Delhi District Court
Commanding Officer, Ins India vs Sarvesh Security Services Pvt. Ltd on 8 April, 2026
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1. Memo of Parties 2
2. Description of the Case 2
3. Brief Facts of the Case 2-4
4. Grounds of Challenge 4-12
5. Reply/Plea of respondent 13
6. Arguments on behalf of Petitioner 13-20
7. Arguments on behalf of Respondent 20-25
8. Appreciation of Arguments, Facts & Law 25-37
(i) Limitation 28-35
(ii) Mandate of Section 12 of the Act 35-37
9. Decision 37
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 37 Patiala House Court, New Delhi
OMP (COMM) No.96/2021
In the matter of: -
Commanding Officer, INS India
NSB-II, Naraina
Dara Shukhon Road, New Delhi-110011.
...Petitioner
Versus
Sarvesh Security Services Pvt. Ltd.
Registered Office: 413, Pocket-E, Mayur Vihar
Phase-II, Delhi -110091.
...Respondent
Date of Institution : 09.10.2021
Arguments heard on : 17.03.2026
Decided on : 08.04.2026
Decision : Petition is allowed.
JUDGMENT
DESCRIPTION OF THE CASE
1. Petitioner has filed present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act"), assailing the arbitral award dated 12.02.2020 passed by learned Sole Arbitrator.
BRIEF FACTS OF THE CASE
2. Briefly stated, the relevant facts are that a tender for providing security service was floated by petitioner, to which respondent was the successful bidder. The contract for 08 Security watchman for a period of one year from the date of the award of the contract at a total cost of Rs. 12,47,153/- (Rupees Twelve Lac Forty Seven Thousand One Hundred Fifty Three only) was awarded vide letter dated 01.01.2014. As per the terms of the OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.2 of 37 Patiala House Court, New Delhi contract, respondent was to provide security services for a period of minimum 1 year and as per Clause-1 of 'Part-IV: Special Condition of Contract Agreement' it had to submit a Performance Bank Guarantee equal to 10% of the contract value i.e. Rs. 1,25,000/- within 30 days of signing of the contract. The payment to the respondent for the services provided, could only be made subject to satisfaction of the 'payment terms' as provided in the Clause no. 5 of 'Part-IV: Special Condition of Contract Agreement'.
3. Petitioner has averred that respondent failed to submit the PBG within the stipulated period of 30 days and it only submitted the same on 15.03.2014 after a delay of 45 days. Petitioner issued letter dated 12.03.2014 to respondent to submit the PBG and also to submit the bills pertaining to months of January and February of 2014 along with the requisite documents, so that the same could be processed in the financial year 2013-14.
4. Petitioner has pleaded in the petition that respondent had consistently been violative of the terms of the contract and had not submitted the performance certificate, payment wages sheet, attendance sheet duly signed by it or its representative, which was in complete contravention of Clause-S of 'Part-IV: Special Condition of Contract Agreement'.
5. Petitioner has further averred that the contract rates were based on the exiting minimum wages promulgated by the Delhi Government and were subject to revision based on revision of minimum wages by the Delhi Government, provided that the respondent provided an intimation letter along with copy of the OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 37 Patiala House Court, New Delhi government orders to this effect. Petitioner averred that even though there was revision of minimum wages twice during the currency of the contract, but same was never intimated to the petitioner. Petitioner has averred that respondent throughout the currency of the contract, failed to adhere by the terms of the contract and had not submitted the bills in the designated format along with the documents and records of EPF and ESIC deductions. Petitioner tried to resolve the issue of the payment and invited the respondent to a meeting vide letters dated 14.11.2014 and 17.11.2014, but respondent never responded to any of the letter. Respondent sent a legal notice dated 23.02.2017 addressed to Directorate of Administration, which was forwarded to the petitioner and was duly replied by the petitioner.
6. Respondent moved Hon'ble High Court of Delhi under Section-
11 (6) of the Arbitration and Conciliation Act, 1996 for appointment of Arbitrator. Delhi High Court appointed Arbitrator and arbitration took place at DIAC. Ld. Sole Arbitrator pronounced Arbitral Award on 12-02-2020 for an amount of Rs. 31,84,869/- in favour of the respondent/claimant and against the petitioner, with interest@ 12% per annum from the date of demand notice i.e. 23-02-2017 till the payment, along with litigation charges of Rs. 1,50,000/-.
GROUNDS OF CHALLENGE
7. Aggrieved by the arbitral award dated 12.02.2020, petitioner has preferred the present objections under Section 34 of the Act, inter alia, on the following relevant grounds: -
i. That the impugned Award is patently illegal on the face of record OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 37 Patiala House Court, New Delhi and same suffers from perversity and violates the basic notion of justice and rationality. That the impugned Award is liable to be set aside being in contravention of Section 34 (2A) of the Act. (Ref. Ssangyong Engineering and Construction Co. Ltd. v. National Highways Authority of India, 2019 (8) SCALE 41.) ii. That while adjudicating issue no.1, ld. Arbitrator failed to distinguish between the limitation period for filing petition for appointment of Arbitrator u/s. 11 of the Act and the limitation period for filing the claims before the court of law or Arbitral Tribunal. That ld. Arbitrator failed to consider that for each bill there was a different cause of action and the dispute between the parties had commenced when petitioner had refused to make any payment to respondent. That no proper bills along with requisite documents were submitted and the same was informed to respondent multiple times through different letters dated 12.03.2014, 01.10.2014, 04.02.2015 etc. That the limitation period even for the last bill had expired on 10.01.2018 and the claims were barred by time, when the arbitration was invoked on 17.09.2018 i.e. beyond three (3) years limitation period. That petitioner never acknowledged the liability u/s. 18 of Limitation Act, 1963. (Ref. Micrographics India v. Govt. of NCT of Delhi & Ors., 2018 VAD (Delhi) 139).
iii. That while adjudicating issue no.2, ld. Arbitrator did not dismiss Statement of Claim despite the fact that same had not been verified by respondent, recording the reason that provisions of CPC were not strictly applicable in Arbitral proceedings. That this reasoning is in complete contravention of the material on OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 37 Patiala House Court, New Delhi record. Reliance has been placed upon the case of ONGC v. M/s. Interocean Shipping (India) Pvt. Ltd., Arbitration Petition No.549 of 2013, decided on 09.06.2017 by Hon'ble High Court of Bombay, to submit that the arbitral proceedings have to be carried out as per the provisions of substantial laws and procedural laws, as are carried out in any Court of Law in Delhi.
iv. That while deciding issue no.3 in favour of respondent, ld. Arbitrator failed to appreciate the difference between a company and a partnership firm with respect to authorised representatives for filing cases before Court of Law. That merely being Director or major shareholder does not ipso facto make that person an authorised person to file the case on behalf of a company. That ld. Arbitrator also failed to appreciate the cross-examination of CW-1 as well as the judgment of Hon'ble High Court of Delhi in the case of Escorts Limited v. Sai Auto & Ors., 42 (1990) DLT 446, which provides the manner in which a board resolution is to be proved.
v. That ld. Arbitrator conveniently neglected to appreciate the Clause 5(b) of 'Special Conditions of Contract Agreement' prescribing conditions, which were to be fulfilled by the claimant for getting the payment for its services. That ld. Arbitrator has gone beyond the scope of the contract to adjudicate the issue in favour of respondent. Reliance was placed upon the case of State of Rajasthan v. Nav Bharat Constructions Co., (2006) 1 SCC 86; wherein Hon'ble Supreme Court held that an Arbitrator cannot go beyond the terms of the contract and in the guises of doing justice, he cannot award contrary to the terms of the contract.
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.6 of 37 Patiala House Court, New Delhi
vi. That the bills submitted by respondent do not bear any signature/receipt of respondent and those bills have been denied by petitioner in its affidavit of admission/denial. Reliance has been placed upon the case of Pradyuman Kumar Sharma & Ors. v. Jaysagar M. Sancheti & Ors., 2013 SCC OnLine Bom 453, wherein Hon'ble High Court of Bombay observed that consideration of an unproven document by an Arbitrator would be in violation of the principles of natural justice and a ground to set aside the Award. That respondent/claimant had failed to bring on record any evidence to prove the existence of the said bills. That ld. Arbitrator has gravely erred in awarding the claim amount to the claimant/respondent herein, which is against the established principles of law. (Ref. Delhi Jal Board and Ors. v. Dev Raj Kataria and Ors. 2016 (1) ARBLR 196 (Delhi). That said alleged bills had been filed by the Claimant in contravention of order dated 18.09.2019 as passed by ld. Arbitrator, wherein he himself had instructed that for any electronic evidence filed by the parties, they need to file an affidavit u/s. 65B of I.E. Act.
vii. That the respondent had admittedly not submitted the required documents as per Clause 5(a) & (b) of the 'Part- IV: Special Conditions of the Contract' i.e. proof of payment of statutory dues like bonus, EPF, ESI, Service Tax, etc., still ld. Arbitrator has awarded Rs. 31,84,869/- to the claimant without explaining the basis of this decision. Reliance has been placed upon the case of India in Associate Engineering Co. vs. Govt. of Andhra Pradesh, (1991) 4 SCC 93; to highlight the observations of Hon'ble Supreme Court that "The arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 37 Patiala House Court, New Delhi contract. His sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction...". That no basic/ supporting document like bills/vouchers/payment proofs/bank statements, etc. had been filed by claimant to substantiate the calculation sheets, still ld. Arbitrator awarded the amount, which was mentioned in the undated and unsigned calculation sheets, which were furnished by claimant without there being any supporting document.
viii.That ld. Arbitrator has failed to give reasons for adjudicating the claim in favour of respondent. (Ref. MKU Ltd. v. Union of India, 243 (2017) DLT 198) ix. That ld. Arbitrator while adjudicating issue no. 6, has illegally put the burden of proof on petitioner to find out whether respondent was in existence in the record of the Registrar of Companies and whether it was operational as on that day.
x. That ld. Arbitrator with regard to issue no.7, baselessly presumed that ld. counsel for respondent committed lapse in getting the affidavit sworn before signing of the claim petition, while there were no such submissions by the respondent/claimant. That ld. Arbitrator wrongly observed that "it would have been proper on the part of the claimant to have sworn the affidavit on 01-01- 2019 on the date of signing the claim petition ". That it is necessary to verify the contents of pleadings with duly sworn affidavit and such affidavit can be sworn only after signing of the pleadings and not before that. Ld. Sole Arbitrator further OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 37 Patiala House Court, New Delhi mentioned about some judicial pronouncement without disclosing its name/citation ignoring the case of Oil and Natural Gas Corporation Ltd. vs. Joint Venture of M/s Sai Rama Engineering Enterprises (sree) & M/s Megha Engineering & Infrastructure Limited (meil) MANU/DE/3294/2019, relied upon by the Petitioner.
xi. That ld. Arbitrator while adjudicating issue no. 8, gave sole reason that 'natural justice' demanded that petitioner must pay for the services availed by it. Thus, the award is patently illegal as the same has been based on natural justice instead of clear contractual and statutory provisions in clear contravention of Nav Bharat Construction Co. (supra).
xii. That ld. Arbitrator while adjudicating the issue no. 9, wrongly ignored severe violation of the contractual provisions by respondent. That ld. Arbitrator allowed all the baseless claims made by the respondent despite there being no provision in the contract for redemption of the bonus, if paid to the employees. That ld. Arbitrator did not consider that respondent had neither informed petitioner nor had provided requisite documents showing payment of various statutory dues.
xiii.That ld. Arbitrator has allowed payment of damages and interest @18% p.a. on account of alleged non-payment of EPFO, ESIC and Service Tax by petitioner. In doing so ld. Arbitrator has failed to consider that the contract does not allow grant of damages or interest and that it is an established position of law that damages can only be awarded when loss is proved and that the award has to be reasoned. That the Indian Contract Act, 1872 OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 37 Patiala House Court, New Delhi provides u/s. 73 that party claiming damages/compensation have to prove the actual loss incurred by it. That ld. Arbitrator has not given any reason that why damages along with interest have been allowed. That ld. Arbitrator also failed to consider that the basis of quantification of damages and interest has neither been given by the respondent nor has been stated/disclosed by ld. Arbitrator. That ld. Arbitrator did not consider that respondent has claimed damages @ 25% without giving any basis for arriving at this figure.
xiv. That ld. Arbitrator has caused undue enrichment to respondent by granting interest @12% per annum from the date of demand notice dated 23.02.2017 till the payment is made, while the claimant had itself not prayed for the interest from 23.02.2017. That respondent had already included interest @18% on all claimed amounts in the table of Claims written just before Prayer Clause (page no. 12 of the Statement of Claims) till 01.01.2019. That respondent had prayed for pendente lite and future interest in the prayer clause (e) of the Statement of Claim, which means from 02.01.2019 onwards. However, ld. Arbitrator knowingly committed duplication of claims by allowing interest from 23.02.2017 that too at the rate of 12% per annum, which is on higher side considering prevailing rate of interest by nationalized banks. That pendente liteinterest from 2014 till 2019 has been allowed @18% per annum by ld. Arbitrator without giving any justification for grant of interest at such a high rate. Thus, ld. Arbitrator has discreetly allowed the claimant to enjoy interest at the rate of 18% per annum till 01.01.2019 on all the claimed amounts and further awarded interest @12% from 23.02.2017 on OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 37 Patiala House Court, New Delhi the awarded amount. Reliance has been placed upon the case of Patel Engineering Ltd. v. North Eastern Power Corporation Ltd., 2020 SCC OnLine SC 466, to highlight the observations of Hon'ble Supreme Court that 'undue enrichment' is contrary to the public policy doctrine u/s. 34 (2) (b) (ii) of the Act and therefore, the impugned award is liable to be set aside.
xv. That ld. Arbitrator has also not decided the issue of improper verification of the evidence by way of affidavit by the respondent's/claimant's witness. That respondent's/claimant's witness was cross examined on this issue, oral arguments were made and written arguments were submitted under the head of "Additional issues raised during oral arguments". That respondent's witness had verified that each and every averment made in its evidence by way of affidavit was based on legal advice believed to be true. While replying to the question no. 26 of the counsel for the petitioner, the CW-1 had categorically stated that whatever paper he had submitted was true to the best of his knowledge. The CW-1 had not denied the suggestion of the counsel for the petitioner that his affidavit had been prepared by his counsel only and was based upon counsel's legal advice only as stated by him in the verification clause of affidavit of evidence. That since all the factual contents of evidence by way of affidavit were based upon the legal advice of ld. counsel of the respondent/claimant, then this evidence did not hold any merit/weight in the eyes of law. Therefore, whole of the Statement of Claim was liable to be dismissed in toto as held by the Hon'ble Punjab and Haryana High Court in Registrar of Companies v. New Suraj Financiers & Chit Fund, (1990) 69 OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 37 Patiala House Court, New Delhi CompCas 104 P&H. That ld. Tribunal did not intentionally deliberate upon this issue and did not return any finding on the same which amounts to violation of public policy of India as well as misconduct.
xvi. That there is patent illegality on the part of ld. Arbitrator as he has deliberately overlooked the contents of Statement of Defence, Evidence by way of affidavit, Cross-examination of claimant's witness, Oral and written submissions of petitioner.
xvii. That ld. Arbitrator has failed to provide any reason while adjudicating the claims and that he has acted on some presumptions and he has awarded the claims of the claimant based on ratios and logics which were never pleaded before him by respondent/claimant. (Ref. State of Kerala vs. K. Kurian P. Paul, AIR 1992 Ker 180).
xviii. That ld. Arbitrator has wrongly awarded Rs.1,50,000/- towards the litigation charges without stating anywhere in the award the basis for the same. That respondent/claimant had neither provided any proof of litigation charges incurred by it nor had prayed for any specific amount towards the same. That ld. Arbitrator has simply added in his handwriting 'with litigation charges of Rs.1,50,000/-' at the end of the line on the last page of the arbitral award without giving any reasoning for the same.
xix. On the basis of aforesaid grounds, prayer has been made to: - (i) set aside the impugned Award dated 12.02.2020; and (ii) award the cost of the proceedings in favour of petitioner and against respondent.
OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 37 Patiala House Court, New Delhi REPLY OF THE RESPONDENT
8. Respondent filed its reply opposing the petition and contended that petition filed by applicant is not maintainable and is liable to be dismissed, as none of the grounds raised by petitioner falls within limited sphere of Arbitration and Conciliation Act, 1996 (as amended time to time). Respondent averred that it is settled law that under the provisions of Section 34 of the Act, the Court does not sit as court of appeal against award passed by ld. Arbitrator. Respondent averred that no new grounds have been raised in the petition, wherein the grounds, which are raised, have already been adjudicated by ld. Arbitrator with valid and legal reasoning. Respondent averred that petitioner has concealed material and vital facts from this court.
ARGUMENTS ON BEHALF OF THE PETITIONER
9. Learned counsel for the petitioner argued that ld. Arbitrator while adjudicating issue no.1 has wrongly taken the commencement of the cause of action from the date when the legal notice was served by the respondent/claimant on the petitioner, which is contrary to the provision of the contract as well as law of limitation. Ld. counsel argued that ld. arbitral tribunal has failed to distinguish between the limitation period for filing application for appointment of arbitrator u/s 11 of the Act and the limitation period for filing the claims before the Court of law or Arbitral Tribunal. Ld. counsel averred that the arbitral tribunal while adjudicating the issue no.2 did not dismiss the statement of claims, though the same had not been verified by the respondent/claimant, by giving the reason that the provisions of OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 37 Patiala House Court, New Delhi CPC were not strictly applicable in arbitral proceedings. Ld. counsel argued that respondent/claimant had not filed the authorization letter of the authorized person with the statement of claim. Ld. counsel argued that respondent/claimant had not filed its bills along with requisite documents within prescribed time as required in clause 5 (b) of the Contract Agreement and ld. Arbitral Tribunal had wrongly adopted negative reasoning while adjudicating issue no.4. While making his submissions on issue no.5, ld. counsel argued that respondent had admittedly not submitted the required documents as per clause 5(a) and (b) of the Contract. Ld. counsel argued that ld. tribunal has failed to give reasons for adjudicating the claim in favour of the respondent and therefore, the award is in contravention of Section 31 (3) of the Act. While arguing on issue no.6, he argued that respondent/claimant had not filed with its SoC or evidence affidavit, any document to prove that it was in existence in the record of the ROC and that it is in operation as on day, despite the fact that petitioner had raised specific preliminary objection no.8 with this regard. As regard, issue no.7, ld. counsel argued that the SoC had been signed on 01.01.2019 but the affidavit had been sworn and attested on 29.12.2018. As regard, issue no. 8, petitioner averred that petitioner herein was supposed to make the payments for the bills received by its office along with the requisite documents on monthly basis, but the petitioner did not receive the bills along with the requisite documents from the respondent/claimant. Ld. counsel argued that sole reason given by Arbitral Tribunal for deciding the claim in favour of the respondent was that 'natural justice' demanded that the petitioner OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 37 Patiala House Court, New Delhi must pay for the service availed by it. As regards issue no.9, ld. counsel argued that no interest or damages were payable as per the contract by the petitioner herein to the respondent/claimant, particularly when the respondent/claimant had itself been negligent in providing the bills and required documents on time on the petitioner. As regards, issue no.10, ld. counsel argued that respondent/claimant has not verified its evidence.
10. A written argument was filed on behalf of petitioner, reiterating the above-mentioned plea. Apart from above-mentioned plea, it has been mentioned that respondent/claimant itself had calculated interest on the principal amount from the year 2014, which proves that the cause of action had accrued in 2014 itself and the claims were time barred at the time of invocation of arbitration clause. It has been further mentioned that if the cause of action had arisen on 23.12.2017, then the interest could not have been awarded from the year 2014. No such letter dated 23.12.2017 has been filed by respondent/claimant along with its pleadings or affidavit of CW-1. It has been further mentioned that respondent/claimant did not file its bills within prescribed time and these alleged bills do not bear any signature/receipt of respondent and have been denied by petitioner in its affidavit of admission/denial. It has been further mentioned that working sheets/calculation sheets filed by respondent were undated and unsigned and are not evidence in themselves, but were at the best just extracts of the base documents like bills/vouchers/payment proofs/bank statements, etc. which were not filed by the respondent. Ld. Arbitral Tribunal has failed to give reasons for adjudicating the claim in favour of respondent and therefore, the OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.15 of 37 Patiala House Court, New Delhi award is in contravention of Section 31(3) of the Act. It has been further mentioned that petitioner did not receive the bills along with the requisite documents from respondent, to make payments for those bills. Petitioner herein kept on writing letters to respondent asking it to submit the bills along with the requisite documents, but respondent failed to comply with the conditions of the contract. Petitioner is justified in not making the complete payment to respondent for the period of 01.01.2014 to 31.12.2014. It has been further mentioned that ld. Arbitral Tribunal has not specified as to which of the principles of the natural justice provides for payment of bills without complying with the terms and conditions of the contract and particularly in violation of the principles of substantial laws of the land like limitation Act, CPC & Evidence Act. It has been further mentioned that ld. Arbitral Tribunal allowed all the baseless claims made by respondent despite there being no provision in the contract for redemption of the bonus, if paid to the employees. No interest or damages were payable as per the contract by the petitioner to the respondent particularly when respondent had itself been negligent in providing the bills and required documents on time to the petitioner herein. It has been further mentioned that ld. Arbitral Tribunal has not decided on the issue of improper verification of evidence by way of affidavit by the respondent's witness. It has been further mentioned that ld. Arbitral Tribunal knowingly committed duplication of claims by allowing interest from 23.02.2017 that too at the rate of 12% per annum which is on higher side considering prevailing rate of interest by nationalized banks. Similarly, pre lite interest from OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.16 of 37 Patiala House Court, New Delhi 2014 till 2019 has been allowed @ 18% per annum by ld. Sole Arbitrator without giving any justification for grant of interest at such a high rate.
11. An additional written arguments was also filed by ld. counsel on behalf of petitioner. In the additional written arguments, in respect of issue no.12, it has been mentioned that the tribunal has not given any reason and breakup of the amount of awarded costs with reference to S.31A(3) of the Act, while adding in its handwriting an arbitrary sum of Rs.1,50,000/- as litigation charges after printing the award on papers. It has been further mentioned that when respondent/claimant neither prayed for any specific amount in its statement of claims nor has provided any proof of litigation charges allegedly incurred by it. In respect of issue no.13, it has been mentioned that when a statute confers discretionary powers upon an adjudicatory authority then it has to be exercised with reasons. It has been further mentioned that award of interest without assigning any reason for awarding the same, is also against the fundamental policy of India. It has been further mentioned that by awarding unquantified amount of pre- lite and pendente-lite interest, Tribunal has not performed its part of contract. In respect of issue no.14, it has been mentioned that ld. Arbitrator suo moto awarded pre-lite interest @ 12% p.a. on the awarded amount (which already included pre-lite interest @ 18% p.a. till 01.01.2019), which has resulted into double jeopardy to the petitioner herein. No reasons have been given for awarding such amounts to the respondent/claimant by ld. Arbitrator. The claimant has failed to bring on record any evidence to prove the existence of the said bills. In respect of OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.17 of 37 Patiala House Court, New Delhi issue no.15, it has been mentioned that ld. Arbitrator had not furnished his declaration of independence and impartiality to the parties before entering into the reference, while S.12 of the Act casts a mandatory duty upon the prospective arbitrator to give disclosure in writing.
12. In support of his contentions, ld. counsel for petitioner relied upon certain case laws, which are as under: -
i. Micrographics India v. Govt. of NCT of Delhi & Ors., 2018 VAD (Delhi) 139.
ii. Avalon Investment Private Ltd. v. Mukesh Brokerage & Financial Ltd. Appeal No. 692 of 2011, 2012 (114) 5 Bom. L.R. 2716.
iii. Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India, 2019 (8) SCALE 41.
iv.Bharat Sanchar Nigam Limited & Anr. v. Nortel Networks India Pvt. Ltd., (2021) 5 SCC 738.
v. M/s. ONGC v. M/s. Interocean Shipping (India) Pvt. Ltd., Arb. Pet. No. 549 of 2013, AIR OnLine 2018 BOM 270.
vi.V. Narayanaswamy v. C.P. Thirunavukkarasu, (2000) 2 SCC
294.
vii.Escorts Limited v. Sai Autos & Ors., 42 (1990) DLT 446.
viii.M/s. Nibro Limited v. National Insurance Co. Ltd. 1990 SCC OnLine Del 65.
ix.State Bank of Travancore v. Kingston Computers (I) P. Ltd., MANU/SC/0280/2011.
OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.18 of 37 Patiala House Court, New Delhi x. United Bank of India v. Naresh Kumar, AIR 1997 SC 3.
xi.State of Rajasthan v. Nav Bharat Construction Co., (2006) 1 SCC
86. xii. Pradyuman Kumar Sharma & Ors. v. Jaysagar M. Sancheti & Ors., 2013 SCC OnLine Bom 453.
xiii.Delhi Jal Board & Ors. v. Dev Raj Kataria and Ors., 2016 (1) ARBLR 196 (Delhi).
xiv. State of Rajasthan v. Nav Bharat Construction Co. (2006) 1 SCC
86. xv. Associate Engineering Co. v. Govt. of Andhra Pradesh, (1991) 4 SCC 93.
xvi. MKU Ltd. v. Union of India, 243 (2017) DLT 198.
xvii. Oil and Natural Gas Corporation Ltd. v. Joint Venture of M/s.
Sai Rama Engineering Enterprises & M/s. Megha Engineering & Infrastructure Ltd. O.M.P. (COMM.) 97/2019, AIR OnLine 2019 DEL 1753.
xviii. Padmabati Dasi v. Rasik Lal Dhar, ILR 37 Cal 259.
xix. Hira Lal v. Amarjit Singh, 1977 RLR 520.
xx. Registrar of Companies v. New Suraj Financiers & Chit Fund, (1990) 69 CompCas 104 P&H. xxi. Patel Engineering Ltd. v. North Eastern Power Corporation Ltd., 2020 SCC OnLine SC 466.
xxii. Ram Kumar & Anr. v. Shriram Transport Finance Co. Ltd., 2022/DHC/005313.
xxiii. Bridge Building Construction Co. Pvt. Ltd. v. Bharat Heavy OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.19 of 37 Patiala House Court, New Delhi Electricals Ltd., MANU/DE/0262/2023.
xxiv. State of Maharashtra v. Hindustan Construction Company, AIR 2010 SUPREME COURT 1299.
xxv. Era Constructions (India) v. Mr. D.K. Sharma, Prop. Keshav, 2008 (1) ARB LR 205 Delhi.
xxvi. Steel Stripes Wheels Ltd. v. Tata AIG General Insurance Co.
Ltd. 2020(3)ARBLR 451 (Delhi).
xxvii. K. Lubna & Ors. v. Beevi & Ors., AIR 2020 SC 429.
xxviii.Union of India & Anr. v. Alcon Builders and Engineer Pvt. Ltd., 2023/DHC/000304.
xxix. Morgan Securities and Credits Pvt. Ltd. v. Videocon Industries Ltd., (2023) 1 SCC 602.
xxx. ONGC v. Afcons Gunanusa JV, AIR 2022 SC 4413.
ARGUMENTS OF RESPONDENT
13. Per contra, learned senior counsel for the respondent argued that issue of limitation was rightly decided by ld. Arbitrator, as the limitation started from the date of giving notice to the petitioner. She also argued that in DIAC there was practise of taking disclosure from the Arbitrator, and same should have been so made by ld. Arbitrator. Such question was never raised by petitioner and now this plea cannot be allowed to be raised. At the same time ld. senior counsel submitted that interest w.e.f. 2014 cannot be payable, being beyond the period of three years, and only such part of the award is liable to be modified. She argued that under s. 34, award can be modified or partly set aside in respect of portion which is severable from other part of the OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.20 of 37 Patiala House Court, New Delhi award.
14. Written submission/argument was filed on behalf of respondent as well. It has been mentioned that it is not open for the petitioner to allege that the award is not correct on facts or that ld. Arbitrator came to a wrong decision, wherein the arbitration proceedings went on for months together and every arbitration proceeding was duly attended and contested by petitioner along with counsel. It has been further mentioned that provisions of S.34 of the Act are not inconsistent with the Award and therefore, the Award cannot be challenged. It has been further pleaded that no new grounds have been raised in the petition under reply, wherein the grounds have already been properly adjudicated by ld. Arbitrator with valid and legal reasoning. It has been further pleaded that respondent being the service provider, provided continuous services to petitioner and raised and submitted the bills not just once, but multiple times as per the demand of the petitioner, which petitioner failed to process and pay. This clearly establishes unjust and arbitrary act of petitioner to misuse their dominant position and same has been dealt by ld. Arbitrator. It has been further mentioned that once the contract was concluded and claimant did not receive any payment from petitioner in spite of submissions of bills, respondent wrote numerous letters and reminders requesting petitioner to make payment against the security services enjoyed by petitioner. It has been further mentioned that post the legal notice of claimant and during talks of pending wage bills, respondent released 6 Earnest Money Deposit (EMD's) in the form of DD and FDR of claimant company and further assured OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.21 of 37 Patiala House Court, New Delhi that the wage bills would be processed, however, no payment was made against the same. It has been further mentioned that despite making all possible efforts and personal visits by the Director himself and through his AR, only FDRs were released, but no payment against the wage bills were made. It has been further mentioned that being aggrieved by the arbitrary act of respondent, the claimant being a retired Army Officer, was constrained to write a DO letter to respondent vide letter dated 10.10.2017. It has been further mentioned that respondent not only failed to reply to the requests of claimant, but further did not seek or provide reasons for non-payment. Thereafter claimant was constrained to invoke the Arbitration Clause between the parties vide its letter dated 17.09.2018, so that claimant could receive its due payment from the respondent against the security services availed by the respondent. It has been further mentioned that the issue regarding the cause of action was duly acknowledged, addressed and reasoned by ld. Arbitrator in para- 26 of the Award, wherein it was rightfully adjudicated that the cause of action arose from the date of the service of legal notice as the petitioner admitted that the payments were not made by them. It has been further mentioned that the cause of action was continuous in nature as the legal dues of petitioner were accrued over the time period of the subsistence of the contract. It has been further mentioned that ld. Arbitrator has rightfully granted interest in favor of respondent as it is settled principal of law that the interest has to be considered from the date of first demand, which in this case arose in the year 2014. It has been further mentioned that the claims of claimant filed before ld. Arbitrator, OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.22 of 37 Patiala House Court, New Delhi was within limitation and was not barred by law and is a well- reasoned and legal award. It has been further mentioned that the claim was filed by the Director of the claimant company, whose authorization was not only filed in the Section 11 petition before Hon'ble High Court of Delhi, but also before the Tribunal. In respect of issue no.4, it has been mentioned that there was no clause in the agreement that the payment of the services given by the respondent would be stopped merely on the ground of alleged omission on the part of respondent in submitting its bills within the prescribed time along with the required documents as reasoned by ld. Arbitrator in the para-29 of the award. In respect of issued no. 5, it has been mentioned that as per clauses of the contract, the statutory dues like EPFO, ESIC etc. were to be submitted by the respondents and no prejudice was caused to the petitioner, which is so addressed by ld. Arbitrator in para-30 of the Award. In respect of issue no.6, it has been mentioned that in para-31 of the Award it is stated by ld. Arbitrator that the record of the company could have easily be taken from the Registrar of the Company. The pending dues were from the period of January 2014 to December 2014, when the company was in the existence. In respect of issue no.7, it has been mentioned that the provisions of Code of Civil Procedure, 1908 and Indian Evidence Act, 1872 Act, were not strictly applicable in arbitral proceedings. The claim petition was signed by the Director, who was present in all proceedings and a mere technical error could not be taken as a patent illegality in the award. In respect of issues no.8 and 9, it has been mentioned that petitioner enjoyed the services provided by the respondents for a whole year without paying even a single OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.23 of 37 Patiala House Court, New Delhi penny to them, which is unjust, illegal, and arbitrary, and which is strictly against the principles of natural justice. Ld. Arbitrator took notice of all the above-mentioned material facts and passed a self-explanatory and well-reasoned Award. In respect of issue no.10, it has been mentioned that evidence by way of affidavit was properly verified and the provisions of CPC, 1908 and Indian Evidence Act, 1872, were not strictly followed in the arbitration proceedings as mutually agreed by the parties. In respect of issue no.11, it has been mentioned that petitioner is liable to pay the interest for the delay and loss caused to the respondent, which has been justly and fairly adjudicated by ld. Arbitrator.
15. A gist of oral arguments/plea made on behalf of respondent in reply to the preliminary objections of petitioner on claims being time barred and declaration made by ld. Sole Arbitrator under Section 12(1) of the Act, was also filed. Through this gist on the point of limitation, it has been pleaded that limitation in the present case is a mixed question of law and fact, and that any factual finding cannot be interfered u/s 34. It has been further pleaded that in cases where parties are in correspondence with each other, the cause of action for initiating legal proceedings arises, when a breaking point is reached by the parties.
16. In support of the contentions, ld. counsel for respondent relied upon certain case laws, which are as under: -
i. Consolidated Construction Consortium Ltd. v. Software Technology Parks of India, (2025) 7 SCC 757.
ii. Hindustan Construction Company v. National Highways OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.24 of 37 Patiala House Court, New Delhi Authority of India, (2024) 2 SCC 613.
iii. M/s. Welspun Enterprises Ltd. v. M/s. NCC Ltd., FAO (OS) (COMM) No. 9/2019, decided on 10.10.2022 by Hon'ble High Court of Delhi.
iv. Geo Miller and Co. Pvt. Ltd. v. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd. (2020) 14 SCC 643.
v. M/s. Hyder Consulting (UK) Ltd. v. Governor State of Orissa Through Chief Engineer, (2025) 2 SCC 189.
vi. Associate Builders v. DDA, (2015) 3 SCC 49.
vii. Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India, AIR 2019 SC 5041.
viii.Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp(1) SCC 644.
ix. Patel Engineering Limited v. North Eastern Electric Power Corporation Ltd., AIR 2020 SC 2488.
x. Canara Nidhi Ltd. v. M. Shashikala, 2019 SCC OnLine SC 1244.
xi. Associated Construction v. Pawan Hans Helicopters Ltd., (2008) 16 SCC 128.
xii. NTPC Ltd. v. M/s. Deconar Services Pvt. Ltd. Civil, Civil Appeal No.6483/2014, decided on 14.05.2015.
APPRECIATION OF ARGUMENTS, FACTS & LAW
17. The crux of the legal principals explained by superior courts in respect of ambit of Section 34, is that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.25 of 37 Patiala House Court, New Delhi is not to be set aside even by the Court, even if the Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the award can be set aside are mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the award passed by the Arbitrator.
18. Hon'ble Supreme Court in the case of Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It was held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
19. Hon'ble Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.26 of 37 Patiala House Court, New Delhi 2019 SCC OnLine SC 677 held that under Section 34 (2A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore, would also have to be characterized as perverse. It was held that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision, would be perverse and liable to be set aside on the ground of patent illegality.
20. In the present case, ld. Arbitrator had framed following issues: -
i. Whether claim petition is barred by limitation?
ii. Whether claimant has not verified the claim petition and if so, its effect?
iii. Whether the statement of claim has been filed by the unauthorised person and if so, its effect?
iv.Whether claimant did not file its bills within prescribed time along with required documents if so, its effect?
v. Whether claimant has not provided to the respondent till date proof of payment of statutory dues like bonus, EPF, ESI, service tax etc., if so, its effect?
vi.Whether claimant company is in existence in the record of Registrar of the companies and that it is in operation as on today?
vii. Wheat will be impact on claim petition as the affidavit has been OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.27 of 37 Patiala House Court, New Delhi shown on 29.12.2018 while claim petition has been signed on 01.01.2019?
viii.Whether the respondent is justified to withheld the complete payment of claimant company for the period 01.01.2014 to 31.12.2014?
ix. Whether the workman [security guard] are the employees of the respondent and whether compliance of statutory dues of ESI, EPF, Service tax and labour law, is to be seen by the respondent or by statutory competent authority?
x. Whether the claimant is entitled for the reliefs claimed? OPP LIMITATION
21. In the present proceeding, though the arguments were made on behalf of petitioner in respect of all the afore-said issues to contend that ld. Arbitrator has given wrong findings, but keeping in view the narrow scope of Section 34 of the Act, more focus was given on the legal issues. The issue related to limitation was very extensively argued by both the parties. The relevant factual matrix without any controversy, is that 31.12.2014 was the last day of contract between the parties. As per contract between the parties, bills were to be raised on monthly basis and same were payable on monthly basis. Part-IV of the contract contained the relevant contractual terms related to payment. Clause 5 mentions that payment was to be made every month on production of certain documents. The notice u/s. 21 of Arbitration and Conciliation Act was given by respondent herein on 17.09.2018. Petitioner took stand that this notice was issued after lapse of three (3) years from the date when even the last bill became due OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.28 of 37 Patiala House Court, New Delhi and hence, all claim of the respondent was time barred. However, respondent took plea that demand notices were sent subsequently and the cause of action to invoke arbitration arose when notice was issued to petitioner on 23.02.2017, which was even replied by the petitioner, vide reply dated 10.03.2017.
22. While deciding the issue of limitation, ld. Arbitrator made following observations: -
"26. ................
Hon'ble Supreme Court discussed this aspect in judgment cited as Union of India vs. L.K. Ahuja, 1988 RLR SC 293. In that case between 29.5.1972 and 19.6.1972, respondent accepted four final bills. The parties in 1976, respondent/claimant wrote a letter to additional CE that about Rs.2 lakhs was due to him and matter be referred to arbitration. Government denied claim on 4.6.1976 and declined reference on 13.12.1972, respondent applied to civil court Allahabad for appointment of arbitrator. It was dismissed as barred by time, that order was referred by High Court and Union of India appealed to Supreme Court. It was held by Hon'ble Supreme Court that claim for reference if made within three years from date of demand, then it is within time. This question was again considered by Hon'ble Supreme Court in case cited Punjab State vs. Executive Engineer Anandpur Sahib, AIR 2007 SC 2157. In para no.24 of the judgment, it was held that reference of the dispute of the arbitration is required to be filed within three years, when right to file accrue and that said right accrued when differences or disputes arise between the parties to the arbitration agreement. Now it is to be seen when dispute arose between the parties. According to claimant, he was pursuing the matter with respondent to make payment of the services rendered and the resident of respondent for one year from January 2014 to till December 2014. Claimant has placed on record legal notice sent to respondent, Mark-B dated 28.01.2017. The service of this notice on respondent OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.29 of 37 Patiala House Court, New Delhi has not been proved, marked documents can not be taken into consideration. However another notice Ex.CW1/10 dated
23.02.2017 has been admitted by the respondent in their affidavit filed in respect of document by claimant. In column No.10 of the affidavit, receipt of this notice has been admitted. In legal notice sent by the claimant Ex.CW1/10, it is mentioned that the respondent has enjoyed security services provided by claimant from January 2014 till December 2014 under contract dated 30.1.2014. Agreement executed between the parties is Ex.CW1/3. Respondent gave reply to this notice, which is Ex.CW1/12 dated 10.3.17 in which it is mentioned that the firm has not been providing requisite document, which are required by CDA[N] and which are explicitly mentioned in the contract agreement for payment to the firm. Claimant was asked to provide requisite document as mentioned in the contract agreement at the earliest for the duration January 2014 to December 2014 for onwards submissions of the bills to CDA [N] so that payment may be made to the firm.
To my opinion, the limitation starts on the date of demand by the claimant. The claim has been filed within three years, when cause of action arose. Limitation period starts not from January 2015, but it starts from 23.12.2017, when notice was issued by the claimant to respondent. This issue is decided accordingly in favor of the claimant and against the respondent."
23. First of all the date of 23.12.2017 as mentioned in the concluding part of the finding, appears to be a case of typographical mistake and ld. Arbitrator basically treated the date of legal notice sent by respondent to petitioner on 23.02.2017, as the date of accruel of cause of action.
24. According to ld. Counsel for respondent there had been negotiation going on between the parties and it was only when a breaking point was achieved that the actual cause of action arose to invoke arbitration clause. Ld. Senior Counsel referred to OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.30 of 37 Patiala House Court, New Delhi observations made by three judge bench of Hon'ble Supreme Court in paragraph 28 of the case of Geo Miller (supra). The said observations are as follows: -
"28. Having perused through the relevant precedents, we agree that on a certain set of facts and circumstances, the period during which the parties were bona fide negotiating towards an amicable settlement may be excluded for the purpose of computing the period of limitation for reference to arbitration under the 1996 Act. However, in such cases the entire negotiation history between the parties must be specifically pleaded and placed on the record. The Court upon careful consideration of such history must find out what was the "breaking point" at which any reasonable party would have abandoned efforts at arriving at a settlement and contemplated referral of the dispute for arbitration. This "breaking point"
would then be treated as the date on which the cause of action arises, for the purpose of limitation. The threshold for determining when such a point arises will be lower in the case of commercial disputes, where the party's primary interest is in securing the payment due to them, than in family disputes where it may be said that the parties have a greater stake in settling the dispute amicably, and therefore delaying formal adjudication of the claim."
25. The above observations made by Hon'ble Supreme Court, make the pleading very important, which has to be considered in accordance with the observations of the court. In the Statement of Claim filed by respondent herein, it was pleaded that claimant/respondent herein was contrained to file the claim petition against the unjust, unfair and arbitrary actions of the respondent of not making the due payment to the claimant company against the security services enjoyed by them from January, 2014 till December, 2014 till date. It was also alleged that respondent (in the arbitration proceedings) had also failed to OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.31 of 37 Patiala House Court, New Delhi release the bank guarantee. It was further alleged (para-12 & 13 of SOC) that claimant company personally as well as through representative time and again requested the respondent to release the due payment of the claimant against their security services provided for a year, and that aggrieved by non-payment of the wage bills the claimant personally as well as vide letter dated 06.12.2015 requested the respondent for kind intervention as well as hold meeting in order that the dispute could be settled amicably. Thereafter, the pleadings in the SOC straightaway referred to the legal notices allegedly sent on 28.01.2017 and 23.02.2017 to the respondent for release of payment. In para-17 of SOC, it was further pleaded that during the process respondent assured to process and release the payment to the claimant and that it was during that time when petitioner herein also released three (3) FDRs. It was further pleaded that inspite of the assurance given, the respondent failed to release a single payment to the claimant company and accordingly aggrieved by the same, claimant invoked arbitration clause vide letter dated 17.09.2018.
26. The afore-said pleading did not in any manner project any scenario of negotiation towards amicable settlement actually taken place between the parties at any particular period of time. In the same judgment, Hon'ble Supreme Court in respect of stretching the period of cause of action, observed as under: -
"29. Moreover, in a commercial dispute, while mere failure to pay may not give rise to a cause of action, once the applicant has asserted their claim and the respondent fails to respond to such claim, such failure will be treated as a denial of the applicant's claim giving rise to a dispute, and therefore the OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.32 of 37 Patiala House Court, New Delhi cause of action for reference to arbitration. It does not lie to the applicant to plead that waited for an unreasonably long period to refer the dispute to arbitration merely on account of the respondent's failure to settle their claim and because they were writing representations and reminders to the respondent in the meanwhile."
27. It is, thus, well clear that the concept of breaking point is based on some actual negotiation going on between the parties, with a scope of settlement of the dispute. But the negotiation cannot be unilateral, meaning thereby just because one party says that meeting be held to settle the dispute amicably, but the opposite does not respond at all positively or otherwise, then it cannot be said that any negotiation was underway. Demand in respect of the due amount is implicit when a bill for such due amount is given to the opposite party.
28. In the case of Era Constructions (India) Limited (supra), while dealing with a case of security agency services provided by the claimant, Hon'ble Delhi Court held as under: -
"In the Award itself it is noted that the contract between the parties was essentially one for payment of wages in respect of the security personnel provided by the respondent to the petitioner. The specific period of limitation provided in respect of such contracts is indicated in Article 7 of the Limitation Act, 1963 and it is three years from when the wages accrue due."
29. In the name of any response from the respondent (in the arbitration proceedings/petitioner herein) there is reference to only one reply dated 10.03.2017, which is Ex.CW-1/12 in the arbitral record. This reply refers to the claimant's letter dated 23.02.2017. In this reply or even in the letters sent by claimant/respondent herein, there had not been any reference to OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.33 of 37 Patiala House Court, New Delhi any talk of negotiation for amicable settlement. It was only a desire/request made by claimant to arrange for a meeting to resolve the matter amicably, as mentioned in the letter dated 23.02.2017. All these letters refered to monthly wage bills, which had remained due for payment. In the reply of petitioner herein, it was mentioned that repeated reminders were given to claimant to provide requisite documents which were explicitly mentioned in the contract agreement and same advise was again repeated in the reply dated 10.03.2017. Thus, even if I go beyond pleading of claimant/respondent herein, to infer any kind of negotiation actually going on between the parties, I do not find any material to presume so. Actually no negotiation was going on and that is the reason that claimant could not plead anything about any such negotiation talk or conversation/communication. From the side of claimant, the first letter referred in the pleading is dated 06.12.2015, wherein same grievance was made about non release of even single payment and request was made to look into the matter and to hold the meeting. Legal notices dated 28.01.2017 or 23.02.2017 also remained silent in respect of failure of any negotiation talk (because there had not been any). Thus, it was case of unilateral letters form the side of claimant to keep making demand and also to make request for a meeting. In that situation, there was no ocassion to have a breaking point (as referred in the case of Geo Miller (supra)). Thus, I do find that the finding given by ld. Arbitrator on the point of limitation was contrary to the law of limitation. Referring to some case laws based on different set of facts, was only to be oblivious of the actual facts involved in this matter. Even the approach was contrary to legal concept, OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.34 of 37 Patiala House Court, New Delhi in reaching to the conclusion that the cause of action started from 23.02.2017 that is the second legal notice sent by claimant. The right approach was to treat the documents and facts pleaded by claimant binding upon the claimant, which did not require any admission from the respondent/petitioner herein, for the purpose of calculation of limitation. Thus, ignoring the notice dated 28.01.2017 as pleaded by claimant, on the basis of reasoning that respondent did not admit the same, was altogether approach contrary to law to look into the limitation aspect. Since petitioner herein had raised this issue of limitation, such issue was not to be decided only on the basis of documents admitted by petitioner. It was always onus of the claimant/respondent herein to establish that the claim was within limitation and therefore, any fact pleaded or document referred by the claimant, was to be read against claimant for the purpose of deciding limitation. In these circumstances, I do find that the illegality in the decision making process as well as the decision given on the aspect of limitation, goes into the roots of the complete matter and apparently this cannot be something minor diffect in nature, which can be ignored by the court.
MANDATE OF SECTION 12 OF THE ACT
30. Another substantial legal question raised by the petitioner was compliance of mandate of Section 12 of the Act. It remained admitted position that on the arbitral record no such declaration/disclosure was found by anyone. Argument was made on behalf of respondent that it is not a case of non- disclosure, rather it is a case of missing of such disclosure from OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.35 of 37 Patiala House Court, New Delhi the arbitral record. Ld. Counsel for petitioner had submitted that such oral assertion cannot be entertained and if disclosure was acctually filed/made by ld. Arbitrator, then respondent could file affidavit to that effect. In response to this argument, it was submitted that such affidavit was not being filed because the present counsel or AR did not participate in that proceeding and hence, they could not vouch for the same.
31. Apparently, benefit of absence of such disclosure in the arbitral record cannot be given blindly, merely on the basis of oral submissions that it is part and parcel of practice in DIAC to make such disclosure and hence, such disclosure must have been made by ld. Arbitrator. At least some sort of reference could have been shown to me from any material placed on the record, in order to raise such presumption, but it was not so done. If I refer to the first order dated 18.09.2019, as passed by ld. Arbitrator, there is no reference of making any such declaration by ld. Arbitrator. Similarly, there is no reference of making such disclosure even in the Award. In the file pertaining to correspondence as received from DIAC, I could find one email dated 30.08.2019 sent to ld. Arbitrator from DIAC, wherein he was asked to send the declaration of acceptance and statement of independence, but I could not find any reply to that email so as to confirm about having sent such declaration nor could I find any declration in the file. In such situation, I cannot treat it to be a case wherein declaration u/s. 12 of the Act was filed by ld. Arbitrator. It is well settled that absence of such declaration is not mere irregularity, rather it goes into the roots of the arbitration proceedings. The judgments passed in the case of Ram Kumar OMP (COMM.) No. 96/2021 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.36 of 37 Patiala House Court, New Delhi (supra) and Bridge Building (supra), leave no doubt about indispensable mandate of Section 12 of the Act and on account of non-compliance of the same also, this arbitration proceedings stood vitiated.
DECISION
32. In view of my foregoing discussions, observations and findings, I find that the Award in question does not stand the test of fundamental laws of the land and hence, petition is allowed and Award is set aside.
33. File be consigned to record room after due compliance.
Pronounced in the (PULASTYA PRAMACHALA)
Open Court on this District Judge (Commercial Court)-01,
08th Day of April, 2026 Patiala House Court, New Delhi
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.37 of 37 Patiala House Court, New Delhi