Delhi District Court
Bharat Petroleum Corporation Ltd vs M/S Vatika Hotel P.Ltd on 5 January, 2024
IN THE COURT OF Dr. KAMINI LAU: DISTRICT JUDGE
(COMMERCIAL COURT)02, CENTRAL DISTRICT,
TIS HAZARI COURTS, DELHI
OMP (COMM) No. 111/2020
CNR No. DLCT010082452020
M/s Bharat Petroleum Corporation Ltd.
Through its Authorized Representatives
Plot No. A5 and 6, Sector1,
Noida201301, Uttar Pradesh.
......Petitioner
Versus
M/s Vatika Hotel Pvt. Ltd.
7th Floor Vatika Triangle
MehrauliGurgaon Road, BlockA
Sushant Lok, PhaseI, Gurugram
Haryana122002.
......Respondent
Date of filing of Objections: 18.11.2020
Arguments concluded on: 12.12.2023
Date of Judgment: 05.01.2024
TABLE OF CONTENTS
Sr. No. Title Page No.
1 Brief facts/ Case of the petitioner 29
2 Case of the respondent 912
3 List of Authorities & Legal Position 1230
4 Findings & Observations 3040
5 Conclusion 4042
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd.
OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 1 of 42
Present: Sh. Parveen Kumar Singh Advocate for petitioner.
Ms. Prerna Sharma Advocate for the respondent.
JUDGMENT:
(1) These objections under Section 34 of the Arbitration and Conciliation Act, 1996 have been filed by the petitioner Bharat Petroleum Corporation Ltd. for setting aside the impugned award dated 07.08.2020 passed by the Sole Arbitrator Sh. Neeraj Kumar Gupta, Retd. District & Sessions Judge, Delhi in arbitration claim titled as "Vatika Hotel Private Ltd. Vs. Bharat Petroleum Corporation Ltd." by way of which an award for recovery of Rs.12,31,231/ along with costs of proceedings assessed at Rs.4,00,000/ and interest @7% per annum from March 2013 till the date of actual payment, was passed in favour of M/s Vatika Hotel Pvt. Ltd. and against Bharat Petroleum Corporation Ltd.
BRIEF FACTS:
Case of the Petitioner/ Objector:
(2) The case of the petitioner is as under:
That the respondent entered into an agreement dated 27.02.2012 with the petitioner for providing Integrated Facility Management and Service at the Research and Development Centre of the petitioner located in Greater Noida for the year 20122013 after the acceptance of the bid tendered by the respondent with Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd.
OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 2 of 42 the petitioner subject to the certain terms and conditions.
That after due completion of Tender Process and issuance of Letter of Intent dated 17.02.2012, agreement dated 27.02.2012 came into force and work contract was given for the term commencing from 29.02.2013 to 28.02.2013.
That the agreement was extended as per already existing terms of the agreement awarded by LOI dated 17.02.2012 and further the new agreement for the enhanced/ extended period of one year was done on 15.03.2013.
That during execution of the work, the respondent did not adhere to the terms of the agreement and never submitted the monthly reports with the invoice as per the tender condition and never shared any maintenance record at the premises.
That the respondent paid excess bonus to its employee over and above the capping limit of Rs.3,500/ as per law which was recovered from the petitioner. That finally the petitioner deducted a total sum of Rs.12,31,231/ (Rs.2,95,102/ on account of excess bonus and Rs.9,36,129/ on account of deficiency in operation and maintenance) from the total consideration while sharing full details of the deduction such as the accounts head along with the respective time period for which they belonged.
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 3 of 42 That the respondent approached the petitioner thereby asking for the payment of above mentioned deducted amount but the petitioner vide email dated 09.09.2013 communicated to the respondent in very clear language thereby rejecting the claim towards deducted amount. That in the year 2017, the respondent vide a letter dated 29.08.2017 sent a letter to petitioner thereby invoking the arbitration in respect of the deducted amount by the petitioner.
That the respondent also approached the Hon'ble Delhi High Court vide OMP No. 580/2018 after which the dispute was referred to the Ld. Sole Arbitrator. That on 22.04.2019 the claimant filed its claim before the Ld. Sole Arbitrator which was denied by the petitioner by moving an application under Section 16 and 43 of Arbitration and Conciliation Act, primarily on the ground of claim being hit by limitation as the amount deducted was pertaining to the year 2013 and the Arbitration Clause was invoked in the year 2017 i.e. after expiry of the statutory period of three years.
That the respondent filed its reply to the said application taking almost no defence rather simply replied that objection taken by the petitioner of limitation is a mixed question of law and facts. That the Ld. Sole Arbitrator vide his order dated 15.07.2019, dismissed above mentioned application on Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 4 of 42 the ground that the issue relating to limitation is based on the mixed question of law and facts and left it to be adjudicated after completion of trial.
That thereafter, both the parties adduced their respective evidence and relied upon their relevant documents after which final arguments were heard; written submissions were filed and vide order dated 07.08.2020, the Ld. Sole Arbitrator without appreciating correct facts and law, passed the impugned award.
That on 07.08.2020, the petitioner received the copy of award on email and hard signed copy of the same was not supplied despite repeated requests made by the parties by the Sole Arbitrator.
(3) Being aggrieved with the impugned Arbitral Award dated 07.08.2020, the petitioner has challenged the same on the following grounds:
A) Because the Arbitral Tribunal has failed to appreciate the agreement dated 27.02.2012 and has completely ignored the express terms and conditions of the agreement and the documents on record.
B) Because the claimant has miserably failed to prove his case and the Arbitrator has erroneously shifted the burden of proof on the respondent while passing the impugned award.
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 5 of 42 C) Because the arbitral award is in conflict with the public policy of India as the Sole Arbitrator completely failed to appreciate the fact that the claimant/ respondent in its reply to the application under Section 16 and 43 of Arbitration & Conciliation Act and in the claim petition, nowhere stated a single fact to counter the objection taken by the petitioner on the ground of limitation.
D) Because the award is in conflict with basic notion of justice and morality, the way the sole Arbitrator has passed the award without going through the evidence, reliance placed and the written arguments/ submissions on record.
E) Because a cost of four lacs has been awarded in favour of the claimant/ respondent without any basis and even on guess work, the same cannot be justified for a stale claim and the said relief is in contravention of Section 31 of the Arbitration and Conciliation Act, 1996 being a patent illegality and an instance of bias. F) Because the Ld. Sole Arbitrator completely failed to appreciate the fact that the claimant was informed about the deduction on 09.09.2013 and thereafter the claimant kept on approaching the petitioner who reiterated its version by justifying the deduction which exfacie does not extend the limitation within the meaning of Section 18 of the Limitation Act which renders the claim of the claimant as stale in nature and further is being hit by Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 6 of 42 limitation.
G) Because the Ld. Sole Arbitrator has wrongly held that in case the employer wants to pay more bonus than that as prescribed then the Act will not be a deterrent and in this case the claimant had disbursed the bonus to its employees without taking into account the cap and hence, the deduction on this count was arbitrary and unsustainable. The petitioner in its reply had highlighted Clause 17 of the agreement and had also attached copy of Gazette Notification dated 13.12.2007 along with its reply wherein it was clear that the respondentclaimant was contractually bound to follow the statutory provisions wherein as per the payment of Bonus Act, 1965 a ceiling of Rs.3,500/ had been statutorily imposed and since the respondentclaimant had claimed extra wages which were beyond the statutory limit, therefore, the petitioner had the right to deduct the same.
H) Because the Ld. Sole Arbitrator has failed to appreciate the fact that as per Clause 17 of the Agreement there was some condition under the heading of "statutory requirement" which confers the right upon the employer to withhold the payment to the contractor if it does not comply the statutory requirement such as providing the complete details of the workman employed by it and hence, the petitioner was justified in making the deduction on account of Bonus and other Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 7 of 42 head.
I) Because the Ld. Sole Arbitrator also failed to appreciate the fact that before entering into the agreement dated 27.02.2012 the claimant has already inspected the concerned side only after which the respondent submitted the tender bid.
J) Because the Ld. Sole Arbitrator failed to appreciate that the claimant failed to prove the factum of sharing of any Snag List and MMR report to the petitioner which also warrants the rejection of the claim as the fact in support of the claim remained not proved. K) Because the full details of the deduction was submitted to the claimant through the monthly recovery details vide email dated 21.08.2013 so the version of the claimant that it kept on asking the details of the deduction was totally false and hence, the award is bad the same being passed with closed eyes.
L) Because the evidence conducted and the evidence specifically crossexamination which is a categorical admission on the part of the claimant has not been discussed/ relied upon by the Ld. Sole Arbitrator which passing the impugned award.
M) Because the Ld. Sole Arbitrator has not appreciated that having meetings or replying to mails does not extent limitation, specifically when continuous agreements were entered into between the parties for regularly maintenance work, the relied stray Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 8 of 42 correspondence does not relate to the dispute in hand, however, the same is erroneously relied by the Arbitrator to pass an award in favour of the claimant. N) Because it is not the claim of the claimant that limitation was extended or there was fresh acknowledgement after expiry of limitation, rather it is a case of claimant/ respondent that cause of action only arose on 28.01.2016 and the same is totally misconceived by the Ld. Sole Arbitrator which is against the public policy and suffers with patent illegality.
O) Because the Ld. Arbitrator has wrongly shifted the burden of proof of justifying the deduction on account of noncompletion of jobs, nonsubmission of records and reports, not providing timely tools and tackles from the respondentclaimant to the petitioner since it was the responsibility of the respondentclaimant to prove that they had completed the jobs, submitted the report and provided timely tools and tackles, which they have failed to do so.
Case of the respondent:
(4) The respondent has filed a detailed reply to the objections filed by the petitioners. The case of the respondent is as under:
That the present petition has been moved by the petitioner with the sole intention to reagitate the issues Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 9 of 42 which have already been decided by the Ld. Arbitrator in favour of the respondent and to reexamine the findings returned in the Arbitral Award on merits which is not permissible under Section 34 of the Arbitration and Conciliation Act.
That a question of limitation does not relate to the public policy of India and the findings returned by the Ld. Arbitrator is a plausible finding in view of the evidence on record and there is no patent illegality in the Arbitral Award.
That the sole ground of challenge appears to be that the Ld. Arbitrator has not considered the objections raised by the petitioner with regard to the limitation initiating arbitration as agitated by way of Section 16 application and thereafter at the time of final arguments. However, vide order dated 15.07.2019 the Ld. Arbitrator unequivocally held that the objections raised by the petitioner were mixed question of fact and law and having one examined the facts and merits of the case, it is not open for the petitioner to again seek and examination of facts and merits of the case. That the petitioner has made bald allegations regarding the failure of the Ld. Arbitrator to consider the pleadings and evidence on record whereas on the contrary on a reading of the Arbitral Award, it is evident that the Ld. Arbitrator had considered all evidence and material placed before it prior to passing Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 10 of 42 the Arbitral Award including the material sought to be relied upon by the petitioner in the present proceedings.
That the Arbitral Award is a well reasoned decision which amply takes into consideration the contentions and evidence of both the parties to the proceedings and by way of the present petition, the petitioner is attempting to shift its own failure to prove its case upon the Ld Arbitrator by making fallacious and incorrect averments.
That the present petition being meritless and beyond the scope of Section 34 of the Arbitration and Conciliation Act, is liable to be dismissed. That the Ld. Sole Arbitrator Sh. Neeraj Kumar Gupta, District & Sessions Judge (Retd.) was appointed by the Hon'ble Delhi High Court vide order dated 16.11.2018 in Arb. Pet. No. 580/2018 to adjudicate the disputes between the parties.
That the arbitration proceedings were conducted by the Ld. Arbitrator in a transparent and diligent manner, and after completion of pleadings, recording of evidence and final arguments the Ld. Arbitrator passed the award dated 07.08.2020.
That the Award is a wellreasoned award which has been passed by the Ld. Arbitrator by keeping in mind all pleadings, evidence and submissions which is borne out from the fact that the Ld. Arbitrator has Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 11 of 42 substantiated his opinion by placing reliance on the arbitral record and only after consideration of the same passed an Award in favour of the respondent.
(5) In so far as the various grounds raised by the petitioners are concerned, the respondent has denied all the grounds. According to the respondent, the Ld. Arbitrator has elaborately decided the disputes between the parties after taking note of the facts, documents and evidence on record.
List of Authorities/ Judgments relied upon by the parties: (6) I have considered the rival contentions and have gone through the written memorandum of arguments filed by the parties. Ld. Counsel for the petitioner has placed his reliance upon the following authorities:
A) Geo Miller & Co. Pvt. Ltd. Vs. Chairman, Rajasthan Vidyut Utpadan Nigam Ltd., Civil Appeal No. 967/2020 decided on 03.09.2019 (Supreme Court). B) Associate Builders Vs. DDA, SLP (Civil) No. 14767 of 2012 decided on 25.11.2014 (Supreme Court). C) State of Kerala Vs. T.M. Chacho, report in JT 2000 (7) SC 594.
D) Micrographics India Vs. Govt. of NCT of Delhi & Anr., RFA no. 320 of 2018 (Delhi High Court) E) The Fertilizers & Chemicals Travancore Ltd.
Marketing Division, Udyog mandal Vs. Cardamon Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 12 of 42 Processing & Marketing Cooperative Society Ltd. Vandanmedu, Idukki District, Arbitration Appeal No. 17 of 2018 (High Court of Kerala).
F) Hindustan Petroleum Corporation ltd. Vs. Batliboi environmental Engineers Ltd., Appeal No. 227 of 2001 decided on 02.11.2007 (High Court of Bombay). G) Oil & Natural Gas Corporation Ltd. & Ors. Vs. Essar Oil Ltd. & Ors., Arbitration Petition No. 267 & 630 of 2011, decided on 14.01.2016 (High Court of Bombay). H) Satender Kumar & Ors. Vs. MCD & Ors. Arbitration Appeal No. 354/2008, 253 & 254/2009, decided on 04.02.2010 (High Court of Delhi).
I) Sssangyong Engineering & Constructions Company Ltd. Vs. NHAI, Civil Appeal No. 4779 of 2019, decided on 08.056.2019 (Supreme Court).
(7) On the other hand, the Ld. Counsel for the respondent has placed his reliance upon the following authorities:
A) DDA Vs. K.R. Anand, reported in 2023 SCC OnLine Del 3610.
B) Ssangyong Engg. & Construction Co. Ltd. Vs. NHAI reported in 2019 SCC OnLine 677.
C) Bhopal Sanchi Highways (P) Ltd. Vs. NHAI, reported in 2023 SCC OnLine Del 3292.
D) Delhi Airport Metro Express (P) Ltd. Vs. DMRC reported in 2021 SCC OnLine SC 695.
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 13 of 42 E) DAG (P) Ltd. Vs. Ravi Shankar Institute for Music & Performing Assets, reported in 2023 SCC OnLine Del 3293.
F) A.G. Enviro Infra Projects (P) Ltd. Vs. J.S. Enviro Services (P) Ltd. reported in 2023 SCC OnLine Del 3609.
G) Union of India Vs. Multi Tech Construction Co.
reported in 2023 SC OnLine Del 2665.
Legal Position:
(8) Before coming to the merits of the grounds raised before me, I may note that Section 34 (1) of the Arbitration and Conciliation Act, 1996 provide that the arbitral award may be set aside by the court on an application for setting aside the same being made on any grounds specified in the subsection (2) and within the time prescribed. The provisions of Section 34 (2) (a) are reproduced as under:
"....... 2 (a) the party making the application furnishes proof that
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon,under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 14 of 42 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.'
(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 an erroneous application of the law or by reappreciation of evidence.] (9) Section 34 of the Arbitration & Conciliation Act, 1996 does not empower the Courts to reappreciate and re Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd.
OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 15 of 42 evaluate the evidence produced before the Arbitral Tribunal and thereafter to judge if the findings of the Arbitral Tribunal are correct or wrong. The Superior Courts have repeatedly held that it is not permissible to a Court to examine the correctness of the findings of the arbitrator, as if it were sitting in appeal over his findings. The findings of fact by the Arbitral Tribunal, if based on evidence, even where a different opinion can be held on the basis of that evidence, the findings given by the Arbitrator has to be accepted and the Courts cannot substitute its opinion. The power to interpret the contract also lies with the Arbitrator. If the Arbitrator interpreted the terms of contract in a particular way based on the material before him and the evidence adduced before him, even if another view is possible to be taken on the same materials and evidence, the Court cannot interfere the said findings of the learned Arbitrator.
(10) The Hon'ble Supreme Court in the case of G. Ramachandra Reddy & Company Vs. Union of India & Another reported in 2009 (6) SCC 414, observed that:
"..... The interpretation of a contract will fall within the realm of arbitrator, that the Court while dealing with an award would not reappreciate the evidence, that an award containing reasons may not be interfered unless they are found to be perverse or based on a wrong proposition of law.....".
(11) In another decision reported in 2009 (10) SCC 63 (Steel Authority of India Limited vs. Gupta Brothers Steel Tubes Limited), it was observed as under:
".... Once the arbitrator has constructed Clause 7.2 of the contract of the said case, in a particular manner and such Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 16 of 42 construction is not absurd and appears to be plausible, it is not open to the Court to interfere with the award of the arbitrator.....".
(12) Reference is also made to another decision in the case of Parsa Kenta Collieries Limited Vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited reported in 2019 (7) SCC 236 wherein it was observed that:
"...... Once the courts reach to the conclusion that the Arbitrator has acted within its jurisdiction, even if the courts are of the view that the opinion of the arbitrator is wrong the same cannot be disturbed unless it is against the public policy...."
(13) An award warrants interference by the Court under Section 34 of the Arbitration and Conciliation Act only when it contravenes a substantive provision of law or is patently illegal or shocks the conscious of the Court and that a plausible/reasonable view taken by an Arbitrator, even if the same is based on insufficient evidence, is not to be substituted by the Court.
(14) Moreover, umpteen number of judgments of higher Courts have categorically held that the Courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 17 of 42 (15) The grounds on which an interference can be made with the arbitral award by invoking Section 34 of the said Act of 1996 have been provided in subsection (2) of Section 34 itself. As can be seen from the Scheme of Section 34 of the Act of 1996 and the object of enacting the said Act of 1996, the scope of interference in a petition under Section 34 is limited only on the grounds provided in subsection (2) of Section 34 of the said Act of 1996. One more ground is provided in subsection (2A) of Section 34 of the said Act of 1996 added with effect from 23 rd October 2015.
(16) In the case of MMTC Limited Vs. Vedanta Limited reported in 2019 (4) SCC 163 the reasons for vesting such a limited jurisdiction in exercise of powers under Section 34 of the Arbitration Act has been explained by the Hon'ble Apex Court, which observations I quote as under:
"...... 11. As far as Section 34 is concerned, the position is well settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b) (ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury [Associated Provincial Picture Houses v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract...."
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 18 of 42 (17) A similar view, has been taken by the Hon'ble Supreme Court in K. Sugumar Vs. Hindustan Petroleum Corporation Ltd. reported in 2020 (12) SCC 539, which observations are reproduced as under:
"......2. The contours of the power of the Court under Section 34 of the Act are too well established to require any reiteration. Even a bare reading of Section 34 of the Act indicates the highly constricted power of the civil court to interfere with an arbitral award. The reason for this is obvious. When parties have chosen to avail an alternate mechanism for dispute resolution, they must be left to reconcile themselves to the wisdom of the decision of the arbitrator and the role of the court should be restricted to the bare minimum. Interference will be justified only in cases of commission of misconduct by the arbitrator which can find manifestation in different forms including exercise of legal perversity by the arbitrator...."
(18) It has also been held time and again by the Hon'ble Supreme Court that if there are two plausible interpretations of the terms and conditions of the contract, then no fault can be found, if the learned Arbitrator proceeds to accept one interpretation as against the other. In Dyna Technologies (P) Ltd. V. Crompton Greaves Ltd. reported in 2019 (20) SCC 1, the limitations on the Court while exercising powers under Section 34 of the Arbitration Act has been highlighted by the Hon'ble Apex Court as under:
"......24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award.
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 19 of 42 Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated....."
(19) In the case of Parsa Kente Collieries Limited Vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited reported in 2019 (7) SCC 236, adverting to the previous decisions of the Hon'ble Apex Court in McDermott International Inc. Vs. Burn Standard Co. Ltd. & Others reported in 2006 (11) SCC 181 and Rashtriya Ispat Nigam Ltd. Vs. Dewan Chand Ram Saran reported in 2012 (5) SCC 306, it has been observed that an Arbitral Tribunal must decide in accordance with the terms of the contract, but if a term of the contract has been construed in a reasonable manner, then the award ought not to be set aside on this ground, it has been held as under:
"..... 9.1 It is further observed and held that construction of the terms of a contract is primarily for an Arbitrator to decide unless the Arbitrator construes the contract in such a way that it could be said to be something that no fairminded or reasonable person could do. It is further observed by this Court in the aforesaid decision in paragraph 33 that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the Arbitrator on facts has necessarily to pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It is further observed that thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 20 of 42 this score.
9.2 Similar is the view taken by this Court in NHAI v. ITD Cementation (India) Ltd. (2015) 14 SCC 21, para 25 and SAIL v. Gupta Brother Steel Tubes Ltd. (2009) 10 SCC 63, para 29....."
(20) In the case of Dyna Technologies (P) Ltd. (supra), the view taken above has been reiterated in the following words:
"....25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act....."
(21) An identical line of reasoning has been adopted in the case of South East Asia Marine Engg. & Constructions Ltd. [SEAMAC Limited] V. Oil India Ltd. reported in 2020 (5) SCC 164 wherein the Hon'ble Apex Court has observed and I quote as under:
"....... 12. It is a settled position that a court can set aside the award only on the grounds as provided in the Arbitration Act as interpreted by the courts. Recently, this Court in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1 : 2019 SCC OnLine SC 1656] laid down the scope of such interference. This Court observed as follows : (SCC pp. 1112, para 24) "24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 21 of 42 which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated."
13. It is also settled law that where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. This Court in Dyna Technologies [Dyna Technologies (P) Ltd. V. Crompton Greaves Ltd., (2019) 20 SCC 1 : 2019 SCC OnLine SC 1656] observed as under : (SCC p.12, para
25)
25. Moreover, umpteen number of judgments of this Court have categorically held that the Court should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act....."
(22) The Hon'ble Supreme Court has in the case of Project Director, National Highways Authority of India Vs. M. Hakeem & Anr. reported in (2021) 9 Supreme Court Cases 1 elaborately dealt with the law relating to objections under Section 34 of the Arbitration and Conciliation Act, relevant portion of which is reproduced as under:
"...... 13. Section 34 of the Arbitration Act, 1996 occurs in Chapter VII under the title "Recourse against arbitral award". We are directly concerned with subsections (1) Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 22 of 42 and (4) of Section 34 which are set out hereunder.
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 subsection (3).
xxx xxx xxx (4) On receipt of an application under sub section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
xxx xxx xxx
14. What is important to note is that, far from Section 34 being in the nature of an appellate provision, it provides only for setting aside awards on very limited grounds, such grounds being contained in subsections (2) and (3) of Section 34. Secondly, as the marginal note of Section 34 indicates, "recourse" to a court against an arbitral award may be made only by an application for setting aside such award in accordance with subsections (2) and (3).
"Recourse" is defined by P Ramanatha Aiyar's Advanced Law Lexicon (3rd Edition) as the enforcement or method of enforcing a right. Where the right is itself truncated, enforcement of such truncated right can also be only limited in nature. What is clear from a reading of the said provisions is that, given the limited grounds of challenge under subsections (2) and (3), an application can only be made to set aside an award. This becomes even clearer when we see sub section (4) under which, on receipt of an application under sub section (1) of Section 34, the court may adjourn the Section 34 proceedings and give the arbitral tribunal an opportunity to resume the arbitral proceedings or take such action as will eliminate the grounds for setting aside the arbitral award. Here again, it is important to note that it is the opinion of the arbitral tribunal which counts in order to eliminate the grounds for setting aside the award, which may be indicated by the court hearing the Section 34 application.
15. It is important to remember that Section 34 is modelled on the UNCITRAL Model Law on International Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 23 of 42 Commercial Arbitration, 1985, under which no power to modify an award is given to a court hearing a challenge to an award. The relevant portion of the Model Law reads as follows:
Article 34. Application for setting aside as exclusive recourse against arbitral award (1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (2) of this article.
xxx xxx xxx (4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside.
16. Redfern and Hunter on International Arbitration (6th edition), states that the Model Law does not permit modification of an award by the reviewing court (at page
570) as follows:
"10.06 The purpose of challenging an award before a national court at the seat of arbitration is to have that court declare all, or part, of the award null and void. If an award is set aside or annulled by the relevant court, it will usually be treated as invalid, and accordingly unenforceable, not only by the courts of the seat of arbitration, but also by national courts elsewhere. This is because, under both the New York Convention and the Model Law, a competent court may refuse to grant recognition and enforcement of an award that has been set aside by a court of the seat of arbitration. It is important to note that, following complete annulment, the claimant can recommence proceedings because the award simply does not existthat is, the status quo ante is restored. The reviewing court cannot alter the terms of an award nor can it decide the dispute based on its own vision of the merits. Unless the reviewing court has a power to remit the fault to the original tribunal, any new submission of the dispute to arbitration after annulment has to be undertaken by commencement of a new Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 24 of 42 arbitration with a new arbitral tribunal."
17. The statutory scheme under Section 34 of the Arbitration Act, 1996 is in keeping with the UNCITRAL Model Law and the legislative policy of minimal judicial interference in arbitral awards.
18. By way of contrast, under Sections 15 and 16 of the Arbitration Act, 1940, the court is given the power to modify or correct an award in the circumstances mentioned in Section 15, apart from a power to remit the award under Section 16 as follows:
15. Power of Court to modify award.
The Court may by order modify or correct an award
(a) where it appears that a part of, the award is upon a matter not referred to arbitration and such part can be separated from the other part and does not affect the decision on the matter referred; or
(b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or
(c) where the award contains a clerical mistake or an error arising from an accidental slip or omission.
16. Power to remit award.
(1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit (a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or (b) where the award is so indefinite as to be incapable of execution; or (c) where an objection to the legality of the award is apparent upon the face of it., (2) Where an award is remitted under sub section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: Provided that any time so fixed may be extended by subsequent order of the Court.
(3) An award remitted under sub section (1) shall become void on the failure of the arbitrator Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 25 of 42 or umpire to reconsider it and submit his decision within the time fixed.
19. As a result therefore, a judgment in terms of the award is given under Section 17 of the 1940 Act which reads as follows:
17. Judgment in terms of award.
Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award.
20. Thus, under the scheme of the old Act, an award may be remitted, modified or otherwise set aside given the grounds contained in Section 30 of the 1940 Act, which are broader than the grounds contained in Section 34 of the 1996 Act.
21. It is settled law that a Section 34 proceeding does not contain any challenge on the merits of the award. This has been decided in MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, at 167 as follows:
14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section
34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 26 of 42
22. Likewise, in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, this Court under the caption "Section 34(2)(a) does not entail a challenge to an arbitral award on merits" referred to this Court's judgment in Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 [the "New York Convention"] and various other authorities to conclude that there could be no challenge on merits under the grounds mentioned in Section 34 (see paras 34 to 48). This Court also held, in Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2018) 3 SCC 133 (at 170), that the court hearing a Section 34 petition does not sit in appeal (see para 51).
23. As a matter of fact, the point raised in the appeals stands concluded in McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, where this Court held:
51. After the 1996 Act came into force, under Section 16 of the Act the party questioning the jurisdiction of the arbitrator has an obligation to raise the said question before the arbitrator.
Such a question of jurisdiction could be raised if it is beyond the scope of his authority. It was required to be raised during arbitration proceedings or soon after initiation thereof. The jurisdictional question is required to be determined as a preliminary ground. A decision taken thereupon by the arbitrator would be the subjectmatter of challenge under Section 34 of the Act. In the event the arbitrator opined that he had no jurisdiction in relation thereto an appeal there against was provided for under Section 37 of the Act.
52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness.
Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 27 of 42 minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.
24. This statement of the law was followed in Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328 at page 334 (see para 15).
25. Also, in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, this Court held:
36. At this juncture it must be noted that the legislative intention of providing Section 34(4) in the Arbitration Act was to make the award enforceable, after giving an opportunity to the Tribunal to undo the curable defects. This provision cannot be brushed aside and the High Court could not have proceeded further to determine the issue on merits.
37. In case of absence of reasoning the utility has been provided under Section 34(4) of the Arbitration Act to cure such defects. When there is complete perversity in the reasoning then only it can be challenged under the provisions of Section 34 of the Arbitration Act. The power vested under Section 34(4) of the Arbitration Act to cure defects can be utilised in cases where the arbitral award does not provide any reasoning or if the award has some gap in the reasoning or otherwise and that can be cured so as to avoid a challenge based on the aforesaid curable defects under Section 34 of the Arbitration Act. However, in this case such remand to the Tribunal would not be beneficial as this case has taken more than 25 years for its adjudication. It is in this state of affairs that we lament that the purpose of arbitration as an effective and expeditious forum itself stands effaced......"
(23) In so far as the aspect of Rate of Interest is concerned, the observations of the Hon'ble Supreme Court in the case of Ambica Constructions Vs. Union of India reported in 2017 (14) Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 28 of 42 SCC 323 are very relevant which I quote as under:
"...... A perusal of the conclusions drawn by this Court in the above judgment, rendered by a three Judge Division Bench, leaves no room for any doubt, that the bar to award interest on the amounts payable under the contract, would not be sufficient to deny payment of pendente lite interest. In the above view of the matter, we are satisfied, that the clause relied upon by the learned Counsel for the Union of India, to substantiate his contention, that pendente lite interest could not be awarded to the Appellant, was not a valid consideration, for the proposition being canvassed. We are therefore satisfied, that the arbitrator, while passing his award dated 28.6.1999, was fully justified in granting interest pendente lite to the Appellant. Accordingly, while affirming the award passed by the arbitrator on the issue of pendente lite interest, as also, the determination rendered by the learned single Judge in his order dated 6.9.2001, we set aside the impugned order passed by the Division Bench of the High Court, on 17.06.2005, on the question of pendente lite interest. The pendente lite interest determined by the arbitrator, shall be paid to the Appellant, within two months from today...."
(24) Also, in the case of Reliance Cellulose Products Ltd. Vs. Oil and Natural Gas Corporation Ltd., reported in AIR 2018 SC 3707 the Hon'ble Supreme Court observed and I quote as under:
"...... 22. A conspectus of the decisions that have been referred to above would show that under the 1940 Act, an arbitrator has power to grant prereference interest under the Interest Act, 1978 as well as pendente lite and future interest. However, he is constricted only by the fact that an agreement between the parties may contain an express bar to the award of prereference and/or pendente lite interest. Since interest is compensatory in nature and is parasitic upon a principal sum not having been paid in time, this Court has frowned upon clauses that bar the payment of interest. It has therefore evolved the test of strict construction of such clauses, and has gone on to state that unless there is a clear and express bar to the payment of interest that can be awarded by an arbitrator, clauses which do not refer to claims before Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 29 of 42 the Arbitrators or disputes between parties and clearly bar payment of interest, cannot stand in the way of an arbitrator awarding prereference or pendente lite interest. Thus, when one contrasts a Clause such as the Clause in the Second Ambica Construction Case (supra) with the Clause in Tehri Hydro Development Corporation Ltd. (supra), it becomes clear that unless a contractor agrees that no claim for interest will either be entertained or payable by the other party owing to dispute, difference, or misunderstandings between the parties or in respect of delay on the part of the engineer or in any other respect whatsoever, leading the Court to find an express bar against payment of interest, a Clause which merely states that no interest will be payable upon amounts payable to the contractor under the contract would not be sufficient to bar an arbitrator from awarding pendente lite interest under the 1940 Act. As has been held in the First Ambica Construction Case (supra), the grant of pendente lite interest depends upon the phraseology used in the agreement, clauses conferring power relating to arbitration, the nature of claim and dispute referred to the Arbitrator, and on what items the power to award interest has been taken away and for which period. We hasten to add that the position as has been explained in some of the judgments above Under Section 31(7) of the 1996 Act, is wholly different, inasmuch as Section 31(7) of the 1996 Act sanctifies agreements between the parties and states that the moment the agreement says otherwise, no interest becomes payable right from the date of the cause of action until the award is delivered.....".
(25) By application of the above principles of law to the facts of the present case, I now proceed to decide the objections raised by the objectors/ petitioners.
Findings & Observations:
(26) Now coming to the grounds raised by the petitioner/ objector. I have gone through the original arbitral record.
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 30 of 42 (27) At the very Outset, I may note that the main ground on which the petitioner has challenged the impugned award dated 07.08.2020 is that claim of the respondentclaimant before the Ld. Arbitrator was beyond the period of Limitation. (28) The case of the petitioner is that the claim of the claimant (respondent before this Court) was denied by the petitioner by moving an application under Section 16 and 43 of Arbitration and Conciliation Act, on the ground of claim being hit by limitation as the amount deducted was pertaining to the year 2013 and the Arbitration Clause was invoked in the year 2017 i.e. after expiry of the statutory period of three years. It was alleged by the petitioner in its application under Section 16 of the Arbitration and Conciliation Act that the deductions as sought to be recovered by the respondentclaimant were for the period of 20122013 and since there was no acknowledgement by the petitioner qua the liability, therefore the claim of the respondent was barred by Limitation.
(29) I may observe that vide a detailed order dated 15.07.2019 the Ld. Arbitrator had dismissed the application under Section 16 of the Arbitration and Conciliation Act, 1996 filed by the present petitioner by holding that the question of limitation is a mixed question of law and fact. The relevant portion of the order dated 15.07.2019 passed by the Ld. Arbitrator is reproduced as under:
"........ On behalf of the respondent reliance is placed on M Saraf Trading Agency & Ors. Vs. M/s. Bharat Petroleum Corporation Limited passed in CMP No. 1395/2014 by the High Court of Orissa decided on Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 31 of 42 10.07.2017, the said ruling is given in the said matter under Order VII Rule 11 (d) CPC and pertains to date of cause of action for filing a claim in a civil suit. Reliance is also been placed on Union of India Vs. M/s. Momin Construction Company, AIR 1995 SC 1927, wherein it has been held that application under Section 20 of the Arbitration & Conciliation Act 1996 should be filed within 3 years when no claim certificate and the final bill was passed. Both the said rulings as discussed below are not applicable to the facts and circumstances of the present case.
On the other hand, on behalf of the claimant, it is averred that not only Section 16 has no application to the facts and circumstances in the present case but the respondent had not filed any reply to the claim petition and documents have been filed by the claimant reflecting therein that the deductions so made was not accepted by the claimant and when challenged the respondent also held various meetings with the claimant to ascertain as to whether the deductions made were rightly made or not and it was ultimately in the last meeting held on 23.01.2016 for the first time, the respondent took a stand that the deductions have been rightly made. So as per the claimant the disputes i.e. arbitrable disputes arose for the first time on 23.01.2016 as before that, the parties were themselves including the respondent considering whether the deductions were made rightly or not.
Even in the application itself moved by the respondent in para 7 it is mentioned that the period of limitation for arbitrations runs from the date dispute arises and the claim for arbitration has to be raised as soon as the cause of arbitration arise.
So, in the present case as per the letters placed on record ending with letter dated 23.01.2016, the cause for arbitration arose even as per the respondent arose on 23.01.2016 as the respondent has not filed any reply or explanation to the said letter dated 23.01.2016. On behalf of the claimant reliance has been placed on Indian Farmers Fertilizers Cooperative Limited Vs. Bhadra Products MANU/SC/O026/2018, wherein it has been held that an award which did not relate to the arbitral tribunals own jurisdiction under Section 16 did not have to follow the drill of Section 16 (5) and (6) of the Act. An award delivered by the arbitrator which decide the issue of limitation can be said to be an interim award, Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 32 of 42 which can be challenged under Section 34 of the Arbitration Act which decides the point of limitation against the claimant.
As already pointed out as above, reliance regarding the reason of arbitrable dispute has been placed upon a letter and the counsel for the respondent had argued that the meaning tried to be assigned by the claimant on the said letter cannot be the only meaning which could be derived. So, under the present circumstances, the question of limitation is a mixed question of law and fact.
The application stands dismissed.....".
(30) It is writ large that the Ld. Arbitrator has duly considered the various judgments relied upon by the parties and rightly observed that as per the letters placed on record ending with the letter dated 23.01.2016, the cause for arbitration arose on 23.01.2016 as the respondent (i.e. the present petitioner) has not filed any reply or explanation to the said letter dated 23.01.2016.
(31) I may also note that though the application under Section 16 of the Arbitration and Conciliation Act 1996 was dismissed by the Ld. Sole Arbitrator yet which the respondent (i.e. the petitioner before this Court) had reagitated the issue of the limitation by way of Statement of Defence and also at the time of final arguments as well. The Ld. Arbitrator has elaborately discussed all the contentions raised by the parties, the reliances and also the various emails and decided the aspect of limitation by holding that the claim is well within the period of limitation (Ref. Para 17 to 39 of the Arbitral Award). The relevant portion of the award is reproduced as under:
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 33 of 42 ".....32. Furthermore a bare perusal of email dated 28.01.2016 shows that it has been sent to inform the decision taken in meeting dated 23.01.2016 which was confined to the aspect of Deductions made on account of Bonus, paid in excess earlier, and to no other point. As such Email dated 28.01.2016 could not in any case be a reiteration of Email dated 09.09.2013, which have dealt with all the deductions and it is stated therein that the Respondent is liable to pay the wages for 29th Feb. 2012 to the claimant.
33. So the stand taken that the Email dated 28.01.2016 is a reiteration of Email dated 09.09.2013, with a view to say that there was no occasion for considering the arbitrary deductions made by the Respondent, and the Claimant was simply harping over the issues, is totally untenable and is an afterthought. No noting of the Respondent has been placed on record in this regard.
34. During the crossexamination of CW1 suggestions have been put to the witness to the effect that the mails relied upon were unilateral, that they have been addressed to persons who were not authorized by the Respondent, and that no Committee was ever formed to take a relook about the arbitrary deductions made, which all suggestions have been denied by CW1.
35. Such suggestions are absolutely untenable as no such stand has been taken in reply or in Evidence Affidavit of RW1. Furthermore the most glaring aspect is that the receipt of all the emails have been admitted in the affidavit filed by way of admission and denial by the Respondent and only the contents have been denied.
36. Since the receipt of Emails stands admitted, it cannot be said that they were unilateral or were addressed to unauthorized persons. The receipt has been admitted by the Respondent Company i.e. to say they are on the record of Respondent Company and were received from time to time, and the Respondent Company is aware of the contents thereof, and at no point of time the Respondent Company had refuted the contents, on receipt of respective emails.
37. So far as formation of Committee is concerned, the said aspect has been admitted by the Respondent in its email dated 24.12.2014, reproduced above.
38. So it is clear that the Emails exchanged between the parties were not after the expiry of the period of limitation to invoke the Arbitration, and that the deductions made by the Respondent from the final bill of Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd.
OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 34 of 42 the Claimant in March 2013 were so made, without providing the details of the counts against which deductions were made, and despite repeated requests by the claimant to explain as to why deductions have been made. (said plea has been taken by the Claimant in the claim petition as well as duly elaborated by CW1 in its crossexamination). The so called details for the first time were provided on 29.08.2013, reflecting that at the time of making deductions the Respondent had no data available with it as on what account deductions are to be made, otherwise the same instead of providing in August 2013, almost after six months of making the deductions, should have been supplied on month month basis, as it is the stand taken by the Respondent that deductions were made from monthly bills. The consolidated statement ought to have been supplied within two or three days of closing of contact as it could have been based on monthly deductions only.
39. So the cause for raising an Arbitrable Dispute accrued to the Claimant on 28.01.16 and the notice invoking arbitration was served upon the Respondent in august 2017, the claim is held to be raised within the period of Limitation.
In the case of Geo Miller case (Para 8), relied upon by the Respondent itself, it was held that though a different scheme has been evolved under the 1996 Act, however, the same principles continue to apply with respect to applicability of the law of Limitation to an application under 11(6) of the 1996 Act as laid down in the decisions dealing with judicial appointment of an arbitrator under Section 8 and 20 of the 1940 Act.
Reference of the case State of Orissa Vs. Damodar Dass (1996) 2 SCC 216, in the said very judgment has also been made wherein it had been held that the period of limitation for an applicati8on for appointment of Arbitrator under Sections 8 and 20 of the 1940 Act commences on the date on which cause of Arbitration accrued i.e. from the date when the Claimant first acquired either a right of action or a right to require that an arbitration take place upon the dispute concerned. (para 70). This ruling was not held to be a wrong law by the Hon'ble Supreme court in the judgment cited and relied upon by the Respondent.
Furthermore in para 10 of the very said ruling, it has been held that we agree that on certain set of facts and circumstances the period during which the parties were Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 35 of 42 bonafide 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 history between the parties must be specifically pleaded and placed on 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 arising at a settlement and contemplated referral of the dispute for Arbitration. The 'breaking point' would then be treated as threshold for determining when such a point arises.
In the present case the 'breaking point' is 28.01.16 when the claim for refund of bonus amount, deducted on the ground that earlier higher amount was paid on a misplaced notion by the Respondent and before that respondent never closed the gates for arriving at a settlement or called upon the Claimant to have recourse to Arbitration.
In view of the above discussion the plea of claim being time barred is decided against the Respondent and it is held that the claim is well within the period of Limitation...."
(32) The aforesaid findings of the Ld. Arbitrator, which are based upon the law and facts, cannot be said to be against the provisions of the contract. It is a settled law that the Court cannot undertake an independent assessment of the merits of the award and where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. The findings as reflected above, are reasoned and do not suffer from any infirmity or error. No interference is required with the regard to the above conclusion arrived at by the Ld. Arbitrator.
(33) Now coming to the aspect of deductions by the petitioner in respect of the bonus payable to the employees of the Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 36 of 42 respondent for the year 20122013 to the tune of Rs.2,95,102/ and deductions to the tune of Rs.9,36,129/ under Operations and Maintenance. I may observe that all the grounds which the petitioner has raised before this Court, have also been raised by the Ld. Sole Arbitrator who has dealt with the same elaborately. After considering the various documents and evidence before him, the Ld. Arbitrator has held that the deductions made by the respondent (i.e. petitioner before this Court) are not sustainable (Ref. Para 40 to 87 of the Award dated 07.08.2020). The relevant portion of the observations of the Ld. Arbitrator are reproduced as under:
".......82. The respondent had also tried to urge that the claimant had not provided the full details of the wages paid by it to its employees, which contention is of no substance, as admittedly earlier the bonus was paid and then deducted simply on the premises that the cap in wages was not taken into account at that time.
83. So it is clear that the respondent initially paid the Bonus component calculated at 8.33% of actual wages. It must have been paid as per the agreed terms. It was only later on revealed to the Respondent that under the Bonus Act there is a cap on wages on which Bonus can be paid and realising that instead of the agreed terms it can take refuge under the provisions of Bonus Act, it deducted the excess amount paid, unilaterally and as per its own notions.
84. No doubt there is a cap, provided, however the same will mean that the workman cannot as a right demand Bonus more than that as prescribed, but in case the employer wants to pay more than the Act will not be a deterrent. Even in this case the claimant had disbursed Bonus to its Employees without taking in account the Cap. So the deduction on this count is also held to be arbitrary and unsustainable.
85. Moreover in the entire contract there is no provision that an amount paid in excess can be deducted unilaterally and Clause 14 of the General Conditions of Contract, do not provide for deduction on such count.
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 37 of 42 The respondent at best could have asked for the refund which has not been done, and even no counterclaim has been preferred by the respondent in this regard in the present proceedings.
86. In view of the above discussion the unspecific deductions made by the respondent, on account of non provisions of Tools and tackles, non maintenance of records as per relevant Acts, non completion of Jobs, Uniforms, non submission of Monthly Reports, Absenteeism, Service Tax are not sustainable and the respondent is held liable to pay a sum of Rs.9,36,129/ (Nine lac thirty six thousand and one twenty nine), the claimant and an Award in this regard is awarded in favour of the Claimant and against the Respondent.
87. Further Award for a sum of Rs.2,95,102.61 (Two Lac Ninty Five Thousand One Hundred Two and Paisa Sixty One) deducted by the respondent on account of alleged excess amount of Bonus Paid, is passed in favour of the Claimant and against the Respondent....."
(34) It is evident from the above that the Ld. Arbitrator has duly explained and elaborated the reasons for arriving at his decisions. It is not open for this Court to sit in appraisal of the evidence lead before the learned Arbitrator. The above findings of the Ld. Arbitrator are based upon facts of the case and cannot be interfered with by this Court while exercising its jurisdiction under Section 34 of the Arbitration and Conciliation Act. (35) Further, according to the petitioner, the Ld. Sole Arbitrator has wrongly awarded the cost of four lacs in favour of the claimant/ respondent without any basis and even on guess work, the same cannot be justified for a stale claim and the said relief is in contravention of Section 31 of the Arbitration and Conciliation Act, 1996 being a patent illegality and an instance of bias. In this regard, I may observe that it is a settled law that Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 38 of 42 an Arbitrator is the Sole Judge of the quality and quantity of evidence and his estimations are not subject matter of scrutiny under Section 34 of the Arbitration and Conciliation Act. The findings given by the Ld. Arbitrator are reasoned and does not suffer from any infirmity.
(36) In so far as the other grounds raised by the petitioner are concerned, I note that it is settled law that this Court cannot go into the merits of the findings of the Arbitrator. Despite having alleged that the impugned award dated 07.08.2020 is against public policy i.e. being violative of the provisions of Section 34 (2) (b) (ii) of the Arbitration and Conciliation Act 1996, the petitioner/ objector has failed to show that the award in question is in conflict with the public policy in India or that the impugned award is based upon no reasons. Rather, the award dated 07.08.2020 contains elaborate discussion and reasoning for the conclusions so arrived at by the Ld. Arbitral Tribunal. (37) The arbitration award dated 07.08.2020 is a reasoned award and does not suffer from any infirmity or error apparent on the face of the award. It is not open for this Court to sit in appraisal of the evidence lead before the learned Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the learned Arbitrator which was subject matter of dispute. In the present case the learned Arbitral Tribunal has decided upon the issues under reference which were within their competency and as per the agreement entered into between the parties. There are no allegations against the learned Arbitrator regarding misconduct nor of having misconducted Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 39 of 42 the proceedings which have either been alleged by the petitioner or established. The Ld. Arbitrator has duly explained and elaborated the reasons for arriving at his decisions and the petitioner/ objector before this Court has failed to bring its case within the provisions of Section 34(2) of the Arbitration and Conciliation Act, 1996 and I find no ground to intervene. (38) Ergo, I hold that the petitioner/ objector has miserably failed to bring its case within the provisions of Section 34 (2) of the Arbitration and Conciliation Act, 1996 and to establish that the petitioner/ objector was in some incapacity; or that the Arbitration agreement was not valid; or that he was not given a proper notice or was otherwise unable to present his case; or that the arbitral award dealt with a dispute not contemplated by or not falling within the terms of submission to arbitration, or it contains decisions on matters beyond the scope of submission to arbitration. The petitioner/ objector has also failed to establish that the composition of arbitral tribunal or the arbitral procedure was not in accordance with the agreement between the parties or that the subject matter of dispute was not capable of settlement by arbitration under the law for the time being in force or that the arbitral award was in conflict with public policy of India.
CONCLUSIONS:
(39) It is settled law as reported in the case of Associated Engineering Company vs. Govt. of Andhra Pradesh, reported in 1992 SC 232 that an arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract and has sole Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd.
OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 40 of 42 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. However, if he has remained within the parameters of the contract and has construed the provisions of the contract his award cannot be interfered. The petitioner has failed to establish that the Arbitrator has failed to arbitrate the terms of the contract or has travelled beyond the same. Ergo, I hold that the arbitration award dated 07.08.2020 is a reasoned award and does not suffer from any infirmity or error apparent on the face of the award. It is not for this Court to sit in appraisal of the evidence lead before the learned Arbitral Tribunal and this Court will not open itself to the task of being a judge on the evidence placed before the learned Arbitrator which was subject matter of dispute.
(40) Further, I am of the view that the interpretation of the relevant clauses of the Act and the conclusions arrived at by the Ld. Arbitral Tribunal, are possible and plausible and merely because another view is possible, would be no ground to interfere in the conclusions of the Ld. Arbitral Tribunal. It is the mandate of provisions under Section 34 of the Arbitration and Conciliation Act to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law and any frequent interference with the arbitral award in the usual course on factual aspects, the commercial wisdom behind opting for alternate dispute resolution would stand frustrated. The reasoning Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 41 of 42 provided in the Award is just, fair and reasonable. (41) The Arbitral Tribunal has duly explained the reasons for arriving at its decisions and the petitioner/ objector before this Court has failed to bring its case within the provisions of Section 34(2) of the Arbitration and Conciliation Act, 1996 and I find no ground to intervene.
(42) Therefore, I hereby hold that the petitioner has failed to make out any case for requiring any interference with the award under Section 34 of the Arbitration and Conciliation Act, 1996 and accordingly the objections, being devoid of merits, are hereby Dismissed. Parties are directed to bear their own costs. (43) Original arbitral proceedings be sent back.
(44) File be consigned to Record Room.
Announced in the open court (Dr. KAMINI LAU)
Dated: 05.01.2024 District Judge (Commercial Court)02,
Central, Tis Hazari Courts, Delhi
Bharat Petroleum Corporation Ltd. Vs. M/s. Vatika Hotel Pvt. Ltd. OMP (COMM) No. 111/2020, Judgment dated: 05.01.2024 Page No. 42 of 42