Bangalore District Court
Is A Municipal Corporation Under ... vs The Said Act Of The Arbitrator Amounts To on 28 February, 2023
70
Com.A.S.No.159/2018
IN THE COURT OF LXXXII ADDL.CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH.83)
THIS THE 28TH DAY OF FEBRUARY 2023.
PRESENT:
SUMANGALA S BASAVANNOUR., B.COM, LL.M.,
LXXXII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.A.S.No.159/2018
BETWEEN:
Resustain ability Health
Care Solutions limited
(formerly known as M/s.
Ramky Energy and
Environment Ltd.,) vide
order dated 01.07.2022.
Company registered
under the Companies
Act, 1956 Registered
Office at Door No.6-3-
1089/G/10 & 11,
Gulmohar Avenue, Raj
Bhawan Road,
Somajiguda, Hyderabad-
500 082. (Represented
by authorized person
Dr.D.Rajendra Mohan
Project Head of the
Company
: Petitioner
(represented by Sri. M.K
- Advocate)
70
Com.A.S.No.159/2018
AND
1. Bruhath Bengaluru
Mahanagar Palike,
N.R.Square, Bengaluru-
02. Represented by its
Commissioner
2. The Joint
Commissioner Health &
Solid Waste
Management, Bruhat
Bengaluru Mahanagara
Palike N.R.Square,
Bengaluru-02
3. The Deputy
Commissioner [Health]
Bruhat Bengaluru
Mahanagara Palike
N.R.Square,
Bengaluru-02
: Respondents
(Represented by Sri. S N
Prashanth Chandra -
Advocate)
Date of Institution of the suit 27.07.2018
Nature of the suit (suit on
pronote, suit for declaration & Petition for setting aside
Possession, Suit for injunction Arbitral Award
etc.)
70
Com.A.S.No.159/2018
Date on which judgment was 28.02.2023
pronounced
Total Duration Year/s Month/s Day/s
04 07 01
(SUMANGALA S BASAVANNOUR),
LXXXII Addl. City Civil & Sessions Judge,
Bengaluru.
JUDGMENT
This is a Petition filed under Section 34 of the Arbitration & Conciliation Act, 1996 allow the present suit and set aside the impugned award dated 03.05.2018 passed by the Sole Arbitrator, Arbitration and Conciliation Centre, Bengaluru, in Arbitration Case No.01/2017.
2. The Brief facts of the Plaint are as follows:-
The Plaintiff is the Respondent in AC No: 1/2017; the Plaintiff is a Municipal Corporation under Karnataka Municipal Corporation Act, 1996 which invited bidders for development, Operation, Maintenance and Transfer of Integrated Municipal Solid Waste (for short MSW), processing and engineered sanitary could filed at Mavallipura Bengaluru; The Defendant who is the Claimant in AC No: 1/2017, before the Respondent, was awarded the contract on 11.08.2004 which was called as 70 Com.A.S.No.159/2018 Concession Agreement; the Defendant was termed as Concessionaire and the Plaintiff Mahanagara Palike was the Concession Authority; the total period of Concession Agreement was 20 years; the Defendant took over the project and started processing MSW; certain disputes arose between the parties resulting to the Defendant invoking Arbitration Clause and filing AC No: 1/2017 before the Respondent for the following relief:
1. Declare that the termination of Concession Agreement by the Termination Order dated 28.05.2016 (Annexure "N") as arbitrary, illegal and null and void; and
2. Direct the Respondents to pay to the Claimant a sum of Rs.108,44,03,582/- claimed under several heads as indicated at Annexure AD; and
3. Pass such other further orders as deemed fit in the facts and circumstances for the case in the interest of justice and equity.
The Plaintiff entered appearance and filed its detailed objection statement inter alia opposing the claim and also filing a Counter Claim on 15.05.2017. The parties produced documents namely concession agreement, the various correspondences exchanged between the parties, reports, bills 70 Com.A.S.No.159/2018 and invoices etc., as documents in support of the pleadings; the parties did not opt to adduce any oral evidence and relied on their documents and the agreement was canvassed and the Hon'ble Arbitral Tribunal, by its award dated 30.05.2018 was pleased to deliver the award as below:
The Respondent BMP is directed to pay to the claimant a sum of Rs.4 crores with interest at the rate of 9% per annum from the date of termination of Concession Agreement i.e., from 28.05.2016 till realization.
3. Being Aggrieved by the Plaintiff has challenged the same on the following grounds:-
1. The Arbitration Award passed by the Learned Arbitrator is wholly arbitrary and untenable in so far as awarding of compensation to the Claimant/Petitioner herein. The Learned Arbitrator has failed to consider the claim of the Petitioner in a proper perspective. The impugned award has been passed without appreciating the pleadings and material documents put forth by the Petitioner/Claimant along with the Claim Petition.
2. The materials and documents produced before the Arbitral Tribunal and the Arbitrator has not been appreciated properly. As such, the entire award is vitiated as it is against Public Policy and on account of non-appreciation of 70 Com.A.S.No.159/2018 evidence/material documents. The Hon'ble Supreme Court has held that when the Arbitrator does not appreciate the evidence and documents produced before the Arbitrator would amount to grave misconduct and negligence on part of the Arbitrator. In the present case, the Petitioner had claimed a sum of Rs.22,16,26,799/- against respondent BBMP under the head "Book Value of Fixed Assets" as on date of termination.
However, the Arbitrator has overlooked the said claim made by the Petitioner and has arbitrarily held that the Petitioner is not entitled for the claim of Rs.22,16,26,799/- from the Respondents. The said Act of the Arbitrator amounts to misconduct and negligence and as such the arbitral award is bad in law.
3. The Arbitrator at paragraph 97 in the Award has observed as under-
".......... The Claimant has also sought a sum of Rs.22,16,26,799/- towards the book value of fixed assets as on the date of termination and the said amount is claimed at the rate of 120% of the book value which comes to Rs.20,48,70,627/- and adding interest at a rate of SBI PLR + 2% p.a. the total amount thus claimed is of Rs.22,16,26,799/-".
A bare perusal of the aforesaid paragraph clearly states 70 Com.A.S.No.159/2018 that the Petitioner herein had sought a sum of Rs.22,16,26,799/- towards the book value of fixed assets as on the date of termination and the said amount is claimed at the rate of 120% of the book value which comes to Rs.20,48,70,627/- and adding interest at a rate of SPB PLR + 2% p.a. the total amount thus claimed is of Rs.22,16,26,799/-. In other words, the Claimant had sought for the aforesaid amount towards the book value of the fixed assets in the claim petition filed by the Petitioner before the Arbitral Tribunal. However, the Learned Arbitrator has held that the Petitioner is failed to establish the relief sought in as much as the claim towards the book value of the fixed assets. Therefore, the Arbitral Award is liable to be set aside.
4. The Learned Arbitrator at paragraph 95 of the impugned Arbitral Award has held that the Petitioners are entitled for 120% of book value of fixed assets. It is submitted that though the Learned Arbitrator has held that the Petitioner is entitled to the claim of Rs.22,16,26,799/- towards the book value of fixed assets yet the Learned Arbitrator has held that the Petitioners are not entitled to the said claim. Therefore, the impugned Arbitral Award is liable to be set aside.
5. In Prayer No.(ii) in the claim petition which reads as under:
70Com.A.S.No.159/2018 "(ii) Direct the Respondents to pay to the Claimant a sum of Rs.108,44,03,582/-
claimed under several heads as indicated at Annexure AD"
The aforesaid prayer clearly states that the Petitioner had sought a direction against the Respondents to pay to the Petitioner a sum of Rs.108,44,03,582/- claimed under several heads as indicated under Annexure "AD" to the Claim Petition. In other words, the Petitioner had sought a claim against the Respondents-BBMP directing them to pay the amounts mentioned in the summary of claims vide Annexure "AD" to Claim Petition as one of the reliefs sought before the Arbitral Tribunal. It is pertinent to state that the summary of the claims vide Annexure "AD" also states the claim toward the Book Value of Fixed Assets and interest on payment of Rs.22,16,26,799/-. Despite, such a relief been claimed by the Petitioner, the Learned Arbitrator without appreciating the said fact has arbitrarily held that the Petitioners are not entitled for the claim towards the book value of fixed assets and interest on payment. Therefore, the Arbitral Award is bad in law.
6. The Learned Arbitrator in his arbitral award has excluded the Petitioners claim towards loss of interest on investment of own funds made by the Petitioner which amounts to a sum of Rs.38,57,36,459/-. The Petitioner had invested 70 Com.A.S.No.159/2018 Rs.32,72,16,112/- by obtaining financial assistance from the bank with rate of interest payable at the rate of 13% p.a. Consequently, calculating the interest payable from April 2006- 07 to 2016-17, the said amount sums up to Rs.38,57,36,459/-. This relief has been sought for vide Annexure "AD" of the claim petition as Loss of interest on investment of own funds. The learned Arbitrator has excluded this claim from his award without assigning any reasons in that regard. Absolutely there is no appreciation of the evidence and material documents while passing the Award by Learned Arbitrator, and as such, the impugned Arbitral Award is bad in law.
7. The Petitioner's claim for the Tipping Fee has been made vide Annexure "AD" to the claim petition has also been overlooked. The Learned Arbitrator has failed to acknowledge that the Petitioner is entitled to the tipping fee as agreed to in the original agreement between the BBMP and the Petitioner. This fee includes the pending payments of sum of Rs.2,98,88,969/- along with the interest on pending payments at the rate of PLR + 2% interest which is Rs.1,02,12,099/-. This entire claim amounts to Rs.4,01,01,068/- and relief for the same is claimed by the Petitioners vide Annexure "AD". If contentions of Arbitrator that there existed then Petitioner/s will be entitled to the tipping fee at the rate of Rs.240/- per tonne. Since, the change of Rs.158.40 has not been considered effective, the 70 Com.A.S.No.159/2018 Petitioner should have been granted the tipping fee as per the rates agreed under the Concession Agreement i.e. Rs.240 per tonne. Hence, the Arbiterator has erred in overlooking this claim towards the tipping fee.
8. The learned Arbitrator has failed to appreciate the contentions advanced by the Petitioner/Claimant in a proper perspective. It was the specific case of the Petitioner/Claimant that, he is entitled for compensation and damages for the illegal termination of the Concession Agreement Ex.P1. In that regard, the Petitioner/Claimant specifically referred to Sec.73 & 74 of the Indian Contract Act to the effect that, once there is a breach of contract by the Respondents, the Petitioner/Claimant is entitled for compensation in accordance with law. In the present case, the Learned Arbitrator categorically held that the Termination Order is arbitrary and illegal. Further, it was also observed that the termination Order is not owing to breach of the contract at the hands of the Petitioner/Claimant and rather, it is on account of the breach of the terms of the Concession Agreement by the Respondent/BBMP. Thus, the Petitioner/Claimant ought to have been awarded the compensation, as claimed in the Claim Petition.
9. The Learned Arbitrator has categorically observed as under-
70
Com.A.S.No.159/2018
"Therefore, this Tribunal has no
hesitation in answering the Issue No.1 in
favour of the Claimant/Petitioner. In other words, the Respondent has committed breach of the Concession Agreement at the very threshold itself by not handing over 100 Acres of land as per the contractual terms of the Claimant".
The aforementioned observation made by the Learned Arbitrator has made it clear the Termination Order was bad and illegal. Notwithstanding the above categorical observation, the learned Arbitrator has failed to award the compensation as claimed by the Petitioner/Claimant on erroneous assumptions. The compensation sought for by the Petitioner/Claimant under several heads of accounts ought not to have been rejected or refused.
10. The Learned Arbitrator in Para 51, has specifically observed that Ex.P4 Termination Notice is verbatim similar to the Termination Order Ex.P13. It was also observed that the only difference between Ex.P4 and Ex.P13 is that "Termination Notice" and "Termination Order". In para 52 of the Award it has been observed that, there is no compliance by the Respondent- BBMP with regard to the terms and conditions of the Concession Agreement and no preliminary notice was issued to the Petitioner/Claimant to rectify the defects. Further observatin is 70 Com.A.S.No.159/2018 that, the Respondent-BBMP has not followed the manner of termination of contract by complying the requirements of Clause 9.2 (a) (ii) and Clause 9.2 (a) (iii) of the Concession Agreement. In para 53, the Learned Arbitrator has observed as under-
"On combined reading of Ex.P4 and Ex.P.13, it becomes clear that the Respondent/BBMP has failed to comply with the terms and conditions of the Concession Agreement and did not follow the mandatory requirement of issuing a preliminary notice to the Petitioner/Claimant to rectify any of the defects"
The Learned Arbitrator having observed above has not assigned any reasons, much less justifiable reasons for not awarding compensation as claimed by the Petitioner/Claimant herein.
11. The Learned Arbitrator after considering the contentions advanced by the Petitioner/Claimant herein in paragraph 56 has observed as under-
"Thus, there is also failure on the part of the Respondent in complying with the requirements of Article 11.1, 11.1(b) of the Agreement, Ex.P1. But the Respondents 70 Com.A.S.No.159/2018 issued Termination Order on 28.05.2016 as per Ex.P13."
The Learned Arbitrator has observed as under-
"Thus, on a careful examination of the documents produced by both the parties and having regard to the relevant clause of the Concession Agreement and in particular, the manner in which the Respondents has gone on to issue the Ex.P4 the Notice of Termination and Termination Order Ex.P13, it becomes clear that the Respondent has failed to comply with the terms and conditions of the Agreement Ex.P1 and in the absence there being preliminary notice issued to the Petitioner/Claimant to rectify the defects and in the absence of the Respondents not complying with the requirements of Clause 9.2 of the Agreement Ex.P1, the contentions of the learned Senior Counsel for the Petitioner/ Claimant that the order of Termination is illegal and arbitrary will have to be accepted as having narrated in it."
The aforementioned observation supports the contentions advanced by the Petitioner/Claimant. The Learned Arbitrator having given elucidative reasons and holding that the Termination Order is arbitrary and illegal, ought to have awarded compensation in terms of the Agreement entered into 70 Com.A.S.No.159/2018 between the parties. In other words, despite the observation made above, the Learned Arbitrator has failed to award proper and appreciate compensation to the Petitioner/Claimant.
12. The Learned Arbitrator in the Award has made specific observation to the effect that, the Petitioner/Claimant has sought for compensation under several heads of accounts and the summary of those claims are in a nutshell produced as Annexure "AD". It is also observed by the Learned Arbitrator in para 81 that the Concession Agreement provids for Termination payment as per Clause 9.2 (f) equal to 120% of book value of the assets as on Termination date. However, in para 82 of the Award, the Learned Arbitrator observed that the independent Chartered Accountant mutually agreed upon by the parties not having been appointed, certificate issued by an Independent Chartered Accountant appointed by the Petitioner/Claimant is not of any assistance. The learned Arbitrator ought to have noticed that the Respondent/BBMP did not raise any objections to the claim made under several heads of account as per Annexure "AD". That being so, the Learned Arbitrator is erroneous in refusing to award compensation towards value of the fixed assets at 120% of the book value towards Termination payment on technical grounds.
70Com.A.S.No.159/2018
13. The Learned Arbitrator has failed to appreciate the fact that the certificate issued by the Chartered Accountant is valid and sufficient to establish the claim amount. Though, the said certificate is rebuttable, in the present case, the Respondent/BBMP has not denied or pointed out any objections to the said document produced along with the Claim Petition, marked as Ex.P23. Further, the Petitioner/Claimant has also relied upon the decisions of the Hon'ble Courts to the effect that the certificates issued by the Chartered Accountant can be accepted as a valid document to support or establish the claim amount. It is therefore, the Learned Arbitrator is not justified in brushing aside the certificate issued by an independent Chartered Accountant at Ex.P23.
14. The Learned Arbitrator is not justified in disbelieving the document produced such as, certificate issued by the Chartered Accountant relating to summary of loss of interest on own funds and value of fixed assets at 120% of the book value marked as Ex.P22 & Ex.P23. At para 83, the Learned Arbitrator has observed that the certificate issued to the address as "25- 30, 2nd Cross, Raghavendra Nagar, Hennur Ring Road, Kalyan Nagar Post, Bengaluru-560 043" and whereas in the Concession Agreement, the address is mentioned as "No.8, Mavallipura, Hesaraghatta Hobli, Bengaluru North Taluk" and thus, it is not known whether the investment made by the Petitioner/Claimant 70 Com.A.S.No.159/2018 is in respect of the very same site or not the said observation of the Learned Arbitrator is wholly erroneous for two reasons. Primarily, it is not the case of the Respondent-BBMP that the Petitioner/Claimant has not made any investments for establishment of Plant at Mavallipura. Secondly, the material documents produced on record would clearly establish and demonstrate that the Petitioner/Claimant was asked to establish the Plant & Machinery at Mavallipura location and the same having been established the Plant & Machinery was in operation even as on date of filing the Claim Petition. In view of mismatch of the address reflected in the certificate issued by the Chartered Accountant and Concession Agreement, the claim made by the Petitioner/Claimant could not have been rejected, that too in the absence of any objections towards the same by the Respondent/BBMP.
15. It is pertinent to note that the Learned Arbitrator in para 83 and 84 of the Award "83. In Addition to the above it has to be mentioned that in Ex.P22 with regard to the investment made the site has been mentioned as "25-30, 2nd Cross, Raghavendra Nagar, Hennur Ring Road, Kalyan Nagar Post, Bengaluru-560 043". So also in Ex.P23 which is the report of the chartered accountant in respect of the book value of the assets as on 28.05.2016, the address of the unit located is 70 Com.A.S.No.159/2018 mentioned as "25-30, 2nd Cross, Raghavendra Nagar, Hennur Ring Road, Kalyan Nagar Post, Bengaluru-560 043". Whereas, in the Concession Agreement Ex.P1, the site address has been mentioned in the definition site as "No.8, located Mavallipura Hesaraghatta Hobli, Bengaluru North Taluk". Even in the claim petition, the address i.e. given in respect of the site address is the one that is mentioned in the definition of site in Ex.P1. Thus, it is not known whether the investment report Ex.P22 and the book value of assets report at Ex.P23 are in respect of the site that is mentioned in Ex.P1.
84. For the aforesaid reason also, these two documents Ex.P21 and Ex.P23 cannot be of any assistance to the claimant and as such the question of allowing the amounts towards investment and book value of assets as claimed does not arise."
It was held that the certificate of the Chartered Accountant cannot be relied upon as the Chartered Accountant's Certificate has a slight discrepancy with reference to the address of the Petitioner. It is humbly submitted before this Court that the Respondent ( BBMP) itself has acknowledged vide letter dated 07.08.2015 that all further correspondences must be made to the address referred in therein which is the same address referred in the Chartered Accountant's certificate. Furthermore, all bills of tipping fee have been raised from the same address as mentioned in the Chartered Accountant's certificate. The relevant documents having been produced before the Learned 70 Com.A.S.No.159/2018 Arbitrator ought to have been considered by the Learned Arbitrator before pointing out the discrepancy in the Award.
16. The Learned Arbitrator has committed serious error in refusing to Award Tipping Fee as per Clause 7.1 to 8.3 of Article 7 of the Concession Agreement Ex.P1 on the ground that the amount claimed by the Petitioner/Claimant is not as per the Agreement Ex.P1 and the amount claimed by the Petitioner/Claimant is not reflected under the Concession Agreement by making amendment as per Clause 13.6 of the Concession Agreement. The said finding of learned Arbitrator is wholly misconceived and untenable. It is no doubt true that the Schedule 7 of Concession Agreement provides different Tipping Fee rates for different periods, as indicated there under. However, the Petitioner/Claimant and the Respondent-BBMP have mutually agreed for a fixed Tipping Fee instead of weighing the Tonnage or Quantity of MSW received and the said amount was also approved by the Council of the Bruhat Bengaluru Mahanagara Palike. The Tipping Fee raised by the Petitioner/Claimant was in accordance with the mutually agreed rates and which is also approved by the Corporation Council which tantamount to amendment by the Parties as Respondent has paid the mutually agreed tipping fees in past. Indeed, the said fact was also admitted during the course of the arguments by the Respondent-BBMP. It is also a fact that the Tipping Fee 70 Com.A.S.No.159/2018 claimed by the Petitioner/Claimant herein is lesser than the amount mentioned or indicated in the Concession Agreement Ex.P1. That being so, there was no difficulty for the Learned Arbitrator in awarding the Tipping Fee at the rates agreed between the parties. Even assuming for the sake of argument, but not conceding that the Tipping Fee claimed by the Petitioner/Claimant is not in accordance with the rates mentioned in Ex.P1, then also, the Learned Arbitrator ought to have awarded Tipping Fee at the rates mentioned in the Concession Agreement. Instead, the Learned Arbitrator has totally refused to award Tipping Fee in its entirety, even according to the rates as specified under the Concession Agreement Ex.P1. The said action of the Learned Arbitrator does not stand to reason and also unjust in the facts and circumstances of the present case.
17. The Learned Arbitrator has erred in refusing to grant Tipping Fee, observing that there is a direction issued by the Hon'ble High Court of Karnataka in W.P.No.24739/2012. It is submitted that, the bills raised by the Petitioner/Claimant in relation to the Tipping Fee from inception i.e. commitment of the project till 2012 were duly certified by the Project Engineer, appointed by the Respondent/BBMP. The bills were cross- checked and verified at various levels by the Respondent-BBMP and were settled without any demur. However, the payment of 70 Com.A.S.No.159/2018 Tipping Fee from 2012 was stopped on account of the fact that the Pollution Control Board issued notice to the Bruhat Bengaluru Mahanagara Palike from operating the Plant & Michinery at Mahavallipura location. As there were allegations of non-compliance of environment laws by the Respondent BBMP, the Hon'ble High Court directed the Bruhat Bengaluru Mahanagara Palike not to make further payment. However, the Hon'ble High Court permitted reopening of the Plant & Machinery for operation by the Order dated 17.07.2014. Again, the operation was commenced by the Petitioner/Claimant and thereby the Tipping Fee bills were submitted to the Respondent- BBMP by the Claimant/Petitioner. That being the factual matrix, the learned Arbitrator has committed serious error on holding that there is a direction issued by the Hon'ble High Court and as such, the Tipping Fee cannot be granted. There is no prohibition or any order passed by the Hon'ble High Court pursuant to the Order dated 17.07.2014 restraining the Respondent-BBMP from making payment or settling the Tipping Fee. In other words, the Order passed earlier from the Hon'ble High Court cannot be construed to mean that there is a total prohibition on payment of Tipping Fee to the Claimant/Petitioner. Apart from the above, the Respondent-BBMP cannot expect the Claimant/Petitioner to operate the Plant free of cost. The Respondents are bound by terms of Contract and the Tipping Fee ought to have been 70 Com.A.S.No.159/2018 settled.
18. The Learned Arbitrator has erred in not awarding the compensation in terms of the provisions of the Concession Agreement. The Learned Arbitrator at several places observed that the Respondent-BBMP has not disputed the claims made under several heads as put in a nutshell of summary of claims at Annexure "AD". Notwithstanding the said observation, the compensation has not been properly awarded despite the Petitioner/Claimant making out a case to the satisfaction of the Tribunal. The summary of claims made by the Petitioner/Claimant at Annexure "AD" is as per terms and conditions of the Concession Agreement Ex.P1. It is therefore, the award passed by the Learned Arbitrator in refusing to grant the remaining Rs.104,44,03,582/- is liable to be set aside. In other words, the Petitioner/Claimant is seeking for awarding of compensation of the remaining sum/claim of Rs.104,44,03,582/- at the hands of this Court.
19. The award passed by the Learned Arbitrator is wholly illegal, contrary to facts of the case, document on record and to law.
20. The Learned Arbitrator has wholly erred in not applying mind to the judgments relied on by the Petitioner 70 Com.A.S.No.159/2018 which are squarely applicable to the facts of the case., The Arbitrator has just referred the said judgment and failed to apply the ratio of the same.
4. The respondent resisted the claim of the Petitioner and filed statement of objection.
The Applicant/ Plaintiff invited tender notification seeking proposals from eligible bidders for implementing the project known as "Develoopment, Operation, Maintenance and Transfer of Integrated Municipal Solid Waste, Processing and Engineered Sanitary Landfill at Mavallipura, Bengaluru". The bid submitted by the Respondent/ Defendant being the most competitive and responsive, the same was accepted by issuing a Letter of Acceptance. In other words, the implementation of the project was awarded in favour of the Respondent/ Defendant. Pursuant to the issue of Letter of Acceptance, Concession Agreement was executed between the parties on 11.08.2004 for implementation of the project. Subsequently, a Supplementary Agreement was also executed. The Concession Agreement specificallly provides that the project shall be for a period of 20 years or for a period, which may be extended on mutually agreed terms. Under the Concession Agreement, the Applicant/ Plaintiff was under an obligation to provide 100 Acres of land in Survey No.8 located in Mavallipura, Hesaraghatta Hobli, 70 Com.A.S.No.159/2018 Bengaluru North Taluk, as described in detail in Schedule-I in which, the Respondent/ Defendant was expected to establish the Plant and Machinery for processing the Municipal Solid Waste including waste to energy plant. The Concession Agreement further provided that the Applicant/Plaintiff had to hand over the site of 100 Acres of land within 15 days from the appointed date in vacant and peaceful physical possession for the purpose of implementing the project. The responsibility and the obligation of providing 100 Acres of land was not discharged by the Applicant/ Plaintiff in as much as the Respondent/ Defendant was given only 44 Acres of land. The said fact is not in dispute in as much as the Applicant/ Plaintiff has categorically admitted in the Arbitral proceedings. It is the specific case of the Respondent/ Defendant that the failure on the part of the Applicant / Plaintiff in not handing over 56 Acres of land has resulted in the fundamental breach of the contract and it has adversely affected the entire performance of the Respondent/ Defendant. Since the entire 100 Acres of land was not handed over, the Respondent/ Defendant could not avail financial assistance from the banks and other financial institutions, and as such, the Respondent/ Defendant was required to mobilize by diverting its own funds for establishing the project facilities. Despite the above, the Respondent/ Defendant established the plant and machinery for the scientific disposal of the Municipal 70 Com.A.S.No.159/2018 Solid Waste generated in Bengaluru City. The Respondent/ Defendant was required to convert the Municipal Solid Waste into compost and the process of conversion involved several stages. The by-product from the process of convenrsion i.e. inerts/ rejects was to the extent of 50% and the same was required to be sent to the landfill. Though the Respondent/ Defendant had obtained approvals for using of 50% by-products in the 'nature of inerts/ rejects for generation of energy under the caption "Waste to Energy", the Applicant/ Plaintiff have failed to proceed with the same further by executing the Agreement. The Respondent/ Defendant has followed all the terms and conditions of the Concession Agreement during its operation. On the other hand, the Applicant/ Plaintiff has failed to comply with the terms and conditions of the Concession Agreement; over and above there was no co-operation & co- ordination from the Applicant/ Plaintiff for the effective implementation of the project. The Applicant/ Plaintiff started sending large quantity of Municipal Solid Waste for processing as against the agreed quantity between the parties as enumerated in Clause 5.11 (d) of the Concession Agreement with the existing available place, the Respondent / Defendant managed to processing of the excess quality of Municipal Solid Waste sent to the plant. In view of the same, the inerts/ rejects started piling-up in the small extent of 44 Acres of land. As the 70 Com.A.S.No.159/2018 same was beyond the control of the Respondent/ Defendant in as much as the Applicant/ Plaintiff failed to transport the inerts / rejects to the landfill as agreed upon under the Concession Agreement. The nearby villagers interfered with the operation of the plant, as it was causing annoyance to them during rainy season. That apart, the vested interest and real estate lobby also wanted the plant to be closed in order to develop the nearby surroundings. The villagers have beaten the officials of the BBMP including the senior officials and a case was filed by the BBMP officials to that extent. Though, the said fact was brought to the notice of Applicant/ Plaintiff no positive steps were taken and in the meanwhile the Karnataka State Pollution Control Board directed the Applicant/ Plaintiff to stop supply of Municipal Solid Waste to the plant till the entire waste dumped/ accumulated is processed for composting. The Respondent / Defendant was also directed not to receive Municipal Solid Waste for a period of 3 years. Nevertheless, the Respondent/ Defendant always performed its obligations notwithstanding the several hurdles and obstacles during its operation. Shockingly, the Applicant/ Plaintiff has stopped payment of "Tipping Fee" as per Article 7 of the Concession Agreement. The Tipping Fee is the actual cost incurred by the Respondent / Defendant towards the processing / converting of Municipal Solid Waste into compost. The bills raised by the Respondents were in 70 Com.A.S.No.159/2018 accordance with the Article 7 of the Agreement. In the meanwhile, an order came to be passed by the Hon'ble High Court in a Public Interest Petition restraining the BBMP, from making payments to the contractors without further orders from the Hon'ble Court. Accordingly, the Applicant/ Plaintiff informed the Respondent/ Defendant that the Tipping Fee cannot be settled. However, subsequently, the Hon'ble High Court by the order dated 17.07.2014 directed the Applicant/ Plaintiff to explore the possibilities of making use of the facilities made available by the Respondent/ Defendant. The BBMP was also directed to send Municipal Solid Waste for processing only to the extent which can be processed at the site and to lift inerts/ rejects from the plant area without further dumping of garbage. The Applicant/ Plaintiff having failed to abide by the terms of the contract wrongfully rescinded the Concession Agreement and issued Termination Notice dated 06.04.2015 upon Respondent/ Defendant. As such, the Respondent/ Defendant invoked Clause 11.1 of Article 11 for an amicable resolution raising several disputes, apart from responding each and every issue raised in the Termination Notice. Indeed, the officials of the Applicant/ Plaintiff themselves have admitted that the Respondent / Defendant is proactive and there is a steady progress in the operation of the plant and machinery. A meeting was conducted between the officers of the Applicant/ Plaintiff 70 Com.A.S.No.159/2018 and the Respondent/ Defendant and in which the Respondent/ Defendant was called upon to provide a statement indicating the company's commitments. The same was promptly submitted by the Respondent/ Defendant indicating their short- term and long-term solutions vide communication dated 11.06.2015. After lapse of more than one year, the Applicant/ Plaintiff issued Termination Order dated 28.05.2016 and thereby Respondent/ Defendant was called upon to hand over all the project facilities. Initially, the Termination Notice came to be questioned in Arbitration Application before City Civil Court and also seeking for interim measures. Subsequently, the Respondent/ Defendant having no other option but to invoke Clause 11.2 of Article 11 referring the dispute to the Arbitration. Pursuant to the reference of the dispute to Arbitration i.e., to the Sole Arbitrator, the Respondent/ Defendant herein had filed the claim petition in Arbitration Case No.1/2017. The sole Arbitrator having answered all the issues in favor of the Respondent/ Defendant has partly allowed the claim petition, thereby awarding a sum of Rs.4 Crores as against Rs.108 Crores claimed by the Respondent]/ Defendant herein. Against which, the Respondent/ Defendant herein has preferred A.S. No.159/2018 seeking for awarding the remaining part of the claim. The present A.S.No.163/2018 is filed by the Applicant/ Plaintiff as against Rs.4 Crores awarded in favour of the 70 Com.A.S.No.159/2018 Respondent/ Defendant herein. To consider the observations made by the Sole Arbitrator for the purpose of considering the present application filed by the Applicant/ Plaintiff herein. The Arbitrator has categorically observed that the Tribunal has no hesitation in answering Issue No.1 in favour of the Claimant/ Petitioner. In other words, the Respondent/ Defendant has committed breach of the Concession Agreement at the very threshold itself by not handing over 100 Acres of land as per the contractual terms of the Claimant. Notwithstanding the above categorical observation, the Arbitrator has awarded only a sum of Rs.4 Crores as against Rs.108 Crores claimed by the Respondent/ Defendant herein. The Arbitrator has further observed that Ex.P.4 Termination Notice is verbatim similar to the Termination Order Ex.P.13. It is further observed that the only difference of Ex.P.4 and Ex.P.13 IS "Termination Notice" and " Termination Order". The Arbitrator has also observed that there is no compliance by the Applicant/ Plaintiff with regard to the terms and conditions of the Concession Agreement in as much as no preliminary notice was issued to the Respondent/ Defendant to rectify the defects. Apart from the above, it was also observed that the BBMP has not followed the manner of termination of contract by complying the requirements of Clause 9.2 (a) (ii) and Clause 9.2 (a) (ii) of the Concession Agreement. Despite the categorical observation, the Arbitrator 70 Com.A.S.No.159/2018 has erroneously rejected the claim of the Respondent/ Defendant except for a sum of Rs.4 Crores as has been awarded. Hence, he prayed to dismiss the petition.
5. I have heard the arguments for the Advocate for the both Advocates.
6. 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?
7. 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
8. Point No. 1: - The settled position in law that in proceedings under Section 34 of the Act, the Court does not sit in appeal over the Award. Thus, an Arbitral Award passed by an Arbitrator shall not be interfered with lightly. The Court can 70 Com.A.S.No.159/2018 neither sit in appeal nor reassess or re-appreciate the evidence and the Arbitral Award can only be interfered with grounds stipulated in Section 34(2) of the Act.
9. It is settled position in law that an Award could be set aside if it is contrary to :-
(a) fundamental policy of Indian law; or
(b) the interest of India ; or
(c) justice or morality ; or
(d) in addition, if it is patently illegal.
10. The illegality must go to the root of the matter and if the illegality is of trivial nature, it cannot be held that the award is against the public policy. Award could also be set aside, if it is so unfair and unreasonable that it shocks the conscience of the Court. Such an award is opposed to public policy and is required to be adjudged void.
11. The Hon'ble Supreme Court in the landmark judgment reported in 2015(3) - S.C.C. - 49 (Associate Builders vs. Delhi Development Authority), (which is relied on by the Advocate for the Defendent) while setting aside the judgment passed by the Division Bench of Hon'ble High Court of Delhi culled out the legal principles after traversing the judicial pronouncements passed by the various High Courts and the 70 Com.A.S.No.159/2018 Hon'ble Apex Court. In the said case, it is held that it is important to note that the 1996 Act was enacted to replace the Arbitration Act, 1940 in order to provide for an Arbitral procedure which is fair, efficient and capable of meeting the needs of Arbitration and also to provide that the tribunal gives reasons for an Arbitral Award; to ensure that the Arbitral Tribunal remains within the limits of its jurisdiction and to minimize the supervisory role of Courts in the Arbitral process.
12. In the said decision, the Hon'ble Apex Court observed that it must be clearly understood 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 fact 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 quantity and quality of evidence to be relied upon when he delivers his Arbitral Award. Thus, an Arbitral Award based on little evidence or no evidence which does not measure up in quality to a train legal mind would not be held to be invalid on this count.
13. In view of the above mentioned discussions, the position in law is well settled that while dealing with an award under Section 34 of the Act, the Courts are not supposed to sit in appeal and re-appreciate the evidences as an appellate 70 Com.A.S.No.159/2018 Court. Hence, the findings of the facts by the Arbitral Tribunal, if based on evidence, even where a different opinion can be held on the basis of that evidences, the findings given by the Arbitrator has to be accepted and the Courts cannot substitute its opinion. The power to interpret the contracts also lies with the Arbitrator. Once the Court reach to the conclusion that the Arbitrator has acted within its jurisdiction, even if the Courts are of the view that the opinion of the Arbitrator is wrong, the same cannot be disturbed unless it is against the public policy.
14. In the present case, the petitioner/claimant has challenged on this award on the ground that, the Petitioner had claimed a sum of Rs.22,16,26,799/- against respondent BBMP under the head "Book Value of Fixed Assets" as on date of termination. However, the Arbitrator has overlooked the said claim made by the Petitioner and has arbitrarily held that the Petitioner is not entitled for the claim of Rs.22,16,26,799/- from the Respondents. The said Act of the Arbitrator amounts to misconduct and negligence and as such the arbitral award is bad in law.
15. This fact considered by the learned arbitrator has considered this fact in issue No. 4 and 5. The learned arbitrator has discussed in Para - 81 that in Ex.P.1 which is the concession 70 Com.A.S.No.159/2018 agreement with regard to termination payments. Clause 9.2 (f) dealing with this aspect reads thus:
"Termination payments" : Upon termination of this agreement on account of BMP event of default, the concessionaire shall be entitled to withdraw the performance security, if subsisting and receive from BMP, termination payment equial to 120% of the book value of the fixed assets as on termination date, made by the concessionaire towards the project facilities, as determined by an independent firm of chartered accountants mutually agreed upon and appointed by the parties for the purpose and amounts in the post closure performance account."
16. In para 82 it clear from the above clause that the entitlement to withdraw the performance security, termination payment in respect of fixed assets is dependent upon a determination by independent firm of chartered accountants to be mutually agreed upon and appointed by the parties. In the instant case, the claimant has produced at Ex.P.23 the report given by the chartered accountant D. Karunakar Rao on 22.12.2016 with regard to the book value of the fixed assets as on 28.05.2016. However, the said certificate or report is not in accordance with the requirement of clause 9.2(f) of Ex.P.1. The chartered accountant is the one chosen by the claimant and not one who is mutually agreed upon and appointed by the parties. The Respondent is not a signatory to the appointment of the 70 Com.A.S.No.159/2018 above mentioned chartered accountant for determination of the book value of fixed assets. Likewise, Ex.P.26 is also by the chartered accountant chosen by the claimant and not one mutually agreed to by both the parties. Ex.P.26 is in respect of gross value of plant and machinery and vehicles. As such Ex.P.23 cannot be of any assistance to the claimant as it falls short of on meeting the requirements as contemplated in the above mentioned clause 9.2 (f). Further, the learned arbitrator has discussed in Para 97 that the security deposit amount and the claim equal to 120% of the book value of the fixed assets also being not established in accordance with the requirement of clause 9.4 (f). The above findings of the learned arbitrator in impugned award I do not find any perverse and illegal. The court is not sitting in appeal to find fault in findings of learned sole arbitrator. The findings of the arbitration is impugned award as per the facts, contract, law of justice and cannot be interfered with.
17. The Petitioner has challenged the award on the ground that the Learned Arbitrator in his arbitral award has excluded the Petitioners claim towards loss of interest on investment of own funds made by the Petitioner which amounts to a sum of Rs.38,57,36,459/-. The Petitioner had invested Rs.32,72,16,112/- by obtaining financial assistance from the bank with rate of interest payable at the rate of 13% p.a. 70 Com.A.S.No.159/2018 Consequently, calculating the interest payable from April 2006- 07 to 2016-17, the said amount sums up to Rs.38,57,36,459/-. This relief has been sought for vide Annexure "AD" of the claim petition as Loss of interest on investment of own funds. The learned Arbitrator has excluded this claim from his award without assigning any reasons in that regard. Absolutely there is no appreciation of the evidence and material documents while passing the Award by Learned Arbitrator.
18. This fact is considered by the learned arbitrator in para 83 of the award. The learned arbitrator has discussed that in addition to the above it has to be mentioned that in Ex.P.22 with regard to the investment made the site has been mentioned as "25-30, 2nd cross, Raghavendra Nagar, Hennur Ring Road, Kalyan Nagar Post, Bengaluru - 560 043. So also in Ex.P.23 which is the report of the chartered accountant in respect of the book value of the assets as on 28.05.2016, the address of the unit located is mentioned as 25-30, 2nd cross, Raghavendra Nagar, Hennur Ring Road, Kalyan Nagar Post, Bengaluru - 560
043. Whereas, in the concession agreement Ex.P.1 the site address has been mentioned in the definition site as " No.8 located mavallipura Hesarghatta Hobli, Bengaluru North Taluk". Even in the claim petition, the address i.e., given in respect of the site address in the one that is mentioned in the definition of 70 Com.A.S.No.159/2018 sire in Ex.P.1. Thus, it is not known whether the investment report Ex.P.22 and the book value of assets report at Ex.P.23 are in respect of the site that is mentioned in Ex.P.1. In para 84 the learned arbitrator has discussed that the 2 documents Ex.P.22 and Ex.P.23 cannot be of any assistance to the claimant and as such question of allowing the amounts towards investment and book value of assets as claimed does not arise. The above findings of the learned arbitrator in impugned award I do not find any perverse and illegal. The court is not sitting in appeal to filed fault in findings of learned sole arbitrator. The findings of the arbitration is impugned award as per the facts, contract, law of justice and cannot be interfered with.
19. The Petitioner has challenged the award on the ground that the Petitioner's claim for the Tipping Fee has been made vide Annexure "AD" to the claim petition has also been overlooked. The Learned Arbitrator has failed to acknowledge that the Petitioner is entitled to the tipping fee as agreed to in the original agreement between the BBMP and the Petitioner. This fee includes the pending payments of sum of Rs.2,98,88,969/- along with the interest on pending payments at the rate of PLR + 2% interest which is Rs.1,02,12,099/-. This entire claim amounts to Rs.4,01,01,068/- and relief for the same is claimed by the Petitioners vide Annexure "AD". If contentions 70 Com.A.S.No.159/2018 of Arbitrator that there existed then Petitioner/s will be entitled to the tipping fee at the rate of Rs.240/- per tonne. Since, the change of Rs.158.40 has not been considered effective, the Petitioner should have been granted the tipping fee as per the rates agreed under the Concession Agreement i.e. Rs.240 per tonne. Hence, the Arbitrator has erred in overlooking this claim towards the tipping fee.
20. The above fact is considered by the learned arbitrator in Para 86 to 91 of the award. The learned arbitrator has discussed in para 88 as considered the schedule 7 which is at page 118 of Ex.P.1 it comes clear that the tipping fee rate per tonne for various period is as under:
Year Tipping fee rate per Tipping Fee rate per tonne (in figure) tonne (in words) From COD to March 198 One hundred and 31, 2009 ninety eight only April 1, 2009 to March 218 Two hundred and 31, 2012 Eighteen only April 1, 2012 to March 240 Two hundred and 31, 2015 Forty only April 1, 2015 to March 264 Two hundred and 31, 2018 Sixty four only April 1, 2018 to March 290 Two hundred and 31, 2021 ninety only April 1, 2021 to March 319 Three hundred and 31, 2024 Nineteen only April 1, 2024 to March 351 Three hundred and 70 Com.A.S.No.159/2018 31, 2027 Fifty one only
21. In para 89 the learned arbitrator has discussed that it is clear from the above table in schedule that the tipping fee for the month September 2015 would be Rs.240 per tonne whereas what is mentioned in page 569 of the claimants documents is Rs. 158.40. Whether the parties have agreed for reducing the tipping fee is the point to be considered at this juncture. The amendment to the concession agreement will have to be in writing. Clause 13.6 of Ex.P.1 with regarding amendment reads thus:
"Amendments: This agreement and the schedules together constitute a complete and exclusive understanding of the terms of the agreement between the parties on the subject hereof and no amendment or modification hereto shall be valid and effective unless agreed to by all the parties hereto and evidenced in writing."
22. It is clear from the aforesaid clause of the concession agreement Ex.P.1 that unless the changes are effected in writing no such amendments to the concession agreement can be taken note of. The learned counsel for the respondent the change in the rate of tipping fee was not effected by any amendment in writing to the concession agreement Ex.P.1. On this ground also the claimant will not be entitled for amount claimant under the head of tipping fee'. In para 91 the learned arbitrator has discussed that the Division bench of the Hon'ble 70 Com.A.S.No.159/2018 High court of karnataka in writ petition No. 24739/2012 has also directed the BBMP not to make any further paymnets as mentioned in the order of the division bench. Apart from this there is also the stand of the respondent that CAG report also mentions that excess payment has been made to the claimant. Though the respondent has not placed the authenticated CAG report before this tribunal, and the claimant has not been heard in the matter in connection with CAG report, notwithstanding the said fact, the question of granting tipping fee to the claimant will not arise in view of no amendments having been made in writing for changing the rate of tipping fee and also in view of the order of the Hon'ble High Court of Karnataka in the above mentioned writ petition directing the respondent not to make any payment until further orders of the court. Hence, the claim towards tipping fee is rejected. The above findings of the learned arbitrator in impugned award I do not find any perverse and illegal. The court is not sitting in appeal to filed fault in findings of learned sole arbitrator. The findings of the arbitration is impugned award as per the facts, contract, law of justice and cannot be interfered with. The above findigs is well reasoned by interpreting provisions of concession agreement supported with other agreement placed before the arbitrator by the both parties.
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23. The Petitioner/claimant challenged the award on the ground that the Learned Arbitrator at several places observed that the Respondent-BBMP has not disputed the claims made under several heads as put in a nutshell of summary of claims at Annexure "AD". Notwithstanding the said observation, the compensation has not been properly awarded despite the Petitioner/Claimant making out a case to the satisfaction of the Tribunal. The summary of claims made by the Petitioner/Claimant at Annexure "AD" is as per terms and conditions of the Concession Agreement Ex.P1. It is therefore, the award passed by the Learned Arbitrator in refusing to grant the remaining Rs.104,44,03,582/- is liable to be set aside and the Petitioner are liable for a sum of Rs. 4 crore awarded towards damages excluding the investment made, the fixed value of assets and the tipping fee.
24. This fact is considered by the learned arbitrator in para 93 and 94 of the award held that clause 9.2 (f) dealing with termination payment reads as under:
"Termination payments" : Upon termination of this agreement on account of BMP event of default, the concessionaire shall be entitled to withdraw the performance security, if subsisting and receive from BMP, termination payment equial to 120% of the book value of the fixed assets as on termination date, made by the concessionaire towards the project facilities, as 70 Com.A.S.No.159/2018 determined by an independent firm of chartered accountants mutually agreed upon and appointed by the parties for the purpose and amounts in the post closure performance account."
25. clause 9.4 deals with the Accrued rights of parties and the said clause is as under:
"Notwithstanding anything to the contrary contained in this agreement, termination pursuant to any of the provisions of this agreement shall be without prejudice to accrued rights of either party including its right to claim and recover money damages and other rights and remedies which it may have in law or contract. The rights and obligations of either party under this agreement include without limitation those relating to the termination payments shall survive the termination but only to the extent such survival necessary for giving effect to such rights and obligations".
26. The learned arbitraor in para 96 discussed that the clause 9.2 (f) and 9.4 of Ex.P.1, so far as damages is concerned, for the reasons already mentioned while dealing with various claims, this tribunal is of the view that on account of termination of the concession agreement by the respondent even before the completion of the contractual period and the period of commercial operations date of the project being 20 years or for a further period which may be extended on mutually agreed terms, as on account of the faults of the 70 Com.A.S.No.159/2018 respondent, the agreement came to terminated and this tribunal having held that the termination of the concession agreement. The security deposit amount and the claim equal to 120% of the book value of the fixed assets also being not established in accordance with the requirements of clause 9.4
(f) and further clause 10.1 of Ex.P.1 making it clear that the ownership of the project facilities including all improvements made therein by the concessionaire, shall at all times remain that of BMP, the claimant can be awarded in the facts and circumstances of this case, damages in a sum of rs. 4 crores covering the heads idling charges of plant and machinery, overhead expenses and the contract being terminated within short period, which otherwise would have lasted for 20 years. The said amount of Rs. 4 crores awarded towards damages excludes the investment made the fixed value of assets and tipping fee.
27. In this regard the Advocate for the Petitioner has relied upon a decision reported in 2022 (4) SCC 463 ( Indian Oil Corporation Limited vs. M/s Shree Ganesh Petroleum Rajgurunagar) the Hon'ble Supreme Court held that An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is constituted. An award can be said to be patently illegal where the Arbitral Tribunal has 70 Com.A.S.No.159/2018 failed to act in terms of the contract or has ignored the specific terms of a contract.
However, a distinction has to be drawn between failure to act in terms of a contract and an erroneous interpretation of the terms of a contract. An Arbitral Tribunal is entitled to interpret the terms and conditions of a contract, while adjudicating a dispute. An error in interpretation of a contract in a case where there is valid and lawful submission of arbitral disputes to an Arbitral Tribunal is an error within jurisdiction.
The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse. Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one.
28. The Advocate for the Petitioner has relied upon a decision reported in 2003 (5) SCC 705 ( Oil and natural gas corporation limited vs. Saw pipes limited) the Hon'ble Supreme Court held that Terms of the contract are required to be taken into consideration before arriving at the conclusion 70 Com.A.S.No.159/2018 whether the party claiming damages is entitled to the same;
(2) If the terms are clear and unambiguous stipulating the liquidated damages in case of the breach of the contract unless it is held that such estimate of damages/compensation is unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation and that is what is provided in Section 73 of the Contract Act.
(3) Section 74 is to be read along with Section 73 and, therefore, in every case of breach of contract, the person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree. The Court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequences of the breach of a contract.
(4) In some contracts, it would be impossible for the Court to assess the compensation arising from breach and if the compensation contemplated is not by way of penalty or unreasonable, Court can award the same if it is genuine pre-estimate by the parties as the measure of reasonable compensation.
29. The Advocate for the Petitioner has relied upon a decision reported in 2006 (11) SCC 181 ( Mcdermott International Inc vs. Burn Standard Co. Limited and Others) the Hon'ble Supreme Court held that 70 Com.A.S.No.159/2018 METHOD FOR COMPUTATION OF DAMAGES What should, however, be the method of computation of damages is a question which now arises for consideration. Before we advert to the rival contentions of the parties in this behalf, we may notice that in M.N. Gangappa vs. Atmakur Nagabhushanam setty and Co and another[(1973) 3 SCC 406], this Court held:
"In the assessment of damages, the court must consider only strict legal obligations, and not 'the expectations, however reasonable, of one contractor that the other will do something that he has assumed no legal obligation to do. [See also Lavarack v. Woods of Colchester Ltd The arbitrator quantified the claim by taking recourse to the Emden formula. The learned arbitrator also referred to other formulae, but, as noticed hereinbefore, opined that the Emden Formula is a widely accepted one.
It is not in dispute that MII had examined one Mr. D.J. Parson to prove the said claim. The said witness calculated the increased overhead and loss of profit on the basis of the formula laid down in a manual published by the Mechanical Contractors Association of America entitled 'Change Orders, Overtime, Productivity' commonly known as the Emden Formula. The said formula is said to be widely accepted in construction contracts for computing increased overhead and loss of profit. Mr. D.J. Parson is said to have brought out the additional project management cost at US$1,109,500. We may 70 Com.A.S.No.159/2018 at this juncture notice the different formulas applicable in this behalf.
(a) Hudson Formula (b) Emden Formula (c) Eichleay Formula ACTUAL LOSS : DETERMINATION OF A contention has been raised both before the learned Arbitrator as also before us that MII could not prove the actual loss suffered by it as is required under the Indian law, viz., Section 55 and 73 of the Indian Contract Act as Mr. D.J. Parson had no personal knowledge in regard to the quantum of actual loss suffered by the MII. D.J. Parson indisputably at one point of time or the other was associated with MII. He applied the Emden Formula while calculating the amount of damages having regard to the books of account and other documents maintained by MII. The learned Arbitrator did insist that sufferance of actual damages must be proved by bringing on record books of account and other relevant documents.
Section 55 and 73 of the Indian Contract Act do not lay down the mode and manner as to how and in what manner the computation of damages or compensation has to be made. There is nothing in Indian law to show that any of the formulae adopted in other countries is prohibited in law or the same would be inconsistent with the law prevailing in India.
As computation depends on circumstances and methods to compute damage, 70 Com.A.S.No.159/2018 how the quantum thereof should be determined is a matter which would fall for the decision of the arbitrator. We, however, see no reason to interfere with that part of the award in view of the fact that the aforementioned formula evolved over the years, is accepted internationally and, therefore, cannot be said to be wholly contrary to the provisions of the Indian law.
30. The Advocate for the Petitioner has relied upon a decision in OMP (Comm.) 279/2017 ( SMS Limited vs. Konkan Railway Corporation Limited) the Hon'ble Delhi High Court held that Above facts show that though the arbitrator work on the costing method for calculation of the loss but then went on to find out the notional proportionate on idling method which per se was wrong. The petitioner could not have been made liable for idling of the machinery and manpower as the problem which occurred in April 2005 i.e. prior to 36.5 months could not be solved even later by using different techniques and ultimately the alignment had to be changed by 400 meters. The extensions, even otherwise, were all without levy of any penalty and hence petitioner could not have been solely made liable for such delays. Further Mr.Jethwa‟s report admittedly was on record; he being chairman of a Committee constituted by respondent itself rather suggested four options and the petitioner was made to work on such option(s), later if the work could not be done, the petitioner could not be made responsible, his being a rate contract. Even internal notings of the respondent 70 Com.A.S.No.159/2018 though were filed on record with rejoinder ought to have considered, were never considered. Hence, the approach of the learned Arbitrator to first take the period of contract to 96 months and then making respondent liable only for 10 months and thereafter dividing compensation to half, make no sense and is perverse; foreclosure being a unilateral decision of the respondent.
It is settled law that the findings of a learned Arbitral Tribunal can be interfered with under Section 34 of the Act if such findings are arbitrary or perverse and the learned Arbitral Tribunal has not adopted a judicial approach. (Associate Builders vs. DDA), (2015) 3 SCC 49) A finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.
31. The Advocate for the Petitioner has relied upon another decision reported in (Kailash Nath Associates V. DDA,) (2015) 4 SCC 136 In the Supreme Court of India held that:
On a conspectus of the above authorities, the law on compensation for breach contract U/s. 74 can be stated to be as follows:
Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the Court.70
Com.A.S.No.159/2018 In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation.
Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Sec. 73 of the Contract Act.
The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre- estimate of damage or loss, can be awarded.
32. Section 73 of Indian contract Act 1872 entitle a party suffer a breach of contract to receive from the breaching party compensation for loss damage suffered an account of such breach. The innocent party can claim the 2 category damages i.e., direct of damage i.e., loss arose naturally from the breach and 2nd the consequential damage in favorably in contemplation 70 Com.A.S.No.159/2018 of the parties to the contract at the time they made the contract has probable result of breach.
33. Under the law of evidence the burden of proving entitle of loss of profit is placed on the contractor taking the damages . In case of claim for loss or profit it becomes to difficult to establish with precision that what was accepted profit that could not be realized on account of breach. The seize of decision of the Supreme court has settled the possession that ordinarily contractor while agreeing to undertake the work contract, reasonable except make profit. Reasonable expectation of profit is held to be implicated in the works contract thus in case of breach leading to improper termination of works contract by employer, a contract is presume to have loss or profit. Further, the major structure of allow to based on some guess work. In Mohammad Sawamllah vs. Government of Andhra pradesh the Hon'ble Supreme court considered a breach of contract to manufactured and supplied. As a result of which the contract could not the contemplated. The court approved a grant 15% of contract price has damage in case of breach of contract. It is held that appellate court was not justified interfering with findings of the fact given by the trial court regarding quantification of the damage given based on the guess work.
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34. In SMS Limited vs. Konkan Railway Corporation Limited the Hon'ble Delhi High Court held that will be mentioned in which this court strike an arbitral tribunals award that calculated the damages using formula. As a result an Examination of this Judgment will be carried out to determine what technique could be used to avoid such a calculation if an award is challenged. The term liquidated damage is not specified in Indian contract Act 1872. However, Section 74 defines the parts that makeup the definition of liquidated damages. If so, the contract stated that a certain number will be awarded in case of breach, innocent party will be allowed to recover the damage equal to or less than that amount, based on facts and circumstances of the each can upto the maximum amount stated in the contract.
35. The Hon'ble Supreme court in Fatechand vs. Balakrishana Das held that the expression if the contracts contain any other stipulation by way of penalty widens the operation of the section so has to make it applicable all stipulation by way of penalty, whether the stipulation is pay an amount of money, are is of another character, as, for example, providing forfeiture of money already paid. Also while interpreting the phase " whether or not actual damage or loss is proved to have been caused there by". The court concluded that while the condition of evidence of actual loss or damage is waived, the requirement 70 Com.A.S.No.159/2018 that the party had experienced legal injury is still required before compensation can be granted under Section 74 of the contract Act.
36. The Hon'ble Supreme Court held a similar possession even if the offended party is unable to prove real a loss or losses. The apex court ruled that in the context of contract by violation aggrieved party is obliged to get appropriate compensation . Because the court may take it challenging measure the award of the compensation to be paid in some situation a real pre-estimate loss is taken into account. Although the party must demonstrate the loss sustained in case of the penalty.
37. In ONGC vs. Saw pipes limited the Hon'ble Supreme court held that before deciding whether a party allow to claim damage or not, the contract term should be considered and it should be straight forward, ascertain un-ambiguously that contracting party will be paid in the event of breach unless the contract expressly stated otherwise. A party who breaches a contract is obliged to pay damage to the other party who suffer as a result of the violation. According to section 73.
38. Both Section 73 and 74 must be view together because the aggrieved person is not necessary to establish actual 70 Com.A.S.No.159/2018 damage caused before requesting the decree. Even, if the actual loss sustained is not shown court has right to provide adequate compensation to the aggrieved party.
39. In this case the learned arbitrator has held that termination of the contract is illegal, null and void. So, while awarding damages he has made a guess work and awarded and 4 crores towards idealing charges of plant and machinery, overhead expenses and the contract being terminated within a short period, which other wise would have lasted for 20 years.
40. As per the several decision of the Hon'ble Supreme Court. The following formula is used while calculating the damages
(a) Hudson Formula
(b) Emden Formula
(c) Eichleay Formula.
41. On perusal of award, the learned arbitrator has granted 4 crores damage towards idealing charges of plant and machinery, overhead expenses and the contract being terminated within a short period, which other wise would have 70 Com.A.S.No.159/2018 lasted for 20 years. But on this question of damage there is hardly in discussion by learned arbitrator has summarized and awarded 4 crores of the damage.
42. The claimant is entitled the damage for the loss of huge of plant kept in idle from the consequences of termination of contract. The learned arbitrator has not given any reason for coming to the conclusion of the awarding 4 crores towards damage. The determination of damages is an inexact science. The learned arbitrator has not proceeded/calculated award on the basis of decision of Hon'ble Supreme court by applying the formula i.e., (a) Hudson Formula (b) Emden Formula (c) Eichleay Formula and as above stated the learned arbitrator has not furnished the reasons in support of his award of damages. Hence, the paragraph of the award dealt with question of damage at para No.97 will have to be regarded as error operate on the face of the award. In the circumstance, I hold that the decision of the learned arbitrator on the claim of damage is erroneous in law and is illegally in that respect is award therefore to the grants to extent grant of damage and 4 crores to the petitioner is perverse and illegal.
43. The Advocate for Petitioner argued that the award severable into 2 portion the first which pertains to the findings on breach which are in accordance with law and required no 70 Com.A.S.No.159/2018 interference under Section 34 of the Act and the second recording quantification of damages which contrary to the terms of the concession of agreement. The award is contrary to the express term of concession agreement and findings on the damages cannot be countenanced in law. Hence, the award may be partially set side.
44. In this regard the learned advocate for Petitioner/claimant has relied upon a decision reported in AIR 2011 SC 2477 (JG Engineers Private Limited vs. Union of India and Others) the Hon'le Supreme Court held that:
18. The arbitrator had considered and dealt with claims (1), (2, 4 and 5), (6), (7, and 8), (9) and (11) separately and distinctly. The High Court found that the award in regard to items 1, 3, 5 and 11 were liable to be set aside. The High Court did not find any error in regard to the awards on claims 2, 4, 6, 7, 8 and 9, but nevertheless chose to set aside the award in regard to these six items, only on the ground that in the event of counter claims 1 to 4 were to be allowed by the arbitrator on reconsideration, the Respondents would have been entitled to adjust the amounts awarded in regard to claims 2, 4, 6, 7, 8 and 9 towards the amounts that may be awarded in respect of counter claims 1 to 4;
and that as the award on counter claims 1 to 4 was set aside by it and remanded for fresh decision, the award in regard to claim Nos.2, 4, 6, 7, 8 and 9 were also liable to be set aside. It is not well-settled that if an award deals with and decides several claims 70 Com.A.S.No.159/2018 separately and distinctly, even if the Court finds that the award in regard to some items is bad, the Court will segregate the award on items which did not suffer from any infirmity and uphold the award to that extent. As the awards on items 2, 4, 6, 7, 8 and 9 were upheld by the Civil Court and as the High Court in appeal did not find any infirmity in regard to the award on those claims, the judgment of the High Court setting aside the award in regard to claims 2, 4, 6, 7, 8 and 9 of the Appellant, cannot be sustained. The judgment to that extent is liable to be set aside and the award has to be upheld in regard to claims 2, 4, 6, 7, 8 and 9.
45. Also relied upon another decision reported in MANU/MH/ 2773/2022(National Highways Authority of India and Ors. V. Additional Commissioner, Nagpur and Arbitrator under the National Highways Act, 1956 and Ors.,) In the High Court of Bombay (Nagpur Bench).
46. Also relied upon another decision reported in (Navyuga Engineering Company Ltd., V. Union of India) MANU/KE/3188/2021 In the High Court of Kerala At Ernakulam held that:
It is now well-settled that if an award deals with and decides several claims separately and distinctly, even if the Court finds that the award in regard to some items is bad, the Court will segregate the award on items which did not suffer 70 Com.A.S.No.159/2018 from any infirmity and uphold the award to that extent.
47. The Advocate for the Petitioner has relied upon following decisions (Delhi Metro Rail Corporation Ltd., V Delhi Airport Metro Express Pvt. Ltd.,) MANU/DE/0161/2019.
(B.R.Arora & Associates Pvt. Ltd., V. Airport Authority India) MANU/DE/1038/2019 in the High Court of Delhi.
(MMTC Ltd. (India) V. Alcari, SA (Switzerland), MANU/DE/5004/2013 in the High Court of Delhi.
48. (R.S.Jiwani V. Ircon International Ltd., Mumbai, 2010(1) Mh. L.J.) MANU/DE/0161/2019 Scope of Sec. 34 of Arbitration and Conciliation Act and Doctrine of Severability held that:
(a) Arbitration and Conciliation Act (26 of 1996), S. 34(2)-
Setting aside an arbitral award- the word 'only if' empowers the Court to set aside an award only if conditions of sub-clauses (a) and (b) of sub-section (2) are satisfied.
(b) Arbitration and Conciliation Act (26 of 1996), S. 34- Setting aside an arbitral award- Doctrine of severability-Can be 70 Com.A.S.No.159/2018 applied to awards which are severable-Matter submitted to arbitration can clearly be separated from the matters not referred to arbitration and decision thereupon by the Arbitral Tribunal.
49. In the present case arbitral tribunal is right on the majority of issues only awarding the damages is arbitrary. So, the question can arises the arbitrator while deciding the damage in the arbitral award otherwise passed is sustainable as per law. The Bombay High Court upheld district court orders and held that the court is not to found set aside the entire award when it is apparent on the arbitral error solely on certain issues and substantial arbitral award is valid. The Hon'ble Apex court in JG Engineering Private Limited vs. Union of India and others it is held that while hearing an application under Section 34 of the Act, court cannot set aside the award depending upon the facts and circumstances of the case. In this case the Hon'ble Apex court has specifically applied the doctrine of probability to arise a conclusion that when there are several mistake each them can be considered a with distinct separate from other. Therefore fall well within a jurisdiction of the court separate to the claim that towards from any informative uphold the rest of part of such award. The scope of by next date of initial intervention under Section 34(2) of the Act has been specifically dealt with by the Apex court in the case of Delhi 70 Com.A.S.No.159/2018 Development Authority vs. M/s R.S. Sharma and company where in court arrived and conclusion that the arbitrator as well as division bench of Hon'ble court while rightly partially upheld the arbitral award as only their sustainable therefor it would not be a wrongly concluded each of the plaint has decided by the arbitrator were distinct and separate in the nature and court can set aside the award partially under Section 34 of the Act based on the facts and circumstances of the case. Further, approached the court aligns with statutory provisions i.e., proviso section 34 (2-a) of the Act, which says that an award may not reversed only based on erroneous application of law or appreciation of evidence. Therefore, in the present case findings of the learned arbitrator is regarding claim-1 i.e., termination of concession contract is valid and findings of he other issue also valid but the findings of the learned arbitrator regarding the damage is illegal and perverse. The learned arbitrator has not given any specific reason and also not given any calculation to arose 4 crores towards damage. So, under these circumstance, the apply doctrine of severability should be analyses independent of each other and rather than setting aside the entire award are recommencing the fresh arbitration.
50. However, Hon'ble Supreme Court in recent decision The Project Director, National Highways authority of India vs. Hakeem and another in Hon'ble apex court elaborately 70 Com.A.S.No.159/2018 discussed the power of the court under Section 34 of Arbitration and Conciliation Act as follows:
"The next judgment referred to in para 32 is the judgment in Tata Hydro-Electric Power Supply Co. Ltd. v. Union of India, (2003) 4SCC 172. In para 21, this Court modified the award qua interest,granting interest at the same rate but with reference to a different period from that stated in the award. There is no doubt that the award was in fact "modified" by the Supreme Court - again referable to Article 142 of the Constitution of India."
"As has been pointed out by us herein above, Mc Dermott (supra)has been followed by this Court in Kinnari Mullick (supra). Also, in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies Pvt. Ltd., 2021 SCC OnLine SC 157, a recentjudgment of this Court also followed Mc Dermott (supra) stating that there is no power to modify an arbitral award under Section 34 as follows: -(f) In law, where the Court sets aside the award passed by the majority members of the tribunal, the underlying disputes would require to be decided afresh in an appropriate proceeding. Under Section 34 of the Arbitration Act, the Court may either dismiss the objections filed, and uphold the award, or set aside the award if the grounds contained in sub- sections (2)and (2A) are made out. There is no power to modify an arbitral award.40. It can therefore be said that this question has now been settled finally by at least 3 decisions of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to 70 Com.A.S.No.159/2018 ignore the fact that the 1996 Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration,1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the 'limited remedy' under Section 34 is co-terminus with the 'limited right', namely, either to set aside an award or remand the matter under the circumstances mentioned in Section34 of the Arbitration Act, 1996."
"Quite obviously if one were to include the power to modify an award in Section 34, one would be crossing the Lakshman Rekhaand doing what, according to the justice of a case, ought to be done. In interpreting a statutory provision, a Judge must put himself in the shoes of Parliament and then ask whether Parliament intended this result. Parliament very clearly intended that no power of modification of an award exists in Section 34 of the Arbitration Act, 1996. It is only for Parliament to amend the aforesaid provision in the light of the experience of the courts in the working of the Arbitration Act, 1996, and bring it in line with other legislations the world over".
"Given the fact that in several similar cases, the NHAI has allowed similarly situated persons to receive compensation at a much higher rate than awarded, and given the law laid down in Nagpur Improvement Trust (supra), we decline to exercise our jurisdiction under Article 136 in favour of the appellants on the facts of these cases. Also, given the fact that most of the awards in these cases were made 7-10 years ago, it would not, at this distance in time, be fair to send back these cases for a denovo start before the very arbitrator 70 Com.A.S.No.159/2018 or some other arbitrator not consensually appointed, but appointed by the Central Government. The appeals are, therefore,dismissed on facts with no order as to costs".
51. For the foregoing reasons, I am of the considered opinion that the findings of the arbitral tribunal arriving at the conclusion to award 4 crores towards idealing charges of plant and machinery, overhead expenses and the contract being terminated within a short period, which other wise would have lasted for 20 years to the Petitioner/claimant is contrary to the terms of contract and settled principal of law. More so, when the learned arbitrator has declared the termination of concession of agreement is illegal and no justification to award the 4 crores towards towards idealing charges of plant and machinery, overhead expenses and the contract being terminated within a short period, which other wise would have lasted for 20 years.
52. 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 70 Com.A.S.No.159/2018 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 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 70 Com.A.S.No.159/2018 awards based on the specific grounds enshrined under Section 34 and should refrain from making any modifications in the arbitral awards.
53. 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 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 70 Com.A.S.No.159/2018 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."
54. Therefore, there is no scope to remand the matter to the Arbitrator.
55. 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 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.
56. In view of my above discussions, observations and 70 Com.A.S.No.159/2018 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 perverse, illegal and 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".
57. Point No. 2:- For the discussion made on above point, following order is passed:
ORDER Arbitration suit filed under Section 34 of the Arbitration & Conciliation Act, 1996 is allowed.
Consequently, the arbitral award dated 03.05.2018 in A.C. No. 01/2017 is set aside.70
Com.A.S.No.159/2018 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 as amended under Section 16 of the Commercial Courts Act.
(Dictated to the Stenographer, typed by her directly on the computer, verified and pronounced by me in open Court on this the 28th day of February 2023).
(SUMANGALA S BASAVANNOUR), LXXXII Addl. City Civil & Sessions Judge, Bengaluru.