Delhi District Court
Union Of India vs Rail Tech Infraventure Pvt Ltd on 31 May, 2022
In the Court of Shri Sanjiv Jain, District Judge,
(Commercial Court-03), Patiala House Courts New Delhi
OMP (Comm) No. 06/2021
Union of India
Dy. Chief Engineer (C) NWR,
Bikaner, Rajasthan ....... Petitioner
versus
Rail Tech Infraventure Pvt Ltd, ....... Respondent
Shakarpur, New Delhi.
Date of institution : 08.01.2021 Date of reserving judgment : 25.05.2022 Date of decision : 31.05.2022 JUDGME NT
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called the 'Act') challenges the award dated 17.10.2019 passed by the Arbitral Tribunal comprising of Sh. A. K. Verma, Sh. Mahesh Mangal and Sh. Harsh Kumar, whereby, sum of Rs. 54,29,639/- along with amount towards GST, subject to a ceiling limit of Rs. 14,07,865/- was awarded in favour of the respondent.
OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.1 of 26 Brief facts:
2. The facts leading to this petition are that the respondent was awarded the work of Suratgarh Anupgarh Section Conversion of SR / SWR Section into LWR through weld renewal (TWR) by flash butt welding (41.25 km) under ADEN / NWR / Suratgarh vide letter of award dated 07.02.2017 at the tender cost of Rs. 4,70,88,690/-. The work was to be started on 07.02.2016 and to be completed within 8 months i.e. upto 06.10.2017. The work comprised of flash butt welding of 60 kg / 52 kg rails using rail cum road mobile and / or stationary flash butt welding plant and destressing of existing BG LWR track for flash butt welded portion as per PCE's circular under traffic block including cutting of rails near SEJs or at every kilometer inserting single cut closure rails, so as to pass traffic blocks including providing one meter long fish plate with four clamps and fixing SEJ in mean position, welding of cut made during destressing by AT weld, replacement of 100% GRPs and worn out / unserviceable ERCs and liners etc with the contractor's own labour, materials, machinery, tools, plants with all lead, lifts etc. The scope of work is defined in para 3.4 of the award. As against the above, the respondent executed the work as detailed in para 3.5 of the award i.e. ERCs and liners, etc with contractor's own labour, materials, machinery tools, plants with all lead, lifts, descents etc complete in all respect as per direction of Engineer.
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3. The work prolonged beyond the original contract period from 8 months to 11 months. After completing about 92% financial progress and execution of 40.50 km out of total 41.21 km (98.27%), the respondent applied for the extension of time for the completion of work upto 05.01.2018 without penalty but with PVC stating that the work could not be completed within the stipulated period as the suitable atmospheric temperature (destressing temperature), required for destressing work could not be attained. The petitioner granted the extension of time w.e.f. 07.10.2017 till 05.01.2018 vide letter dated 21.11.2017 under clause 17 B of GCC with penalty @ Rs. 25,000/- per month with the stipulation that the respondent would give acceptance of extension with penalty within a week. The respondent expressed its reluctance and submitted reasons for the same vide letter dated 14.12.2017 that the progress of work was more than 90% and it has almost completed the work within the stipulated period. During the extended period, respondent did only the destressing work and did not start the flash butt welding work for the remaining length of 2.81 km. The petitioner then rescinded the contract in terms of clause 62 of GCC 2014 by sending a rescind notice dated 27.06.2018. Earnest money, security deposit and performance guarantee of the respondent were forfeited. The respondent raised the disputes requesting for arbitration. The General Manager OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.3 of 26 constituted the Arbitral Tribunal to adjudicate upon the disputes vide letter dated 18.04.2019. The Tribunal entered into the reference vide letter dated 23.04.2019. It also disclosed that there are no circumstances or any interest whatsoever that may give rise to any justifiable doubts as regards its independence or impartiality or bias. After seeking no objection from the parties, it directed the parties to exchange documents / claims / rejoinder and listed the matter for hearings on 16.08.2019, 17.09.2019 & 06.10.2019. The Tribunal framed the following issues:
7.1.1 Whether claimant was given work beyond the scope of contract?
7.1.2 Whether extension under clause 17 B was justified?
7.1.3 Whether or not the respondent was justified in rescinding the contract?
The Tribunal thereafter passed the impugned award after hearing the parties on the basis of their documents giving issue- wise findings.
4. The petitioner challenged the award on the following grounds:
A. That the agreement dated 15.05.2017 contained exception clause in Annexure 'A' of the Tender Conditions & Instructions to Tenderer i.e. clause 33 (a), 33 (b) and 33 (c), which define the 'excepted matter' and exclude the applicability of clause 63 & 64 of GCC. It is stated that the contract value of the present case is Rs. 4,70,88,690/-. 20% of the said value comes to Rs. 94,17,738/-. The arbitration OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.4 of 26 clause would have been applicable to that extent but in this case, the respondent claim was of Rs. 1,12,68,674/- besides cancellation of penalty of Rs. 75,000/-, total amounting to Rs. 1,13,43,674/- and as such the award is contrary to the terms of the contract and violative of Section 28 (3), Section 34 (2) (a) (iv) and Section 34 (5) of the Act. Reference is made of the case M/s Lion Engineering Consultants Vs. State of MP, (2018) 16 SCC 758 and ONGC Vs. Saw Pipes Limited, (2003) 5 SCC 705.
B. That the Tribunal failed to assign any reason for awarding 12% interest on the amount from the date of award till the date of payment in the event of failure to pay the amount within 60 days from the date of award. It is stated that as per Section 31 of the Act, post publication award carries an interest 2% higher than the current rate of interest prevalent on the date of award as explained in Section 2 (b) of the Interest Act. The rate of interest of the schedule banks, as on date, varies from 2% to 5.5%.
C. That the reason assigned in the award for deciding the issue as to whether or not the respondent was justified in rescinding the contract is wholly irrational, which no reasonable person could arrive in the given facts & circumstances.
D. That the work was neither over nor the agreement was closed by mutual consent. The agreement was not coterminous with the time specified for the performance of the agreement. In this case, the petitioner had extended the time upto 05.01.2018 but expiry of the extended period did not result in the expiry of the contract. The requirement of notice was not applicable or relevant to the present facts & circumstances but the Arbitrator erred in relying on clause 62 of the GCC, which required 7 days notice followed by 48 hours notice.
E. That the contract was terminated in terms of clause 61 (vi) (vii) & (x) of GCC and this matter clearly fall under the 'excepted matter' defined in clause 63 of GCC. The respondent clearly failed to follow the procedure laid down in the agreement clause 63 and for this reason, the arbitral OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.5 of 26 proceedings could not have been triggered.
F. That the award in conflict with the public policy of India and is patently illegal. Reference is made of the cases ONGC Limited Vs. Saw Pipes Limited (supra) and Delhi Development Authority Vs. R. S. Sharma & Co. (2008) 13 SCC 80.
5. Along with the petition, an application is moved under Section 34 (3) of the Act for condonation of delay. It is stated that the impugned award dated 17.10.2019 was received by the petitioner on 07.02.2020, which is evident from the postal receipt read with the tracking report. Though, the petition was required to be filed within the period of three months but in view of the prevailing situation arisen out of Covid-19 pandemic, the Supreme Court in suo moto Writ Petition (C) No. 03/2020 having extended the period of limitation w.e.f. 15.03.2020, the petition was filed beyond the period of 90 days.
6. On getting notice of the petition, respondent filed its reply denying the averments made in the petition. It is stated that it had sent a letter dated 12.07.2018 to the General Manager for resolution of disputes. The arbitral proceedings were initiated after the expiry of 120 days and on the letter of the respondent. The petitioner not only concealed the existence of the letter dated 12.07.2018 but also raised the false objections. It is stated that the petitioner had raised objections OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.6 of 26 of 'excepted matter' only in respect of claim no. 4 i.e. loss of profit @ 10% on the cost of the balance work stating to be outside the purview of the arbitration. It has nowhere challenged the entire claim on the ground of 'excepted matter'. It is stated that nil award was passed in respect of claim no. 4.
7. It is stated that the petitioner rescinded / terminated the contract after more than 92% financial work and 98% physical work was completed. As per clause 62 of GCC, before rescinding the contract, the authority must give 7 days notice period followed by 48 hours waiting period and thereafter, terminate the contract, which provision was not complied with by the petitioner and it illegally, unilaterally and arbitrarily terminated the contract. It is stated that as per the information taken through RTI, no contract was rescinded by the BKN Division in the last three years, where the progress was 92% or above. In the present case, the conduct of the petitioner was malafide.
8. It is stated that the issue of jurisdiction must have been raised with the defence submitted by the petitioner before the Tribunal. Section 4 of the Act is referred to contend that in the absence thereof, the petitioner deems to have waived of the objection as to the jurisdiction of the Tribunal. It is however stated that the petition is barred by limitation. It is stated that OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.7 of 26 the petitioner has failed to make out a case for judicial intervention qua the impugned award.
9. It is stated that the exception clause is not applicable to the facts of this case. Principal claim was of Rs. 65,27,821/-, which was less than 20% of the tender amount. Law of constructive res judicata bars the petitioner to take benefit of the exception clause. It is stated that the petitioner never raised any objection before the Tribunal, rather had submitted to the jurisdiction of the Tribunal. At this stage, the petitioner cannot be allowed to raise this issue before this Court. It is stated that the Tribunal has assigned reasons in the impugned award, which do not require interference from this Court. It is stated that initially the respondent had requested the General Manager to refer the disputes vide letter dated 12.07.2018, who after considering the facts & circumstances constituted an Arbitral Tribunal to resolve the disputes. It was the petitioner, who had referred the matter to the Arbitral Tribunal and thus has no right to challenge the award on the ground that the dispute does not come under the purview of Arbitral Tribunal. It is stated that the respondent had complied the provision of clause 63 of GCC. Reference is made of the case Haryana Warehousing Corporation & Ors Vs. M/s Gupta Electric Co. & Ors, 2013 (3) RCR (Civil) 809, Mahavir Rice & General Mills Talwandi Bhai Vs. Punjab State Warehousing Corporation, Chandigarh & OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.8 of 26 Ors, 2010 (4) RCR (Civil) 535.
10. I have heard the arguments advanced by Ld. Counsel Sh.
Surendra Suryan for the petitioner and Sh. Aditya Sharma, Ld. Counsel for the respondent and perused the award, documents and the case laws supra.
11. Section 34 (3) of the Act provides a limitation period of three months for filing objections against an arbitral award. Proviso to Section 34 (3) of the Act provides an extended period of 30 days for filing the application and the court has the discretion to condone the delay, provided sufficient cause is shown by the party which prevented it from approaching the court in the limitation period of three months. In the case of DDA v/s Durga Construction, (2013) SCC Online Del 4451, it was held that although the courts have the jurisdiction to condone the delay, the approach in exercising such jurisdiction cannot be liberal and the conduct of the applicant will have to be tested on the anvil of whether the applicant acted with due diligence and dispatch. The applicant would have to show that the delay was on account of reasons beyond the control of applicant and could not be avoided despite all possible efforts by the applicant.
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12. The proviso to Section 34 (3) of the Act is similar to that of Section 5 of the Limitation Act. It also relates to extension of period of limitation. In the instant case, the impugned award was passed on 17.10.2019. According to the petitioner, it had received the award on 07.02.2020. The petitioner has filed the postal receipt showing the date 07.02.2020. This petition has been filed on 08.01.2021. In the case of Union of India Vs. Tecco Trichy Engineers (2005) 4 SCC 239, it was held that conjoint reading of Section 31 (5) of the Act, Section 3 & Section 34 (3) of the Act would show that the period of limitation would commence only after a valid delivery of an arbitral award under Section 31 (5) of the Act. It is not a matter of mere formality but a matter of substance. Delivery of award to the party, to be effective, has to be received by the party and this delivery sets in motion the period of limitation. In view of the above, the period of limitation of 90 days would start from 07.02.2020, the day, the petitioner received the signed copy of award. The Supreme Court in suo moto Writ Petition (Civil) No. 03/2020 has extended the limitation period we.f. 15.03.2020 keeping in view the situation arisen out of Covid-19 Pandemic in India, which is also applicable in the arbitral proceedings.
13. In view of aforesaid, I am of the view that this petition is OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.10 of 26 maintainable even without an application for condonation of delay.
14. Now coming to the objections, Section 34 of the Arbi-
tration and Conciliation Act reads as:
"34.Application for setting aside arbitral award-
(1)Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3). (2)An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.11 of 26 force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation- I For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India only if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81."
ii) It is in contravention with the fundamental policy of Indian law;
iii) It is in conflict with the most basic notions of morality or justice.
Explanation-II- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
[2 (A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
15. Normally, the general principles are that the decision of the Arbitrator unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even if the court as a court of law would come to a different conclu- sion on the same facts. The court cannot reappraise the evi- dence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. It is not open to the court to set aside a finding of fact arrived at by the arbitrator and only OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.12 of 26 grounds on which the award can be cancelled are those men- tioned in the Arbitration Act. Where the arbitrator assigns co- gent grounds and sufficient reasons and no error of law or mis- conduct is cited, the award will not call for interference by the court in the exercise of the power vested in it.
16. In the case of Associate Builders v/s Delhi Development Authority, (2015) 3 SCC 49, it was held that interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when con- science of the Court is shocked or when illegality is not trivial but goes to the root of the matter. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
17. In Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India Ltd. 2019 SCC OnLine SC 677, the Supreme Court has held that under Section 34 of the Act, a decision which is perverse while no longer being a ground for challenge under public policy of India but would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.13 of 26 back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore would also have to be characterized as perverse.
18. A perusal of record reveals that the petitioner vide letter dated 27.06.2018 giving reference to its earlier letter dated 07.12.2017, contract agreement dated 16.05.2017 and office letters including the letter of the respondent dated 15.06.2018 rescinded the contract in terms of clause 62 of GCC stating that the balance work under the contract will be carried out independently without its participation. An amount of Rs. 47,08,869/- i.e. 10% of the cost of the work was forfeited along with the earnest money of Rs. 3,95,510/- and 5% performance guarantee amounting to Rs. 23,54,440/-. On the request of the respondent, the Additional General Manager, North Western Railway, Jaipur constituted the Arbitral Tribunal vide letter dated 18.04.2019, which has a reference of the respondent's letter for the appointment of the Arbitral Tribunal dated 30.01.2019 requesting the Tribunal to give its decision except in the matters falling in the category of 'excepted matter' as per the agreement giving break up of sums against each individual items of disputes in terms of arbitration clause of GCC. The copy of this letter was sent to the Members of the Arbitral OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.14 of 26 Tribunal as well as the respondent. Vide letter dated 23.04.2019, the Tribunal made a disclosure under Section 12 r/w 6th Schedule of the Act regarding its impartiality. None of the parties raised objections as to the constitution of the Arbitral Tribunal or the impartiality of the Members of the Arbitral Tribunal. The respondent had submitted the statement of facts & claims to the Tribunal raising as many as seven claims for a total sum of Rs. 66,02,821/- i.e. less than 20% of the cost of the tender (Rs. 4,70,88,690/-). There is no record to show that the respondent in its statement of claims had claimed Rs. 1,13,43,674/- as alleged. Its claims were mainly for settlement of final bill, payment under PVC, refund of performance guarantee, earnest money and security deposit, 10% profit on the cost of the balance work and the amount payable under GST. It had claimed interest on the amount @ 24% per annum from the date it became due till the date of payment besides refund of penalty amount of Rs. 75,000/-. The case of Lion Engineering Consultants Vs. State of MP & Ors (supra) is not helpful to the petitioner in any manner. In that case, it was held that there is no bar to plea of jurisdiction being raised by way of an objection under Section 34 of the Act, even if, no such objection was raised under Section 16 of the Act. In the present case, the Tribunal has already held that the amount claimed in the claims is less than 20% of the cost of the tender. This point OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.15 of 26 has also been considered by this Court. That being the position, the claims raised by the respondent before the Tribunal were arbitrable, which have been rightly decided by the Tribunal.
19. Record reveals that the respondent within the stipulated time had completed about 92% (financial progress) and 98.27% (physical progress) of the work. For the remaining stretch, it had applied for the time extension upto 05.01.2018 without penalty and with PVC vide letter dated 04.10.2017 giving the reasons, which the petitioner considered and granted time extension upto 05.01.2018 vide letter dated 21.11.2017 under clause 17 B of GCC with penalty of Rs. 25,000/- per month subject to the condition that the respondent would give acceptance with penalty within a week's time. Though, the respondent expressed its reluctance stating the reasons vide letter dated 14.12.2017 but the petitioner did not consider the request. Record reveals that the petitioner before rescinding the contract never issued any notice either under clause 26 nor under clause 62 and levied penalty of Rs. 25,000/- per month for three months vide letter dated 27.06.2018 after the expiry of validity of the contract. It was held in the case of Union of India Vs. Pundarikakshudu & Sons & Anr, CA No. 8337-8339 of 1997, decided on 09.09.2003 that the rights and obligations of the parties were required to be considered as on the said date OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.16 of 26 and not thereafter meaning thereby that the contract cannot be rescinded after the expiry of its validity.
20. The letter clearly finds mention that the contract has been rescinded under clause 62 of GCC, wherein, issuance of 07 days notice followed by 48 hours notice are obligated and there is no legal escape to this procedure but the petitioner never issued the said notices. The Tribunal in the impugned award has noted that the contract was terminated well over 93% of the work has been completed. It has considered the letter of the petitioner dated 08.08.2018 that no contract was terminated in the Engineering Branch of Bikaner Division in the last three years where 92% or more of the work was completed nor in any case, in the last three years, extension was granted with penalty in cases where financial progress was 90% or more. The Tribunal has also noted that the contract was terminated under clause 62 of GCC without notices as mandated under the clause. In the impugned award, the Tribunal has assigned the reason why the contract termination was not in order particularly when financial progress was more than 92% and physical progress was more than 93%. In the light of the reasons stated above, I do not find force in the contention of the petitioner that requirement of notice was not applicable or relevant in the present case. When the rescind letter itself finds OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.17 of 26 mention that the work has been rescinded under clause 62 of GCC, which mandates issue of the notices. I fail to understand on what basis, the petitioner has alleged that there was no requirement of notice.
21. In this case, the Tribunal has discussed all the claims raised by the respondent individually. In respect of claim no. 1, it accepted the contention of the petitioner that the final payment including the applicable taxes and recovery are only Rs. 94,418.67. It found the recovery made by the petitioner justifiable and awarded the sum as admitted by the respondent.
In respect of claim no. 2 that payment under PVC, it has recorded the submissions of the petitioner, whereby, it had agreed to pay PVC amount and thereafter allowed Rs. 6,26,351.06 after the PVC bill having been examined by the respondent based on the indices issued by the Railway Board vide letter dated 08.08.2017.
In respect of claim no. 3 i.e. refund of performance guarantee, earnest money and security deposit, since, these claims were consequent on the rescind of contract and it has already been held that issue of termination after it had seized to exist was incorrect and that the contract could have been terminated during the currency of the contract under clause 62 of GCC after issue of 07 days notice followed by 48 hours OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.18 of 26 notice, so the amounts against these claims forfeited by the petitioner are liable to be refunded. The Tribunal has rightly awarded a sum of Rs. 47,08,869/- against the said claim.
In respect of claim no. 4 i.e. 10% profit on the cost of the balance work, it is rightly observed by the Tribunal that since the contract ended not on account of short closing of the work, so no amount is payable. It has given the 'Nil' award.
None of the parties has challenged this finding and the same has become absolute and binding on the parties.
In respect of claim no. 5 i.e. costs of arbitration i.e. Rs. 2,00,000/-, the Arbitrator has referred clause 64.6 of GCC, which provides that each party shall bear their own costs, the Tribunal has rightly awarded the 'Nil' amount against this claim.
None of the parties has challenged this finding and the same has become absolute and binding on the parties.
In respect of claim no. 6 i.e. amount payable under neutralization of impact of GST, both the parties had submitted before the Tribunal that as per the GST Laws & Rules, the respondent has to submit necessary documents. In this case, the respondent had submitted the documents vide letter dated 21.05.2019, which were received in the office of the petitioner on 27.05.2019. On their submissions, the Tribunal allowed the claim subject to a ceiling of Rs. 14,07,865/-.
In respect of claim no. 7, the Tribunal has referred OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.19 of 26 clause 16 (3) of GCC & 64.5 of GCC, which provide that if the arbitral award is for the payment of money, no interest shall be payable on whole or any party of the money for any period till the date on which the award is made and has rightly held that no interest is payable on the claimed amount. The Supreme Court in the case of Chittaranjan Maity Vs. Union of India, CA No. 15545-15546/2017 has also held that no interest is payable, if the contract prohibits awarding of interest.
22. In this case, the Tribunal has made a summary of award and awarded a sum of Rs. 54,29,639/- plus an amount towards GST with a ceiling of Rs. 14,07,865/-. As regards pendente lite & future interest, it has been held by the Tribunal that the amount shall be paid within a period of 60 days from the date of the award, failing which, petitioner shall pay interest @ 12% per annum on the amount from the date of award till the date of payment. I do not find any reason to differ with the findings given by the Tribunal. In the case of MSK Projects (I) (JV) Ltd v/s State of Rajasthan & anr, 2011 (8) JT 37 (SC), it was held that Arbitrator is competent to award interest for the period commencing with the date of award or the date of decree or date of realization, which ever is earlier. While amount of interest is a matter of substantive law, the grant of interest for the award period is the matter of procedure. In terms of Section OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.20 of 26 3 of the Interest Act, 1978, the Arbitrator is competent to award interest at the rates prevailing in banking transaction. In the commercial transactions, the prevalent banking rate of interest is around 10% per annum. Adding 2% as provided under Section 31 of the Act, I am of the view that the Arbitrator has rightly allowed rate of interest @ 12% per annum from the date of award till the date of payment.
23. As regards contention that the claims of the respondent fall under the category of 'excepted matter', I am of the view that none of the claims except claim no. 4 fall in the category of 'excepted matter' as defined in clause 63 of GCC, which interalia provides that all disputes and differences of any kind whether during the progress of work or after its completion, whether before or after the determination of contract shall be referred by the contractor to the Railway and the Railway shall within 120 days after receipt of contractor's representation make and notify decisions on all matters in writing provided the matter for which, the provision has been made in clause 8 (a), 18.22 (5), 39, 43 (2), 45 (a), 55, 55-A (5), 57, 57A, 61 (1), 61 (2) and 62 (1) (b) of General Conditions of Contract and in any clause of the Special Conditions of the contract shall be deemed as 'excepted matters' and decisions of the Railway authority, thereon shall be final and binding on the contractor provided OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.21 of 26 further that 'excepted matter's shall stand specifically excluded from the purview of the arbitration clause and not be referred to arbitration.
24. In this case, Additional General Manager, Railways had constituted the Arbitral Tribunal and referred the disputes raised by the respondent. The Tribunal has confined itself within the agreement and the terms of the reference and thereafter passed the impugned award considering the contentions of the parties and the relevant clauses under GCC. It has followed the procedure laid down in the agreement. Further, the petitioner during the arbitral proceedings never challenged the jurisdiction of the Tribunal that the disputes do not come under the purview of the Tribunal.
25. In the case of Patel Engineering Ltd Vs. North Eastern Electric Power Corp Ltd, 2020 (7) SCC 167, it was observed that in paragraphs (39) & (40) of Ssangyong Engineering (supra), the Court reiterated paragraphs (42.2) & (42.3) of Associate Builders (supra), wherein, it was held that construction of the terms of a contract is primarily for Arbitrator to decide, unless the Arbitrator construes a contract in a manner, which no fair minded or reasonable person would take i.e. if a view taken by the arbitrator is not even a possible OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.22 of 26 view to take. It was held that the ground of patent illegality is a ground available under the statute for setting aside a domestic award, if the decision of the arbitrator is found to be perverse or so irrational that no reasonable person would have arrived at the same; or the construction of the contract is such that no fair or reasonable person would take or that the view of the arbitrator is not even a possible view.
26. It was held in the case of State Trading Corporation of India Ltd Vs. Teopfer International Asia PTE Ltd FAO (OS) 242/2014 that Section 34 proceeding which in essence is the remedy of annulment, cannot be used by one party to convert the same into a remedy of appeal. Finality of the award is very important. An interpretation placed on a contract is a matter within the jurisdiction of the Arbitral Tribunal and even if an error exists, this is an error of fact within jurisdiction which cannot be re-appreciated by the Court under Section 34 of the Act. Legal position is no more res integra that the Arbitrator having been made the final Arbiter of resolution of dispute between the parties, the award is not open to challenge on the ground that Arbitrator has reached at a wrong conclusion. If we were to start analyzing the contract between the parties and interpreting the terms and conditions thereof and which will necessarily have to be in the light of the contemporaneous OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.23 of 26 conduct of the parties, it will be nothing else than sitting in appeal over the arbitral award and which is not permissible.
27. In the instant case, there is nothing on record to show that the impugned award on the face of it is against the public policy or the Tribunal acted arbitrarily or lacked in judicial approach or the award is against the fundamental policy of India. All the relevant provisions of the contract were considered. I am of the view that the interpretation of the contract as provided by the Tribunal was reasonable and cannot be said to be perverse that no reasonable person could have reached the same conclusion. It is well settled law that the construction of the terms of a contract is primarily for an Arbitrator to decide unless the Arbitrator construes the contract in a manner that no fair minded or a reasonable person would; in short that the Arbitrator's view is not even a possible view to take.
Conclusion:
28. Now to sum up in the instant case, most of the grounds raised by the parties to challenge the award are factual in nature which have been already considered and adjudicated in the impugned award. It is outside the scope of Section 34 of the Act to reappreciate the entire evidence and come to conclusion because such an approach would defeat the purpose of OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.24 of 26 arbitration proceedings. It has been consistently held that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently, errors of facts cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quality and quantity of evidence to be relied upon when he delivers his arbitral award. Once, it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word on facts. (P.R Shah, Shares & Stock Brokers (P) Ltd v. B.H.H Securities (P) Ltd. [(2012) 1 SCC 594).
29. Having examined the various contentions of the parties on the touchstone of the parameters of interference as explicitly laid down by the Supreme Court in several judgments referred to above, I am of the view that the impugned Award does not suffer from any infirmity or error apparent on the face of record. In the present case, the Tribunal has deliberated on the issues under reference which were within its competence and as per the agreement entered into between the parties. There are no allegations against the Tribunal of misconduct nor of having misconducted the proceedings which have either been specifically alleged by the parties or established. The Tribunal has duly explained the reasons for arriving at its decisions.
OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.25 of 26 There is nothing to indicate that award is in conflict with the basic notions of justice and the fair play or fundamental policy of Indian law or in contravention of the terms of the agreement or it lacks reasoning as pleaded in the objections.
30. For the aforesaid discussions, I am of the view that the impugned award does not call for interference. There is no merit in the petition and the same is hereby dismissed with no orders as to costs.
31. File be consigned to Record Room.
Announced in open court today i.e. 31.05.2022 (Sanjiv Jain) District Judge (Commercial) - 03 Patiala House Courts, New Delhi OMP Comm No. 06/21 Union of India Vs. Rail Tech Infraventure Pvt Ltd Page No.26 of 26