Delhi District Court
Pec Ltd vs Badri Singh Vinimay Pvt Ltd on 1 February, 2025
IN THE COURT OF ANURAG SAIN, DISTRICT JUDGE
(COMMERCIAL COURT-01), PATIALA HOUSE COURTS, NEW
DELHI
ARBTN 3047/2018
PEC Ltd.
Through its Authorized Representative
At 'Hansalaya', 15,
Barahkhamb Road
New Delhi-110001
.........Petitioner
Versus
1. M/s Badri Singh Vinimay Pvt. Ltd.
Through Its Directors
At 9/2B/1B, Gorapado Sarkar Lane
Kolkata, West Bengal-700067
2. Anil Kumar Batra
Sole Arbitrator
C/o Indian Council of Arbitration
Federation House
Tansen Marg, New Delhi-110001
.......Respondents
Date of institution : 10.07.2018
Date of reserving judgment : 28.11.2024
Date of pronouncement : 01.02.2025
JUDGMENT
1. The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed by the petitioner for setting aside the Award dated 02.04.2018 passed in the present matter bearing Arb. Case No. 1973/2015 by respondent no.2/ Ld. Sole ARBTN-3047/2018 Page 1 of 39 Arbitrator.
2. Briefly stated the facts of the case are that the petitioner is a Public Sector Enterprise, a company within the meaning of the Companies Act, 1956 and engaged in sourcing of various commodities in bulk from international markets and importing agricultural commodities including pulses and Lentils for sale in domestic open market and respondent no.1 is a company incorporated under the Companies Act, 1956 engaged in trading regularly in different verities of pulses and similar commodities. The petitioner floated a public tender on 27.08.2011 offering various commodities for sale, including 100 MT of Red Lentils for Canadian Origin and three competitive bids were received from the prospective buyers out of which, respondent no.1 was declared as the successful party being the highest bidder @ Rs. 25,500/- per MT and was awarded to buy the said 100 MT of Red Lentils at a total consideration of Rs. 25,500/- per MT. Subsequently, as a result of mutual consultations and negotiations between the parties, the Order Quantity was increased from 100 MT to 300 MT as the petitioner had the extra stocks available in their Godowns and respondent no.1 had a ready market opportunity for trade in their further supply chain. The tender also had a provision for submissions of EMD equivalent to 5% of the total bid price by the successful bidder. As per the terms and conditions of the tender, the goods were offered on 'as is where is basis' which were to be lifted from the godown of the petitioner at 3, Hyde Park, Kolkata by the successful bidder however, ARBTN-3047/2018 Page 2 of 39 respondent no.1 while accepting the contract notified clearly vide their acceptance letter dated 09.08.2011 that only 'Cargo in sound and good (fresh cargo) condition' shall be acceptable. The petitioner remained silent and did not respond to the said communication dated 09.09.2011 from respondent no.1 while accepting order. The goods were to be lifted in various lots through transportation lorries to be arranged by respondent no.1 from the godown of the petitioner by making payments in advance for the lots to be lifted. As per the terms and conditions of the tender, the successful bidder was required to lift the entire stocks within 30 days of the date of acceptance of tender, failing which, the petitioner had the option to cancel the contract and dispose off goods at the risk and cost of the bidder. Respondent no.1 had made a total payment of Rs. 36,45,844/- including Rs. 2,50,000/- as EMD on various dates during the period between 23.08.2011 and 22.03.2012 which is equivalent to the value of 133 MT of Cargo (Red Lentils) whereas the lifting of only 83.94 MT of Cargo, respondent no.1 alleged the Cargo offered by the petitioner is a mixed up cargo i.e. 'damaged cargo mixed with sound cargo'. Respondent no.1 withdrew his Lorries from the warehouse site and refused to accept the cargo in 'as offered' condition. A complaint with respect to the quality of cargo was made on 02.12.2011 to the petitioner. Respondent no.1 vide communication dated 02.12.2011 notified the petitioner of their inability to take the delivery of 'damaged' Cargo mixed with 'sound' Cargo requesting the petitioner to refund the excess ARBTN-3047/2018 Page 3 of 39 amount paid by respondent no.1 and in response to the same, the petitioner vide communication dated 22.12.2011 rejected the claim of respondent no.1 with respect to the quality of cargo saying that the original tender specified the goods to be offered on 'as is where as basis'. The petitioner while refusing to consider any arguments of respondent no.1 with respect to the damaged/mixed up/non-merchandisable condition of cargo, declared that they would proceed to forfeit the EMD amount deposited by respondent no.1 along with interest and warehouse charges to be debited the account of respondent no.1. After a gap of three to four months during which the parties could not come to the negotiating table, the petitioner in a bid to sort out the matter, proposed a 'Third Party Survey' for the Cargo to be inspected in the presence of both parties. The actual Survey was conducted by Surveyors M/s S.S. Developers on 13.02.2012 wherein both the parties were present and the Survey Report dated 23.02.2012 was issued by the Surveyor nominated by the petitioner. As per the findings of the Survey Report, it was concluded that out of total 3178 bags of Red Lentils (each bag containing approx. 50 kg) available in stock on 13.02.2012 at the godown of the petitioner, as much as 2218, which is about 70% of the stock, were found in 'Damaged condition' whereas remaining 30% stock containing 960 bags were found in 'Sound condition'. As a result of finings of the Joint Survey, the deliveries resumed once again from the godown of the petitioner based upon agreement reached between the parties that only ARBTN-3047/2018 Page 4 of 39 'Sound cargo' be accepted by respondent no.1. During 21.03.2012 and 24.03.2012, respondent no.1 took delivery of three consignments weighing (1) 12.49 MT-260 bags, (2) 12.47 MT-270 bags and (3) 0.152 MT-48 bags. Total cargo delivered and accepted by respondent no.1 in this period works out to 27.34 MT in 578 bags after which respondent no.1 refused to accept the goods alleging the Cargo being mixed/damaged/non- merchandisable. On 13.07.2012, respondent no.1 vide communication dated 13.07.2012 notified the petitioner of non- acceptance of remaining cargo and requested the petitioner for refund of excess amount of Rs. 7,58,854/- after adjusting Rs. 49,350/- towards interest and warehouse charges. Respondent no.1 had already taken delivery of 83.94 MT (1670 bags) of Cargo initially before the dispute arose on 08.10.2011 and thus, the total quantity of cargo delivered by the petitioner which was received and duly accepted by respondent no.1 including three consignments between 21.03.2012 and 24.03.2012 (578 bags) as above, works out to 83.94+27.34=111.28 MT in 2248 bags. Both the parties were in agreement on the actual quantity of cargo lifted by respondent no.1 as 111.28 MT out of total order quantity of 300 MT and actual payment made by respondent no.1 to the petitioner stands at Rs. 36,45,844/- and respondent no.1 has prayed for the refund of excess amount of Rs. 7,58,854/- against the petitioner after adjusting the interest and warehouse charges amounting to Rs. 49,350/- as applicable for 578 bags as per the terms of the contract. Consequently, respondent no.1 while ARBTN-3047/2018 Page 5 of 39 refusing to accept Cargo in 'so offered' condition, has sought refund to excess amount outstanding against quantity non- supplied/non-lifted. The petitioner while rejecting the claim of respondent no.1 has not only forfeited the EMD amount of Rs. 2,50,500/- deposited by respondent no.1 but also withheld the excess payment made by respondent no. 1 while citing the contract conditions in respect of clause 12 i.e. liquid damages and clause 13 i.e. cancellation of contract.
3. It has been averred by the petitioner that the statement of claim was filed on 25.01.2015 before the Indian Council of Arbitration whereas the contract between the parties took place on 09.09.2011 regarding sale of 300 MT of red lentils on Canadian Origin. Respondent no.1 was supposed to lift the entire lentils within a period of 30 days which ended on 08.10.2011 however, till that date, respondent no.1 lifted only 83.94 MT lentils. It has been further averred that even as per the alleged agreement between respondent no.1 and the so-called business entity namely M/s Ghshiram to lift said 83.94 MT lentils claims to have been made on 07.10.2009 which clearly implies that respondent no.1 has malafide intention from the very beginning and was not interested to lift the lentils within the stipulated time. The dispute was created by respondent no.1 on the last day of contract period. It has been further averred that the alleged dispute regarding quality of lentils was beyond the purview of the tender document/terms of contract. It has been further averred that till last day i.e. 08.10.2011, the red lentil was in good condition and ARBTN-3047/2018 Page 6 of 39 hence no complaint was made prior to that date by respondent no.1. The tender document does not talk about the quality of lentils and it was sold on the principle of 'as is where is basis' only and the question of quality does not arise at all and quality dispute is beyond tender document. It has been further averred that the petitioner filed a detailed reply along with documents before the Ld. Sole Arbitrator refuting the claim of the petitioner. It has been further averred that respondent no.1 failed to lift the cargo within the stipulated period of time despite various reminders but forfeited the EMD amount and did not disclose this material fact to Ld. Arbitral Tribunal in order to seek relief and even the statement of claim of respondent no.1 was time barred since it was filed on 25.01.2015 whereas the alleged dispute arose on 08.10.2011. It has been further averred that respondent no.1 had also filed rejoinder to the reply of the petitioner and had also filed certain documents which were manufactured ones and the same were filed in order to improve upon the case. It has been further averred that after completion of the pleadings, the issues were framed by the Ld. Sole Arbitrator and the parties led their respective evidence before the Ld. Sole Arbitrator and the impugned award dated 02.04.2018, was passed by the Ld. Sole Arbitrator vide which the Ld. Sole Arbitrator directed the petitioner to refund to respondent no.1 a net amount of Rs. 5,67,864/- towards the excess amount lying with the petitioner after deducting Rs. 1,91,000/- towards the loss of profit suffered by them out of claim of respondent no.1 of Rs. 7,58,854/- and ARBTN-3047/2018 Page 7 of 39 interest amount of Rs. 1,39,995/- on refund amount of Rs. 5,67,864/- @ 10% simple interest per annum for the period from 25.03.2012 up to 15.07.2014. The impugned Award dated 02.04.2018 passed by the Ld. Sole Arbitrator is under challenge in the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the petitioner.
4. Feeling aggrieved from the findings of the Ld. Sole Arbitrator, the present petition has been filed by the petitioner on the grounds such as the impugned award is wholly illegal being violative of the settled legal position; Ld. Sole Arbitrator has failed to consider the evidence and cross examination of the parties more particularly the cross examination of the petitioner's witness such as RW-1 and RW-2 and given contradictory findings on the issues involved between the parties; Ld. Sole Arbitrator has disregarded the specific terms and conditions of contract dated 09.09.2011 and has acted dehors the contract in respect of the claims of security deposit; There is suppression of material facts by respondent no.1 from Ld. Tribunal about joint inspection report dated 23.02.2012 and EMD has already been forfeited by the petitioner vide letter dated 19.10.2012; Ld. Sole Arbitrator has not considered the clauses of the contract and has arrived at an erroneous conclusion in the award on the basis of hearsay submissions; Ld. Sole Arbitrator has failed to consider that the statement of claim was time barred which was filed on
25..01.2015 wherein the alleged dispute arose on 08.10.2011; The impugned award is beyond the pleadings and it also contrary to ARBTN-3047/2018 Page 8 of 39 the admitted position of parties in the documents and the evidence; and the Ld. Sole Arbitrator has failed to consider the issue of 'as is whereas basis' and relied upon the judgments such as Karamchand Appliances Pvt. Ltd. Vs. M/s Bharat Carpets Ltd. & Ors, 79 (1999) DlT 44; 1999 (49) DRJ, 637, Manpreet Singh & Co. Vs. NDMC, OMP No. 1084/2014, NDMC Vs Manju Maini, OMP No. 631/2007, S.K. Pandey Vs. MCD, OMP NO. 310/2010 and Toyo Eng. Corp. Vs. Cimmco Birla Ltd., 109 (2004) DLT 97, 2004 (73) DRJ 758. On these premise, the instant petition has been filed on behalf of the petitioner for setting aside of impugned award dated 02.04.2018 passed by Ld. Sole Arbitrator in the present case.
5. Reply to the present petition has been filed by respondent no.1 wherein respondent no.1 has averred that the scope of Section 34 of the Arbitration and Conciliation Act, 1996 is limited. The petitioner has not sent notice as per Section 34 (5) of the Arbitration and Conciliation Act, 1996 which is prerequisite condition for filing the present petition. The present petition does not reveal any of the grounds for setting aside of the impugned award, as has been prescribed under Section 34 of the Arbitration and Conciliation Act, 1996. On merits, respondent no.1 has denied the averments of the petitioner as mentioned in the present petition. Respondent no.1 was always ready and willing to lift and take entire 300 MT of Lentils/Pules and for that respondent no.1 made advance payment but the petitioner miserably failed to supply good and sound quality of goods as per the agreement ARBTN-3047/2018 Page 9 of 39 between the parties. As per the report of surveyor and his finding about the damaged condition of goods and further sale thereof by the petitioner at very low price clearly shows that the petitioner knowingly and fraudulently attempted to sale rotten food items to respondent no.1. On these premises, respondent no1. has prayed for the dismissal of the instant petition.
6. I have heard Sh. Amitabh Kumar Verma, Ld. Counsel for the petitioner and Sh. Santosh Kumar, Ld. Counsel for respondent no1.
7. Ld. counsel for the petitioner has argued that the impugned award is against the facts as well as against the law and has been passed by the Ld. Arbitrator without application of mind and the award is a non-speaking award. It has been further argued that the impugned award is based on surmises and conjectures and it has been passed without considering the documents on record and is against the public policy. On these premise, Ld. Counsel for the petitioner prayed that the impugned award be set aside.
8. On the other hand, Ld. Counsel for respondent no.1 has argued that the objections are not maintainable as the award has been passed by the Ld. Arbitrator after considering the material on record and it does not suffer from any infirmity or illegality as alleged by the petitioner. The objections are without any merits and are liable to be dismissed.
9. Before deciding the validity of the impugned Award, it is relevant to observe that the scope of inquiry in Section 34 of the Arbitration and Conciliation Act, 1996 proceedings is restricted ARBTN-3047/2018 Page 10 of 39 to consideration whether any one of the grounds mentioned in Section 34 (2) of the Arbitration and Conciliation Act, 1996 exists for setting aside the Award. The scope of the interference by the court under Section 34 (2) of the Arbitration and Conciliation Act, 1996 has been time and again restricted in catena of judgments by the Hon'ble Superior Courts and it has been held that in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, the re-appreciation of the facts, evidence or interpretation of the terms of contract is not permissible. What is permissible is, if there is a patent illegality, apparent error on the face of the record, perversity in the Award or misconduct by the Ld. Arbitrator.
10.Section 34(2) of the Arbitration and Conciliation Act, 1996 reads as under:-
"34.Application for setting aside arbitral award-(1)Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2)An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or ARBTN-3047/2018 Page 11 of 39 not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India. Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.-- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of ARBTN-3047/2018 Page 12 of 39 an erroneous application of the law or by re-appreciation of evidence. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
11.Normally, the general principles are 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, is not to be set aside even if the court as a court of law would 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 cancelled are those 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.
ARBTN-3047/2018 Page 13 of 3912.The Hon'ble Supreme Court of India in a case titled as Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 has 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 is 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.
13.The Hon'ble Supreme Court of India in a case titled as Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 has 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 is 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.
ARBTN-3047/2018 Page 14 of 3914.The Hon'ble High Court of Delhi in a case titled as J.K. Kashypal Vs. M/s M.G. Capital Services and another (2002) II AD, (Delhi) 363 has held :-
"that the objections are to be examined on the parameters given in section 34 of the Act and observed in the following words:
"Furthermore the objections are to be examined on the touch stone of Section 34 of the Arbitration and Conciliation Act, 1996 and such a contention raised by the petitioner is not covered by any of the provisions contained in Section 34 of the said Act. The Arbitrator was the best judge to adjudicate upon the merits of the case and this court is not supposed to fathom the mind of the Arbitrator or to arrive at its own conclusion on merits or to sit as an Appellant Authority over the findings of the Arbitrator."
15.In a case titled as Himachal Joint Venture Vs. Panilpina World Transport (India) Pvt. Ltd. Reported in 2008 (3) Arbitration Law Reported 497, a Division Bench of the Hon'ble High Court of Delhi has held that :
"When the view taken by the Arbitrator is a plausible view, it is not permissible for the court to interfere with the Arbitrator's view merely because another view of the matter is possible. It is not permissible for the Court to re-appreciate the evidence placed before the Arbitrator. It is well-settled that the Arbitrator is the best judge of the quality as well as quantity of evidence and it will not be for the Court to take upon itself task of being a Judge of the evidence before the Arbitrator.
16.In a case titled as N.H.A.I. V. U.T.D. Cementation India Ltd., (2015) 14 SCC 21, Hon'ble Supreme Court of India has observed as follows:
"It is thus well settled that construction of the terms of a contract is ARBTN-3047/2018 Page 15 of 39 primarily for an arbitrator to decide. He is entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the contract. The Court while considering challenge to an arbitral award does not sit in appeal over the findings and decisions unless the arbitrator construes the contract in such a way that no fair-minded or reasonable person could do."
17.In a case titled as Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. in CA No.5628/2021 decided on 09.09.2021, the Hon'ble Supreme Court of India has observed as follows :
"23. For a better understanding of the role ascribed to courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong (supra) are noted as under:− "34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would not mean the "fundamental policy of Indian law: as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco [ONGC v.Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has beendone away with. In short, Western Geco [ONGC V. Western Geco International Ltd., (2014) 9 SCC 263 :ARBTN-3047/2018 Page 16 of 39
(2014) 5 SCC (Civ) 12], as explained in paras 28 and 29 of Associate Builders {Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment.
However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a) (iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
35.It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basis notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36.Thus, it is clear that public policy of India is now constructed to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western ARBTN-3047/2018 Page 17 of 39 Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub−section (2−A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within" the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor which it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that re-appreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders V. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], namely a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders (Associate Builders V. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows that is stated in paras 42.3 to 45 in Associate Builders [Associate Builders V. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) ARBTN-3047/2018 Page 18 of 39 204], namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair−minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2−A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders V. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], 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. Thus, 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. Additionally, a finding based on 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 th parties, and therefore, would also have to be characterized as perverse."
18.I have examined the Award dated 02.04.2018 in question, arbitration proceedings and also given due consideration to the facts and pleadings of the case, written submissions along with citations filed by the parties as well submissions put forth by the respective Ld. Counsels for the parties and the relevant legal position.
19.The cause of dispute between the parties before the Ld. Sole Arbitrator was that as per the agreement between the parties, ARBTN-3047/2018 Page 19 of 39 respondent no.1 had to lift certain cargo material consisting of Red Lentils of Canadian origin from the godown of the petitioner located at 3, Hyde Road, Kolkata however, as alleged by respondent no.1, the quality of goods was not in conformity with the terms of contract and thereby respondent no.1 was unable to lift the entire quantity of goods as per the agreement, which resulted in a dispute between the parties. The petitioner has rejected the claim of respondent no.1 on the grounds that the goods were contracted to be lifted on 'As is where is basis' and forfeited the earnest money deposit (EMD) deposited by respondent no.1 against performance of contract.
20.It is apparent from the record that the major dispute between the parties is on the quality of cargo offered, the applicability of the tender clause of sale of goods on 'As is where is basis' Vs respondent no.1 Conditional Acceptance of Contract on the basis of 'Only Sound and Good (fresh cargo) Condition' to be accepted.
21.In the present case, respondent no.1 has refused to accept the cargo in 'as offered' condition and claimed for refund of excess amount outstanding against quantity non-supplied/non-lifted whereas the petitioner has rejected the said claim and not only forfeited the EMD amount of Rs. 2,50,500/- deposited by respondent no.1 but also withheld the excess payment made by respondent no.1 as per Clause 12 of the agreement qua liquidated damages and Clause 13 of the agreement qua cancellation of contract which are reproduced as under:-
ARBTN-3047/2018 Page 20 of 39"Clause 12-Liquidated Damages:-
In case the successful bidder fails to lift the stock within the stipulated period of 30 days consecutive days, godown rent for a minimum period of one month @ Rs. 140 PMT per month, 12% pa interest and any other charges will be charged from the successful bidder. After one month, PEC will be free to rescind the contract and dispose off the cargo at the risk and cost of bidder without assigning any written/verbal notice to the successful bidder for making payment and/or lifting the cargo. In addition, Bid Bond will be forfeited'.
Clause 13-Cancellation Contract:-
'If the Buyer fails to lift the goods within specified delivery period for reasons other than Force Majeure, the Seller shall be entitled at his option to cancel the contract and recover the damages besides forfeiture of Bid Bond. The Seller shall not be liable to any risks and costs, whatsoever, consequent upon such cancellation of contract'.
22.In this case, following issues were framed by the Ld. Sole Arbitrator:-
(i) Whether the Claim was preferred within the limitation period?
(ii) Whether the claim was preferred on behalf of the claimant's company with proper authorization?
(iii) Did the Joint Survey of the Cargo by both parties along with Third party Surveyor amount to giving a go-bye to the contracted delivery terms of 'as is where is basis'? What is the effect of consequent delay in lifting of goods on the terms related to forfeiture of EMD ?
(iv) Whether the Claimant is entitled to seek any relief over the contracted term of 'as is where is' basis ?ARBTN-3047/2018 Page 21 of 39
(v) Was the Claimant not under an obligation to lift 960 bags of Red Lentils on the basis of Surveyor's Report?
(vi) Did the Respondent fail in putting-up the Contracted goods in a deliverable state or in delivering sound quality goods thereby committing breach of terms of contract ?
(vii) Whether the Claimant is entitled to a claim of Rs. 7,58,854/-
along with interest thereof for the sum paid in excess of the value of goods lifted ?
(viii) Whether the Claimant is entitled to claim of Rs. 18,00,000/- along with interest thereof for any loss in profit due to non-delivery of goods?
(ix) Whether the Claimant is entitled to claim interest @ 24% or any other rate on the aforesaid sums?
(x) Relief ?
23.Issue no. (i) Whether the Claim was preferred within the limitation period?
24.In the present case, respondent no.1 has filed the statement of claim before ICA on 24.02.2015 and a dispute over the quality of goods arose on 08.10.2011. The record shows that the parties were in constant dialogue to resolve the dispute through mutual negotiations and as mutually agreed by the parties, joint survey of cargo was conducted on 13.02.2012 and as observed by the Ld. Sole Arbitrator, the real break up between the parties came up as late as 24.03.2012 when respondent no.1 refused to take delivery of remaining 382 bags out of 960 bags admittedly of acceptable quality as identified during joint survey of stocks. Ld. Sole Arbitrator also observed, while confirming from the records of ARBTN-3047/2018 Page 22 of 39 ICA that respondent no.1 vide notice dated 24.07.2014 under Section 21 of the Indian Arbitration and Conciliation Act, 1996 to the Council had already invoked Arbitration as per the contract terms notwithstanding the actual statement of claim filed with the Council on 24.02.2015 and thereby observed that the cause of action to raise the dispute for the arbitration proceedings thus, arose in the wake of impasse created after the joint survey and disinclination of respondent no.1 to take delivery of suspect cargo on 24.03.2012.
25.The Hon'ble Supreme Court of India in a case titled as Geo Miller and Co. Pvt. Ltd. Vs. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd. [(2020) 14 SCC 643] has held in Paras 28 and 29 as under:-
"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, ARBTN-3047/2018 Page 23 of 39 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.
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 cause of action for reference to arbitration. It does not lie to the applicant to plead that it 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."
26.In the present case, statement of claim was filed by respondent no.1 before ICA on 24.02.2015 whereas the dispute over the quality of goods arose on 08.10.2011. Thereafter, as is apparent from the record, the parties were in constant dialogue to resolve the dispute through mutual negotiation and a joint survey of cargo was conducted on 13.02.2012, as mutually agreed by the parties. As per the record, during joint survey of stocks, out of 960 bags, 382 bags were found and identified to be acceptable quality but on 24.03.2012, respondent no.1 refused to take delivery of 382 bags. Moreover, though respondent no.1 has filed the statement of claim before ICA on 24.02.2015 however, as per record of ICA, respondent no.1 had already invoked arbitration vide notice dated 24.07.2014 under Section 21 of the Indian Arbitration and Conciliation Act, 1996 to the Council. In the present case, the entire history of the negotiation between the ARBTN-3047/2018 Page 24 of 39 parties has been specifically pleaded and placed on record and the Ld. Sole Arbitrator has considered such history while observing that the joint survey of cargo, as mutually agreed by the parties, was conducted on 13.02.2012 and found that the real breaking point as 24.03.2012 when respondent no.1 refused to take the delivery of admittedly acceptable quality of 382 bags out of 960 bags as found and identified during joint survey of stocks and this 'breaking point' was treated as the date on which the cause of action arises for the purpose of limitation and this has led the Ld. Sole Arbitrator to the irresistible conclusion that the statement of claim was within three years from 24.03.2012 and the court also does not find in infirmity in the same and thus, no interference is called for.
27.Issue (ii) Whether the claim was preferred on behalf of the claimant's company with proper authorization?
28.Claim petition before the Ld. Sole Arbitrator was filed by Sh. Sunil Kumar Singh, representative of respondent no.1 and the Ld. Sole Arbitrator has observed that Sh. Sunil Kumar Singh, being one of the Directors of respondent no.1 company, directly looking after day to day operations during execution of contract in question, was having due authority and mandate from their Board/Management to deal with the case and the text of the affidavit filed by respondent no.1 leaves no ambiguity that Sh. Sunil Kumar Singh at the time of filing claim petition did infact enjoy the confidence of his management and was duly authorized to deal with the subject arbitration case and during pendency of ARBTN-3047/2018 Page 25 of 39 the case, a fresh resolution was made on 10.05.2016 which further corroborated by re-affirmation of his nomination by respondent no.1 company's board. While deciding this issue, Ld. Sole Arbitrator has observed that the case of respondent no.1 cannot be thrown out of window due to any deficiencies in the extract of Board Resolution submitted earlier as resolution dated 10.05.2016 not only reiterates the resolution of 19.02.2011 conferring the authorization and clarifying the act of omission of Serial number of Resolution, but also has the effect of ratifying all acts done in its terms and found the claim petition maintainable. While deciding this issue, Ld. Sole Arbitrator has given reasoned finding and the court does not find any infirmity in this regard. Moreover, in view of the provisions of Order 29 Rule 1 of CPC any Principal Officer of the corporation who is able to depose the facts of the case, is competent to sign and verify the pleadings on behalf of the corporation. In case RFA 174/2007 titled as Kingston Computers I P. Ltd. versus State Bank of Travancore decided on 12.08.2008, the Hon'ble Delhi High Court in para 26 observed that:-
"26. Suffice would it be to state that in law, the Secretary, Director or a Principal Officer of a company would be treated as duly authorized to institute suit on behalf of a company. This flows out from a bare reading of Order 29 Rule 1 of the Code of Civil Procedure as as further explained in the decision in United Bank of India's case."
29.Issues (iii) Did the Joint Survey of the Cargo by both parties along with Third party Surveyor amount to giving a go-bye to the contracted delivery terms of 'as is where is basis'? What is the effect of consequent delay in ARBTN-3047/2018 Page 26 of 39 lifting of goods on the terms related to forfeiture of EMD ? And (iv) Whether the Claimant is entitled to seek any relief over the contracted term of 'as is where is' basis ?
30.Before the Ld. Sole Arbitrator, the moot question has arisen as to whether any responsible PSU Company operating under Government of India can put out for sale through an open public tender such huge quantities (300 MT in this case) of 'damaged' commodity of edible nature like 'lentils' which is essentially a human consumption item and forms a critical component of staple diet for people at large. While deciding this question, Ld. Sole Arbitrator has observed that over 70% of the Red Lentil stock at the point of sale was found to be damaged/water- damaged, as has been established and certified through a Third Party Survey Report issued by the Surveyor nominated by the Seller himself thus, making it unfit for human consumption thereby consumption of such poor quality of Lentils leading people's kitchen either through PDS channels or through urban/semi urban 'Kiryana stores' which has not only lost its nutritional value but also poses a grave threat to the general public health and well-being. The 'Red Lentils' being an item of edible nature for human consumption is legitimately expected to meet certain minimum standards of quality level which has to be fit for the use as well as be merchandisable for further trading and Ld. Sole Arbitrator has observed that during arbitral proceedings, the petitioner has failed to produce the 'Load Port Certificate' issued by the Inspection Authority at the time of shipment of ARBTN-3047/2018 Page 27 of 39 Lentil Stock before the Tribunal to establish quality of actual supplies at the time of shipment and withholding of such critical document having a direct bearing on the core issue of quality of supplies, leads to an irresistible conclusion to the Ld. Sole Arbitrator that if the same was produced, the same would not have supported the case of the petitioner as to the soundness of the cargo and an adverse inference was thus, raised by the Ld. Sole Arbitrator in this regard. Ld. Sole Arbitrator has discussed the evidence of RW-1 who deposed that the import contract with their suppliers (in Canada) was signed on 07.05.2009 and the actual shipment of cargo was effected during period between May 2009 and September 2009 while the subject tender for sale of Red Lentils (received under the consignment) in domestic market was floated on 27.08.2011, the contract for sale with respondent no.1 was signed on 09.09.2011 and the actual deliveries continued until 24.03.2012 in different lots after which respondent no.1 refused to accept further cargo as-offered over a dispute in quality of supplies. Ld. Sole Arbitrator has concluded that even if the quality of imported Lentils met its import contract specifications at the time of shipment, there are strong reasons to infer of cargo having been damaged/water-damaged/infested, as it was produced out of year 2008-2009 Crop of Canadian Origin but sold and delivered in domestic market up to 24.03.2012 (corresponding to year 2011-12) to respondent no.1 and disposed off even later upto 01.06.2012 (corresponding to year 2012-2013) to a third party M/s Harika International, considering the ARBTN-3047/2018 Page 28 of 39 perishable nature of edible items combined with the level of Storage, Warehousing & Preservation practices followed by Stockists to combat humid weather of Kolkata.
31.The petitioner has raised the issue before the Ld. Sole Arbitrator that all domestic sale of Lentils or any other agriculture items is made through open or limited tenders on 'as is where is basis' and the Ld. Sole Arbitrator while examining the tender terms and conditions, has observed that it is nowhere mentioned that the stocks under sale through tender were in fact 'available for pre- inspection' by bidders before putting in their price bids and no such schedule/timelines or arrangements for making stocks available for pre-inspection is any part of tender terms and conditions for bidding and even the tender does not indicate that the condition of cargo or any caution to the prospective bidders that the cargo is mixed-up of various grades or being unsuitable for human consumption. There is acceptance letter dated 09.09.2011 address to the petitioner where it has been mentioned that 'Only Good Quality (Fresh Stocks) shall be acceptable however, Ld. Sole Arbitrator has observed that since both the supplier and the bidder being in same trade and assumed that they know as to what is Normal or Acceptable quality of Lentils which is not only fit for human consumption but also merchandisable for further trade in the market. The Ld. Sole Arbitrator has observed that the petitioner cannot force respondent no.1 to accept the 'damaged' cargo which makes the petitioner liable to refund the excess amount lying with them out of the advance ARBTN-3047/2018 Page 29 of 39 payment made by respondent no.1 for the un-lifted cargo and the condition of 'as is where is basis' stood diluted and would pale into irrelevance. Ld. Sole Arbitrator has given his reasoned findings only after correctly interpretating the contract and considering the pleadings, documents while deciding the issues. The court also finds that the challenge in the present petition is on substantive questions of facts which is not permissible under law. Further, the scope and purview is limited and it does not permit the court to replace the finding given by the Ld. Sole Arbitrator, by its own by re-appreciating the evidence produced before the Ld. Sole Arbitrator. Further the Ld. Arbitrator, while deciding these issues, has discussed the scope of the contract, terms and conditions of the agreement and the documents and only thereafter arrived at the conclusion which in no way, can be said to be patently illegal, irrational, arbitrary etc. It is also evident in this case that the Ld. Sole Arbitrator, while passing the impugned award, in interpreting the contract, had applied his mind, discussed the issues in details and given a reasonable, meaningful, appropriate and effective interpretation of the contract after detailed discussion, which cannot be interfered with. The court also finds that the Award is not only within the confines terms of reference but also based on the terms and conditions of the contract. The Ld. Sole Arbitrator has duly explained the reasons for arriving at his decisions and the petitioner herein has failed to brings its case before this court ARBTN-3047/2018 Page 30 of 39 within the four corners of Section 34 (2) of the Arbitration and Conciliation Act, 1996.
32. Issues (v) Was the Claimant not under an obligation to lift 960 bags of Red Lentils on the basis of Surveyor's Report? and (vi)Did the Respondent fail in putting-up the Contracted goods in a deliverable state or in delivering sound quality goods thereby committing breach of terms of contract ?.
33.The impact of Third Party Survey of cargo stocks on the consequent delay in lifting the cargo by respondent no.1 has been discussed by the Ld. Sole Arbitrator and observed that the petitioner mooted the idea of fresh inspection of stocks in presence of both the parties through a Third Party Surveyor to be deputed at their own costs in order to salvage the situation for which both the parties agreed to the proposal of joint inspection and filed surveyor's report of different dates but the contents and figures in both the reports were similar in nature and while going through the cross examination of witnesses from both sides, it was observed by the Ld. Sole Arbitrator that it has been established that actual survey/inspection took place on 13.02.2012 in the presence of representatives of both parties and the report dated 23.02.2012 of the Third Party Survey revealed that out of 3178 bags, 960 bags were sound condition and 2218 bags were damaged for the reasons of damaged/water damaged and as put the mutual agreement by both the parties for undertaking Joint Inspection under Third party Surveyor implies
(a) that the results of Joint Survey shall be binding without any further questions on condition of stock on either side and only ARBTN-3047/2018 Page 31 of 39 cargo found of 'sound condition' during said Survey shall be lifted by respondent no.1, and (b) that the delay in lifting the goods by respondent no.1 due to above arrangement shall be condoned by respondent no.1 thus giving go-bye to the terms of 'delivery within 30 days' as well as sale condition of 'as is where is basis'. Ld. Sole Arbitrator observed that the claim is based upon the dispute legitimately raised and properly set out to which there was no reasonable or fair response and the facts on which the claim is founded pertain to the period anterior to the lodgment of the claim and while deciding these issues, the Ld. Sole Arbitrator observed that respondent no.1 cannot go back on their commitment to lift 382 bags which they refused to lift inspite of agreement for lifting of 960 bags identified as 'Sound Condition' bags during Joint Survey and the petitioner in this case needs to be compensated for the loss and profit due to unlifted 382 bags of 'Sound Condition' and further the time taken for the Joint Survey and lifting of 578 bags in 'Sound Condition' which were lifted by respondent no.1 beyond 08.10.2011 shall be considered as part of extended contract originally signed/contracted on 09.09.2011 and no penalty or liquidated damages can be invoked or claimed by the petitioner in this account. In the present case, there is nothing on record to show that the impugned award, on the face of it, is against the public policy or the Ld. Sole Arbitrator has acted arbitrarily or lacked in judicial approach or the award is against the fundamental policy of India. All the relevant provisions of the contract were considered by the Ld. ARBTN-3047/2018 Page 32 of 39 Sole Arbitrator. The court is of the view that the interpretation of the contract, as provided by the Ld. Sole Arbitrator, was reasonable and cannot be said to be perverse that no reasonable person could have reached the same conclusion. It is well settled law that the construction of the terms of a contract is primarily lie with Ld. Arbitrator to decide unless the Ld. Arbitrator construes the contract in a manner that no fair minded or a reasonable person would; in short that the Ld. Arbitrator's view is not even a possible view to take. Further the petitioner has failed to explain how the approach adopted by the Ld. Sole Arbitrator falls within the disqualifications of Section 34 (2) (a) (iv) of the Arbitration and Conciliation Act, 1996 as there is no averment to substantiate the same and moreover, the same is no longer survives after the amendment 2015 and thus, there is no occasion for this court to interfere with the findings of Ld. Sole Arbitrator on these issues.
34.Issues (vii) Whether the Claimant is entitled to a claim of Rs. 7,58,854/- along with interest thereof for the sum paid in excess of the value of goods lifted ?, (viii) Whether the Claimant is entitled to claim of Rs. 18,00,000/- along with interest thereof for any loss in profit due to non-delivery of goods? And (ix) Whether the Claimant is entitled to claim interest @ 24% or any other rate on the aforesaid sums?.
35.In the present case, respondent no.1 has filed the claim before the Ld. Sole Arbitrator for Rs. 7,58,854/- as Principal sum and excess amount including EMD lying with the petitioner for the goods not delivered and while deciding the same, Ld. Sole Arbitrator has observed that since respondent no.1 could not lift the cargo due to a major quality issue, the said amount is due to be ARBTN-3047/2018 Page 33 of 39 refunded by the petitioner but after deducting the loss of profit suffered by them on account of 382 bags unlifted post acceptance by respondent no.1 as above and fixed the loss of profit @ Rs. 10,000/- per MT on 19.10 MT (382x50 Kg per bag) totalling a net loss of Rs. 1,91,000/- and thus, the net amount which becomes payable by the petitioner under above claim of respondent no.1 worked out by the Ld. Sole Arbitrator to Rs. 5,67,854/-. Before the Ld. Sole Arbitrator, respondent no.1 has also filed a claim of Rs.18,00,000/- against the loss of profit due to non-delivery of goods however, the Ld. Sole Arbitrator has observed that the contract does not provide for any such consequential damages and the same was without any base which cannot be granted and no such relief was granted to respondent no.1 as in the face of finding the above goods as of un-acceptable quality within initial four weeks itself, respondent no.1 had all the opportunity to resort to procurement of commodity from alternative sources. While deciding the issues, the Ld. Sole Arbitrator has discussed the issues in details and given a reasonable, meaningful, appropriate and effective interpretation of the contract after detailed discussion, which is evident in this case and thus, the same cannot be interfered with. Ld. Sole Arbitrator, while deciding the same, has interpreted the contract and applied his mind and the Award is based on the terms and conditions of the contract and no interfere is called for.
36.Ld. Sole Arbitrator while granting interest has observed that since the dispute has arisen out of a commercial transaction, bearing in ARBTN-3047/2018 Page 34 of 39 mind the RBI rates, the Ld. Sole Arbitrator granted a simple interest @ 10% per annum to respondent no.1 against the petitioner for a period from 25.03.2012 to 15.07.2014 on Principal amount of Rs. 5,67,854/- and also for the future till realization.
37.As per Section 31 (7) of the Arbitration and Conciliation Act, 1996, the Ld. Sole Arbitrator is competent to award interest and further in terms of Section 3 of the Interest Act, 1978, the Ld. Sole Arbitrator is competent to award interest at the rates prevailing in the banking transaction. In a case titled as MSK Projects (I) (JV) Ltd. Vs. State of Rajasthan & Anr, 2011 (8) JT 37 (SC), it has been held that the Arbitrator is competent to award interest for the period commencing with the date of award or the date of decree or date of realization, whichever is earlier. While the amount of interest is a matter of substantive law, the grant of interest for the part award period is a matter of procedure. Further the Hon'ble High Court of Delhi in a case between the same parties titled as M/s Wapcos Limited Vs M/s C & C Energy Private Limited, FAO (COMM) 53/2021 dated 20.10.2022 has held that "Insofar as the award of interest is concerned, it is now well settled that the Arbitral Tribunal has wide discretion in awarding interest (See: Punjab State Civil Supplies Corporation Limited (PUNSUP) and Anr. Vs. Ganpati Rice Mills, SLP (C) 36655 of 2016, decided on 20.10.2021". In the said case, the Hon'ble High Court of Delhi has observed that " In the present case, Wapcos had also claimed interest at the rate of 18% per annum and therefore, it is not open ARBTN-3047/2018 Page 35 of 39 for Wapcos now to contend that the said rate is exorbitant and onerous and the Hon'ble High Court also finds no fault with the learned Commercial Court in declining to interfere with the impugned award ". In the present case, the Ld. Sole Arbitrator has exercised the discretion by giving reasons that the transaction between the parties being of commercial nature, the simple interest @ 10% per annum seems to be reasonable in this case and therefore, the reasoning given by the Ld. Sole Arbitrator while awarding the interest, cannot be said to be unreasonable or perverse. In view of the same, the court does not find any illegality or arbitrariness in the impugned award with respect to the interest so awarded by the Ld. Sole Arbitrator.
38.Perusal of the award reflects that Ld. Sole Arbitrator has taken into consideration the dispute arose between the parties and the grounds raised by the petitioner to challenge the award, are factual in nature which have been already considered and adjudicated in the impugned award. It is outside the scope of Section 34 of the Act to re-appreciate the entire evidence and come to conclusion because such an approach would defeat the purpose of arbitration proceedings. It has been consistently held that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently, errors of facts cannot be corrected. A possible view by the Ld. Sole Arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quality and quantity of evidence to be relied upon when he/she delivers his/her arbitral ARBTN-3047/2018 Page 36 of 39 award. Thus, an award based on little evidence or no evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once, it is found that the arbitrator's approach is not arbitrary or capricious, then it is the last word on facts.
39.A bare perusal of the arbitral award shows that Ld. Sole Arbitrator has examined all the relevant aspects of the contract, the correspondences made by the parties, the terms of the contract and the conduct of the parties. Ld. Sole Arbitrator has remained inside the parameters of the contract and construed the provisions of the contract. Ld. Sole Arbitrator while deciding the issues, has operated within the four corners of the contract and has not travelled beyond it. Ld. Sole Arbitrator has not decided the issues contrary to the terms of the contract, so it cannot be said that Ld. Sole Arbitrator misconducted himself or the interpretation given by him is not reasonable. The petitioner has failed to establish that Ld. Sole Arbitrator has travelled beyond the terms of the contract.
40.Having examined the various contentions of the petitioner on the touchstone of the parameters of interference as explicitly laid down by the Hon'ble Supreme Court of India in several judgments referred to above, I am of the view that the impugned Award does not call for any interference. This Court cannot re- appreciate evidence or interpret the Clauses of the Agreement which the petitioner is calling upon the Court to do. The contentions of the petitioner are thus, rejected having no merits. I ARBTN-3047/2018 Page 37 of 39 am of the view that the arbitration award being a reasoned one and does not suffer from any infirmity or error apparent on the face of the record. It is not for this Court to sit in appraisal of the evidence led before the Ld. Sole Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the Ld. Sole Arbitrator which was subject matter of dispute. In the present case, the Ld. Sole Arbitrator has deliberated on the issues under reference which were within his competency. There are no allegations against the Ld. Sole Arbitrator of misconduct nor of having misconducted the proceedings which have either been specifically alleged by the petitioner or established. The Ld. Sole Arbitrator has duly explained the reasons for arriving at his decisions. There is nothing to indicate that the award violates Section 28 (3) of the Act or that, it is in conflict with the basic notions of justice and the fair play and fundamental policy of Indian law or in contravention of the terms of the agreement or that it lacks reasoning as pleaded in the petition.
41.Taking into consideration the various dates and events on record, I am of the considered opinion that the conclusion drawn by the Ld. Sole Arbitrator is based on sound reasons and the Ld. Sole Arbitrator has passed the award after considering the facts, evidence and material on record. In the impugned award, the Ld. Sole Arbitrator has given logical reasoning in reaching the just conclusion of the case. The award is well reasoned as per the terms and conditions of the agreement. There is nothing on ARBTN-3047/2018 Page 38 of 39 record to show that impugned award is against the terms of the agreement and against the public policy. Also, there is no patent illegality in the award. The award is a well reasoned award, based on evidence and mathematical calculations and not only a possible but a plausible view.
42.In view of the above discussions, the present objections petition under Section 34 of The Arbitration and Conciliation Act, 1996 is dismissed. No order as to cost.
43.File be consigned to record room.
Digitally signed by ANURAG ANURAG SAIN (Announced in the Open Court SAIN Date: 2025.02.01 today on 01.02.2025) 16:33:23 +0530 (Anurag Sain) District Judge (Commercial Court-01), Patiala House Courts Complex, New Delhi ARBTN-3047/2018 Page 39 of 39 ARBTN 3047/18 PEC LTD Vs. BADRI SINGH VINIMAY PVT LTD 01.02.2025 Present:- None.
Vide separate judgment announced in the open court today, the present objections petition under Section 34 of The Arbitration and Conciliation Act, 1996 is dismissed. No order as to cost. File be consigned to record room. Digitally signed by ANURAG ANURAG SAIN SAIN Date:
2025.02.01 16:32:58 +0530 (Anurag Sain) District Judge (Commercial Court-01), Patiala House Courts Complex, New Delhi/01.02.2025 ARBTN-3047/2018 Page 40 of 39