divisional Railway Manager (Works), Palghat Ors). the Hon'ble Supreme Court upheld the discretion of the Arbitral Tribunal in refusing to award interest for the pendente lite period. Thereafter, in the decision reported in (2015) 9 - S.C.C. - 695 (Union of India vs. Bright Power Projects (India) Private Limited), the Hon'ble Supreme Court considered Clause 13(3) of the contract therein. The said Clause 13(3) is set out herein below:-
"No interest will be payable upon the earnest money and the security deposit or amounts payable to the contractor under the contract, but government securities deposited in terms of sub-clause (1) of this clause will be repayable with interest accrued thereon"
60. In the context of this clause, the Hon'ble Supreme Court as distinguished the earlier decision reported in (1992) 1 - S.C.C. - 508 (Secretary, Irrigation Department, Government of Orissa & Others vs. G.C. Roy), which was decided under the 1940 Act and observed in Para 13, 17 and 21 which read as under:
56Com.AS.No.73/2011 "13. Section 31(7) of the Act, by using the words "unless otherwise agreed by the parties", categorically specifies that the arbitrator is bound by the terms of the contract so far as award of interest from the date of cause of action to date of the award is concerned.
Therefore, where the parties had agreed that no interest shall be payable, the Arbitral Tribunal cannot award interest.
...
17. It is also pertinent to note that G.C. Roy's case had been decided on 12-12-1991 on the basis of the provisions of the Arbitration Act 1940, which was not operative at the time when the dispute on hand was decided by the Arbitral Tribunal.
...
21. For the afore-stated reasons, we set aside the impugned judgment and the award so far as it pertains to payment of interest pendente lite and direct that no interest would be paid on the amount payable under the contract to the respondent from the date of the reference till the date of the award."
61. In the decision reported in (2016) 6 - S.C.C. - 36 (Union of India vs. Ambica Construction), which was rendered by a three Judge Bench of the Hon'ble Supreme Court, the Court was considering the power of the Arbitrator to award pendente lite 57 Com.AS.No.73/2011 interest when the contract contains a bar under the 1940 Act. The Hon'ble Supreme Court considered the above-mentioned judgments in (1992) 1 - S.C.C. - 508 (Secretary, Irrigation Department, Government of Orissa & Others vs. G.C. Roy), (2009) 12 - S.C.C. - 26 (Sayeed Ahmed & Company vs. State of Uttar Pradesh & Others), (2010) 8 - S.C.C. - 767 (Sree Kamatchi Amman Constructions vs. Divisional Railway Manager (Works), Palghat Ors) and (2015) 9 - S.C.C. - 695 (Union of India vs. Bright Power Projects (India) Private Limited), and observed as under:-
"22. In our opinion, it would depend upon the nature of the ouster clause in each case. In case there is express stipulation which debars pendent lite interest, obviously, it cannot be granted by the arbitrator. The award of pendent lite interest inter alia must depend upon the overall intention of the agreement and what is expressly excluded.
..............................
25. ....Section 31(7)(a) of the 1996 Act confers the power on the arbitrator to award interest pendent lite, "unless otherwise agreed by parties". Thus, it is clear from the provisions contained in Section 31(7)(a) that the contract between the parties has been given importance and is binding on the arbitrator. The arbitration clause is also required to be looked into while 58 Com.AS.No.73/2011 deciding the power of the arbitrator and in case there is any bar contained in the contract on award of interest, it operates on which items and in the arbitration clause what are the powers conferred on the arbitrator and whether bar on award on interest has been confined to certain period or it relates to pendency of proceedings before the arbitrator.
...
28. ...It is apparent from various decisions referred to above that in G.C. Roy the Constitution Bench of this Court has laid down that where the agreement expressly provides that no interest pendente lite shall be payable on amount due, the arbitrator has no power to award interest.
...
34. Thus, our answer to the reference is that if the contract expressly bars the award of interest pendent lite, the same cannot be awarded by the arbitrator. We also make it clear that the bar to award interest on delayed payment by itself will not be readily inferred as express bar to award interest pendent lite by the Arbitral Tribunal, as ouster of power of the arbitrator has to be considered on various relevant aspects referred to in the decisions of this Court, it would be for the Division Bench to consider the case on merits."59
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62. It is relevant to point out that the above-mentioned decision reported in (2016) 6 - S.C.C. - 36 (Union of India vs. Ambica Construction), was a case decided under the 1940 Act but a reference in respect of the various decisions of the two Judge Benches of the Hon'ble Supreme Court which had taken varying views and only the reference was answered.
63. Thereafter, the Hon'ble Supreme court in the decision reported in (2017) 9 - S.C.C. - 611 (Sri Chittaranjan Maity vs. Union of India), considered a case where there were various claims which were raised and amounts awarded even beyond security deposit and earnest money. This is evident from a perusal of the table in paragraph 10 of the said judgment. On the issue of interest, the Hon'ble Supreme Court considered Section 31(7)(a) of the 1996 Act and clause 16 of the GCC. The relevant portion is as follows:-
"19. In Sayeed Ahmed and Co. vs. State of Uttar Pradesh and Others (2009) 12 SCC 26, this Court noted that the 1940 Act did not contain any provision relating to the power of the Arbitrator to award interest. However, now a specific provision has been created Under Section 31(7)
(a) of the 1996 Act. As per this Section, if the agreement bars payment of interest, the Arbitrator cannot award interest from the date of 60 Com.AS.No.73/2011 cause of action till the date of award. The Court has observed that in regard to the provision in the 1996 Act, the difference between pre-
reference period and the pendente lite interest has disappeared insofar as award of interest by the Arbitrator is concerned. Section 31(7)(a) recognizes only two periods, i.e. pre- award and post-award period.
20. In Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat and Ors. (2010) 8 SCC 767, this Court was dealing with an identical case wherein Clause 16 of the GCC of Railways had required interpretation. This is the same Clause 16(2) of the GCC prohibiting grant of interest which is also applicable in the facts of the present case. The Court held that where the parties had agreed that the interest shall not be payable, the Arbitral Tribunal cannot award interest between the date on which the cause of action arose to the date of the award.
21. In Union of India vs. Bright Power Projects (India) Private Limited (2015) 9 SCC 695, a three- Judge Bench of this Court, after referring to the provisions of Section 31(7)(a) of the 1996 Act, held that when the terms of the agreement had prohibited award of interest, the Arbitrator could not award interest for the pendente lite period. It has been held thus:
61Com.AS.No.73/2011 "10. Thus, it had been specifically understood between the parties that no interest was to be paid on the earnest money, security deposit and the amount payable to the contractor under the contract. So far as payment of interest on government securities, which had been deposited by the Respondent contractor with the Appellant is concerned, it was specifically stated that the said amount was to be returned to the contractor along with interest accrued thereon, but so far as payment of interest on the amount payable to the contractor under the contract was concerned, there was a specific term that no interest was to be paid thereon.
11. When parties to the contract had agreed to the fact that interest would not be awarded on the amount payable to the contractor under the contract, in our opinion, they were bound by their understanding. Having once agreed that the contractor would not claim any interest on the amount to be paid under the contract, he could not have claimed interest either before a civil court or before an Arbitral Tribunal." Therefore, it is clear that the Appellant is not entitled for any interest on the amount awarded by the Arbitral Tribunal"
64. Thereafter, in the decision reported in (2018) 7- S.C.C.
- 664 (Raveechee and Co. vs. Union of India), the Hon'ble Supreme Court was considering a case where the Arbitrator had 62 Com.AS.No.73/2011 awarded interest @ 12% p.a. on the award excluding the amount of security deposit. The relevant portion of the said decision is as follows:-
"8. In the present case, the Arbitral Tribunal giving effect to the purport of Clause 16(3) did not award any interest on security deposits. The clause in terms states that no interest will be payable on earnest money, security deposits or on any amounts payable to the contractor under the contract.
The Arbitrators in their award have relied on Clause 16(3) of the contract to deny interest on the security deposit. The Arbitrators held that what was intended under Clause 16(3) barred the grant of interest on earnest money, security deposit and amounts payable to the appellant, it does not in any way bar grant of interest pendent lite."
65. The legal position, upon a cumulative reading of all the judgments can be summarized as under:
i) There is no distinction between the pre-
reference and pendente lite period under the 1996 Act as held in (2009) 12 - S.C.C. - 26 (Sayeed Ahmed & Company vs. State of Uttar Pradesh & Others).
ii) If the contract has a specific stipulation in 63 Com.AS.No.73/2011 respect of award of interest, the same would be applicable and the Arbitral Tribunal under Section 31(7) would be bound by the same as held in (2015) 9 - S.C.C. - 695 (Union of India vs. Bright Power Projects (India) Private Limited).
iii) The express exclusion in a contract has to be determined after a reading of a clause and the overall intention of the agreement as also the exact exclusion as held in (2016) 6 - S.C.C. - 36 (Union of India vs. Ambica Construction).
iv) In respect of security deposit, earnest money deposit and other amounts payable under the contract, no interest is payable as held in (2017) 9 - S.C.C. - 611 (Sri Chittaranjan Maity vs. Union of India).
v) Though in respect of security deposit, earnest money deposit and amounts payable under the contract, no interest is payable, in respect of unascertained damages, the same would not be an amount payable under the contract, hence interest would be payable as held in (2018) 7- S.C.C. - 664 (Raveechee and Co. vs. Union of India).
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66. The above conclusions are arrived at after looking at the factual background and the findings in the decisions of the Hon'ble Supreme Court referred to above.
67. In view of Section 31(7)(a) of the 1996 Act, if there is an agreement between the parties, insofar as award of interest is concerned, then the said agreement prevails. The power of Arbitrator to award pendente lite interest is contemplated and recognized, only "where justified". Under such circumstances, on the amounts awarded, no pre-award interest is payable. The arbitral award in the present case grants interest to the Claimant, pre-reference and pendente lite. The said amount of interest is liable to be set aside.
68. The Thirty-sixth ground is that the learned Arbitrator having come to a finding that the Defendant had not commenced the Ahmadabad Project or done any work and having disallowed the deduction of mobilisation advance from the amounts paid by the Plaintiff towards the Mangaluru Project, ought to have granted the counter-claim of the Plaintiff thereby refunding the balance sum from the mobilisation advance.
65Com.AS.No.73/2011
(a) This ground is nothing but repetition of the earlier grounds, i.e., Ground No. 6, 7, 9 & 11. I have already discussed in detail about the said facts while answering the said Grounds. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
69. The Thirty-seventh ground is that the learned Arbitrator has erred in holding that the counter-claim was barred by limitation, since the counter-claim had been filed within less than 3 years from the date of assertion of the deductions.
(a) This ground is nothing but repetition of the earlier ground, i.e., Ground No. 9. I have already discussed in detail about the said facts while answering the said Ground. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub- Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the 66 Com.AS.No.73/2011 setting aside of Arbitral Award on this count is thwarted and rejected.
70. The Thirty-eighth ground is that the learned Arbitrator erred in failing to apply the Judgments of the Hon'ble Supreme Court which laid down the proposition that limitation would commence from the date of assertion and denial of payment.
71. On the entire reading of the Award passed by the learned Arbitrator he has discussed about various decisions including A.I.R - 1984 - S.C. - 1703 (A.T. Brij Paul Singh & Others vs. State of Gujarath), 1986 (3) - S.C.C. - 522 (Zodiac Electricals Private Limited vs. Union of India & Others), A.I.R. - 1988 - S.C.- 107 (Major(Retd) Inder Singh Rekhi vs. Delhi Development Authority), A.I.R - 2009 - S.C. - 170 (National Insurance Company Limited vs. Boghara Polyfab Private Limited), and Other several decisions. Further he has discussed about limitation to the Counter Claim of the Plaintiff in detail. Therefore, the said findings cannot be considered as perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
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72. The Forty-first ground is that the learned Arbitrator exceeded his jurisdiction in purporting to reserve liberty for the Defendant to claim payment of tax arrears subsequent to the Arbitration.
(a) This ground is nothing but repetition of the earlier grounds, i.e., Ground No. 12, 14 & 40. I have already discussed in detail about the said facts while answering the said Grounds. Hence for the same reasons, I am of the opinion that the finding of the Learned Arbitrator is not perverse. Hence, the said ground is not available for the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Plaintiff calling for the setting aside of Arbitral Award on this count is thwarted and rejected.
73. Now, among the several grounds urged by the Plaintiff, only on the grounds relating to the pre-reference and pendente lite interest, the Award is liable to be set-aside. When such being the case, whether the Award can be set-aside only for the said portion or whether the Award can be modified about the said aspect, is to be considered.
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74. Section 34 of Arbitration and Conciliation Act 1996 indicates that the power of the Courts is limited to setting aside the arbitral awards, strictly in terms of the specific grounds urged before the Court. The Act contains no provision that allows the Courts to either modify the arbitral awards or grant additional/alternative reliefs that the arbitral tribunal did not grant. The Act provides only two mechanisms for making changes in the arbitral award passed by the arbitral tribunal. The first being provided under Section 33, whereby the arbitral tribunal is empowered to make clerical and technical corrections in the arbitral award that it deems fit after receiving the request for the same from the parties to the proceedings. The second mechanism is under Section 34(4), whereby the Courts can adjourn the proceedings for setting aside arbitral awards and provide an opportunity to the arbitral tribunal to take appropriate actions to eliminate the grounds for setting aside such arbitral awards. Thus, even during the pendency of the proceedings under Section 34, the defects in the arbitral award can only be cured by the arbitral tribunal. In view of the above, it is clear that that power to make changes in the arbitral award only resides with the arbitral tribunal, and the Courts cannot make any such changes in the arbitral award under any circumstance whatsoever. The Courts should recognize that while opting to resolve disputes through 69 Com.AS.No.73/2011 arbitration, the parties consciously choose to exclude the Court's jurisdiction. Thus, the exercise of modifying or altering the arbitral award by the Courts not only goes against the scheme of the Act but also defeats the objective of the arbitration process. Therefore, after the dispute between the parties is resolved through arbitration, the Courts should recognize that their role is limited to setting aside arbitral awards based on the specific grounds enshrined under Section 34 and should refrain from making any modifications in the arbitral awards.
75. It is further to be noted that this court has no jurisdiction to remand the matter to the Arbitrator also. For the said aspect, I wish to refer a decision reported in I.L.R. - 2016 - KAR - 4136 (DB) (Bhaskar Industrial Development Limited vs. South Western Railways), wherein it is held that the power of the Court under Section 34 of the Act is not to remand the matter to the Arbitral Tribunal after setting aside the Arbitral Award. The said principle of law is upheld by the Hon'ble Supreme Court in the decision reported in 2018 (11) - S.C.C. - 328 (Kinnari Mullick and another vs. Ghanshyam Das Damani), wherein it is held as follows:-
"The power of the Court to remand the matter to the Arbitral Tribunal is only to adjourn the Proceedings 70 Com.AS.No.73/2011 for the limited purpose mentioned in Section 34 (4) i.e., to give the Arbitral Tribunal an opportunity to resume the Arbitral Proceedings or to take such other action as in the opinion of the Arbitral Tribunal, will eliminate the grounds for setting aside the Arbitral Award. The conditions required to be satisfied for such remand are :-
(i) There is a written request made by a party to the Arbitration Proceedings;
(ii) The Arbitral Award has not already been set aside;
(iii) The challenge to the Award has been set up under Section 34 about the deficiencies in the Arbitral Award which may be curable by allowing the Arbitral Tribunal to take such measures which can eliminate the grounds for setting aside the Arbitral Award."
76. Therefore, there is no scope to remand the matter to the Arbitrator.
77. Further, in view of the decisions reported in 2019 (15) - S.C.C. - 131 (Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India Ltd.), and 2020 (5) - S.C.C. - 164 (South East Asia Marine Engineering & Constructions Limited vs. Oil India Limited), this Court has no power to modify, revive or vary the Arbitral Award under Section 34 of the Arbitration & Conciliation 71 Com.AS.No.73/2011 Act, 1996. Further, in a latest decision reported in 2021 - S.C.C. Online - S.C. - 473 (National Highways vs. M. Hakeem), decided on 20-07-2021, the Hon'ble Supreme Court has held that if one were to include the power to modify an award in Section 34, one would be crossing the Lakshman Rekha.
78. In view of my above discussions, observations and findings, I am of the opinion that the Award of the Learned Arbitrator is liable to be set aside on the ground that the same is contrary to the Public Policy and also there is patent illegality in the findings of the learned Arbitrator. Further, I make it clear that I have discussed only about the findings given by the learned Arbitrator in the light of the contentions taken by both parties without re-appreciating the oral or documentary evidence placed before the Learned Arbitrator. All my findings are based on the legal aspects and the development of case law on the said subject. When such being the case, I have no other option except to set aside the entire Award passed by the learned Arbitrator. Therefore, I answer this Point in the "Affirmative".
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79. Point No. 2 :- Therefore, I proceed to pass the following Order.
ORDER The Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, is allowed.
The Arbitral Award dated 18.06.2011 is hereby set-aside.
The 1st Defendant shall pay the cost of this proceeding to the Plaintiff.
The Office is directed to send copy of this judgment to both parties to their email ID as required under Order XX Rule 1 of the Civil Procedure Code read with Section 16 of the Commercial Courts Act.
(Dictated to the Stenographer typed by her, corrected and then pronounced by me in open Court on this the 16th day of August 2021.).
(DEVARAJA BHAT.M), LXXXII Addl. City Civil & Sessions Judge, Bengaluru.
73 Com.AS.No.73/2011 The Judgment is pronounced in Open Court. The operative portion of the said Judgment is as follows :-
ORDER The Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, is allowed.
The Arbitral Award dated 18.06.2011 is hereby set-
aside.
The 1st Defendant shall pay the cost of this proceeding to the Plaintiff.
The Office is directed to send copy of this judgment to both parties to their email ID as required under Order XX Rule 1 of the Civil Procedure Code read with Section 16 of the Commercial Courts Act.
(vide my separate detailed
Judgment dated 16.08.2021 ).
(Typed to my dictation)
LXXXII ACC&SJ, B'LURU.