Delhi District Court
Delhi Tourism & Transportation ... vs M/S Swadeshi Civil Infrastructure Pvt. ... on 15 October, 2020
Digitally
signed by RAJ
RAJ KUMAR
CHAUHAN
KUMAR Date:
CHAUHAN 2020.10.15
THE COURT OF DISTRICT JUDGE 16:30:50
(COMMERCIAL COURT01), +0530
SOUTHEAST, SAKET COURTS, NEW DELHI
Presiding Officer: Sh. Raj Kumar Chauhan DHJS
OMP (Comm) No. 131/19
In the matter of:
Delhi Tourism & Transportation Development
Corporation 18A, DDA SCO Complex,
Defence Colony, New Delhi110024. ..........Petitioner.
Vs.
M/s Swadeshi Civil Infrastructure Pvt. Ltd.
302, DLF Tower B, Jasola,
New Delhi - 110025. ........Respondent
Date of institution : 27.11.2019
Date on which order was reserved : 05.10.2020
Date of pronouncement of the order : 15.10.2020
ORDER
1. The petition u/s 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as 'Arbitration Act') has been filed with the following prayer : "(a) Set aside the impugned award dated 29.08.2019 to the effect that the Ld. Sole Arbitrator has rejected the counter claims CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 1 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 of the petitioner, and / or
(b) Award of the cost of the present petition to the petitioner.
(c) Pass any other order or further orders which the Hon'ble Court deems fit in the interest of justice."
2. The brief facts which gave rise to the present petition as alleged in the petition are that the petitioner an undertaking of Government of NCT of Delhi offers a vide range of spectrum of service to tourist and also the citizens of Delhi. Respondent M/s Swadeshi Civil Infrastructure Pvt. Ltd. is a contractor and also was a successful bidder being a lowest bidder and an agreement was executed between the parties vide agreement dated 21.08.2011 annexureP4. The stipulated date of completion was 20.04.2013. The tendered amount was Rs. 38,98,47,69/. The respondent herein / claimant completed the work on 20.05.2014. The petitioner / counter claimant made the full and final payment of Rs. 75,15,22,176/ on 12.08.2016 which was based on the final bill submitted by the respondent / claimant.
3. Further the respondent / claimant raised a dispute raising additional claims before the Executive Engineer and accordingly invoked arbitration clause for settlement of dispute interse parties. On 27.06.2017, the Chief Engineer of the petitioner corporation appointed Sh. Om Prakash Bhatia, Former Additional Director General, CPWD as Sole Arbitrator. Further, CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 2 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 the respondent / claimant refused to appear before him and preferred an application u/s 14 of the Arbitration Act before the Hon'ble High Court of Delhi for termination of the mandate of the Arbitrator appointed by the petitioner / counter claimant. On 21.02.2018, the Hon'ble High Court of Delhi vide consent order appointed Sh. A.K. Singhal, Director General, CPWD (retired) as the Sole Arbitrator for adjudication and resolution of the dispute between the parties.
4. On 07.03.2018, the Sole Arbitrator issued notice to both the parties and directed the respondent / claimant to submit the claim within 30 days. The petitioner / counter claimant on 29.08.2018 submitted his statement of defence. The respondent / claimant on 18.12.2018 further added / changed / modified the claimed amount and the pleadings at the time of filing their rejoinder. The respondent / claimant thus enlarged the scope of reference without permission.
5. The petitioner filed an application u/s 16 of the Arbitration Act on the ground that since full and final bill has been accepted by the respondent / claimant no claim was left between the parties for adjudication. Further, both the parties mutually agreed that contents of the said application will be treated as preliminary issue to be adjudicated by the Learned Arbitrator before deciding the merit of the case. No such preliminary issue was framed by the Learned Arbitrator and nothing was recorded in the order in that regard.
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 3 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
6. During arguments on Claim No. 9 and 10 the respondent / claimant stated that they will be moving an application for amendment u/s 23 (3) of the Arbitration Act for the parties supplementing its plaint. When this application was filed on 08.07.2019 the respondent / claimant has virtually introduced new claim in the guise of amendment relying upon material / data which were not earlier put before the Learned Tribunal. The reply was filed by the petitioner on 14.08.2019. On 08.07.2019 when the amendment application was filed by the respondent / claimant, the petitioner / counter claimant has filed counter claim before the Arbitral Tribunal raising certain counter claim. The petitioner made the counter claim to the tune of Rs. 48,91,233/ detailed as under : CLAIM NO. DETAILS AMOUNT (in Rs.) CLAIM I Refund of excess Rs. 39,75,100/ amount paid in 32nd and final bill CLAIM II Refund of excess Rs. 2,06,478/ amount paid due to measurement carried over twice in 32nd and final bill CLAIM III Refund on account of Rs. 7,09,655/
(i) cost adjustment for producing concrete at site in Agreement item no. 2.03;
(ii) payment made
under 10 CA for
cement consumed in
RMC M20 grade
CLAIM IV Claim of interest @ 18% p.a.
CS (Comm) No. 131/19
Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 4 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 CLAIM V Claim of Arbitration As per the cost sheet that shall be provided at a later stage.
TOTAL Rs. 48,91,233/
7. During the hearing on 21.08.2019 the arguments were addressed on the respondent / claimant's application for amendment of its statement of claim. The respondent / claimant has submitted arguments objecting to the maintainability of the counter claim filed by the petitioner / counter claimant.
8. It is further alleged that during the course of deliberation on the counter claim AR of the respondent / claimant categorically and unequivocally conceded that counter claim no. 1 of the petitioner was genuine inasmuch as double payment as described by the petitioner while raising the counter claim no. 1 has been made to the respondent / claimant. The AR of the petitioner / counter claimant sought time to seek instructions on the offer made on behalf of the claimant regarding payment of amount raised in counter claim no. 1. The matter was adjourned for 23.08.2019. It is further alleged that without deciding the amendment application, the final arguments were heard on the claim no. 9 and 10 on 23.08.2019. At the fag end of the hearing on 23.08.2019 it was indicated that the offer of the respondent / claimant regarding counter claim of the petitioner / counter claimant stood withdrawn. The Learned Arbitrator decided to dispose of the counter claim without hearing the full and final arguments of the petitioner CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 5 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 regarding his counter claim and also without calling the respondent / claimant to file the reply to the said counter claim. The petitioner / counter claimant filed an application u/s 18 of the Arbitration Act seeking procedural order from the Learned Tribunal. However, surprisingly Learned Arbitrator passed a detailed order dated 29.08.2019 rejecting the counter claim of the petitioner / counter claimant without mentioning anything about the respondent / claimant's admission regarding genuineness of the counter claim no. 1 of the petitioner / counter claimant. It is this order dated 29.08.2019, the impugned Award on the counter claim has been challenged in the present petition on various grounds detailed on page no. 18, 19 and 20 of the present petition. The impugned Award has been challenged primarily on the following grounds : "(i) Firstly, the counter claim of the petitioner / counter claimant has been dismissed without assigning any reasons and the arguments on the counter claim were curtailed by the Learned Tribunal on 21.03.2019 because of the admission of the respondent / claimant to the counter claim no. 1.
(ii) Secondly, the impugned Award is in violation of the fundamental rules of the law being in violation of principle of natural justice.
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 6 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
(iii) Thirdly, the impugned Award suffered from patent illegality.
(iv) Fourthly, the Learned Arbitrator was biased. The application u/s 18 and 19 of the Arbitration Act filed by email on 27.08.2018 was not considered while passing impugned Award dated 28.08.2019 and there is not even a whisper of the said application in the impugned Award which make the impugned Award patently illegal."
9. In reply, the respondent / claimant has controverted and denied the averments in the petition stating that the respondent / claimant has raised a preliminary issue regarding maintainability of the counter claim because pleading were already completed and claimant has almost completed its submissions in support of its claim and therefore the counter claim was belated, false and frivolous. It is further stated that Learned Tribunal at the very first hearing had determined the timeline for completion of pleadings including filing of counter claim. Thus filing of the counter claim at a belated stage when the claimant / respondent herein has almost completed its oral submissions is not permissible and the counter claim at the belated stage was filed without completing the procedure stipulated in Clause 25 of the GCC as applicable. As per Clause 25 of the GCC both the parties to the agreement has agreed that CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 7 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 in terms of the contract the Learned Arbitrator shall adjudicate only on issue as are referred to him by the Appointing Authority and give separate Award against each dispute and claim referred to him. The Hon'ble High Court of Delhi while substituting the current Arbitrator vide order dated 21.02.2018 has asked the current Arbitrator to adjudicate claims already submitted by the respondent / claimant before it. Para 03 of the order of Hon'ble High Court of Delhi is as under : "3. The Dispute Resolution Clause (Clause 25 of the GCC) stipulates as procedure where the disputes are, in the first instance, to be resolved by the Superintendent Engineer and, therefore, by the Chief Engineer. Since, in this case, there seems some confusion with regard to the designation of Shri Vivekananda Vibek, the petitioner has raised a controversy as to whether Shri Vivekananda Vibek was authorized to appoint an Arbitrator."
10. In his reply the respondent / claimant has relied upon the case of State of Goa vs. M/s Praveen Enterprises, Civil Appeal No. 4987/2011 order dated 04.07.2011. Para 32 (C) has been relied as under : CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 8 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 "32. The position emerging from above discussion may be summed up as follows:
(a) Section 11 of the Act requires the Chief Justice or his designate to either appoint the arbitrator/s or take necessary measures in accordance with the appointment procedure contained in the arbitration agreement. The Chief Justice or the designate is not required to draw up the list of disputes and refer them to arbitration. The appointment of Arbitral Tribunal is an implied reference in terms of the arbitration agreement.
(b) Where the arbitration agreement provides for referring all disputes between the parties (whether without any exceptions or subject to exceptions), the arbitrator will have jurisdiction to entertain any counter claim, even though it was not raised at a stage earlier to the stage of pleadings before the Arbitrator.
(c) Where however the arbitration agreement requires specific disputes to be referred to arbitration and provides that the arbitrator will have the jurisdiction to decide only the disputes so referred, the arbitrator's jurisdiction is controlled by the CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.Page 9 of 68
(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 specific reference and he cannot travel beyond the reference, nor entertain any additional claims or counter claims which are not part of the disputes specifically referred to arbitration."
11. It is further submitted that in view of the above finding of the Hon'ble Supreme Court the counter claim has been rightly dismissed. The Arbitrator has no jurisdiction to entertain the counter claim from the parties directly without any reference by the Appointing Authority. It is further stated that the impugned Award dismissing the counter claim is based on reasons and in these facts and circumstances can not be said to be against the public policy and petition is liable to be dismissed.
12. It is further stated that on 21.08.2019 both the parties completed their arguments in respect of both the applications moved by the parties i.e. for amendment of claim by the respondent herein and for filing the counter claim by the petitioner. The AR of the respondent / claimant made proposal to the AR of the petitioner herein which is reproduced hereunder: " Respondent herein would not oppose the counter claim of the petitioner herein subject to that the petitioner herein would also give its consent to take on record additional documents filed on behalf of the CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 10 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 respondents herein in support of claim no. 9 and 10. The authorized representative of the petitioner herein stated that he has to take instruction from the appropriate authority. Thereafter, both the parties agreed and jointly requested the Learned Arbitrator not to record anything about the said proposal till the authorized representative of the petitioner gets proper instructions. Accordingly, the Learned Arbitrator did not record such settlement proposal between the parties in its order and adjourned the proceedings."
13. It is further stated that the Learned Arbitrator vide order dated 21.08.2019 reserved the pronouncement of orders on both the applications on 23.08.2019. The Learned Arbitrator vide order dated 23.08.2019 dismissed both the applications filed by the parties. Further, the reasoning for dismissal of both the applications was given vide order dated 29.08.2019, wherein the application of the respondent / claimant for amendment of the claim and the counter claim of the petitioner herein were dismissed.
14. On merit, all the averments in the petition has been controverted and denied stating that the impugned Award is a reasoned Award and has been passed after giving fair opportunity to both the parties and after hearing detailed CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 11 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 arguments. It is further submitted that the petition is false and frivolous and liable to be dismissed.
15. The petitioner has filed rejoinder making preliminary submissions. It is stated that procedure of Clause 25 GCC is not required to be complied with for preferring a counter claim; it is a settled principle of law as well as statutory mandate as provided under Sub Section 2A of Section 23 of the Arbitration Act that the counter claim and set off can be filed in the ongoing arbitration proceedings in case such counter claim falls within the scope of arbitration agreement; Order 8 Rule 6A of the CPC is an enabling provision in filing the counter claim so as to avoid multiplicity of proceedings and avoiding inconvenience to the parties, therefore, no specific statutory bar or embargo has been imposed in entertaining the counter claim in an ongoing proceedings. It is further stated that reference to the arbitration may include all disputes between the parties or all disputes with respect to the particular content or in respect of specific enumerated disputes. If all disputes are referred, the Learned Arbitrator has the jurisdiction to decide all disputes raised in pleadings as per terms of the arbitration agreement. The reliance has been placed on the case of State of Goa vs. M/s Praveen Enterprises (2012) SCC 581 to stress the point that when an Arbitrator is appointed by the Court, the parties are permitted to raise their claims with supporting documents including counter claim to establish their issues and claim reliefs. The discretion has been vested to the CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 12 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 Arbitrator to decide whether the claim as put forth in the counter claim are within the scope of arbitration agreement or not and accordingly adjudicate upon the same. It is therefore submitted that the Learned Arbitrator has wrongly appreciated the judgment of State of Goa vs. M/s Praveen Enterprises (supra).
16. It is further submitted that the counter claim was validly raised and was within the parameters of the arbitration agreement between the parties and Learned Arbitrator was duty bound to adjudicate upon the state and the findings of the Learned Arbitrator to the effect that the counter claim was not referred by the Appointing Authority and as such was not required to be considered are perverse and biased and needs to be set aside and counter claim of the petitioner herein needs to be adjudicated upon.
17. Both the parties have filed the written submissions and the relevant citations. I have heard the learned counsels for parties at length.
18. Sh. Sachin Dutta, Learned Senior Advocate on behalf of petitioner argued that the impugned order is liable to be set aside because the Learned Arbitrator has committed patent illegality while dismissing the counter claim even without seeking reply from the claimant / respondent herein and further wrongly concluded that the counter claim was not having been referred by the Appointing Authority and as such was not CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 13 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 required to be adjudicated upon by the Learned Arbitrator. It is argued that the para 5 of the judgment of the Hon'ble High Court of Delhi while appointing the substitute Arbitrator has done away with the machinery provision hence there was no requirement of confining the adjudication by the Learned Arbitrator so appointed to the reference made by the Appointing Authority to the original Arbitrator who was substituted by the Hon'ble High Court of Delhi on the petition of the respondent / claimant. It is further argued that the counter claim was relating to the payment of extra items except the counter claim no. 3 pertaining to the refund of excess price. All the counter claims were pertaining to the subject matter of the claim petition and as such the counter claim was legally and validly raised. It is further argued that the Learned Arbitral Tribunal has misconducted itself because it did not record in the proceedings regarding the admission made by respondent / claimant regarding the genuineness and correctness of the counter claim no. 1. It is further argued that the Learned Arbitrator has done favoritism to the claimant because it has heard the claimant at length regarding the amendment application but the arguments of the petitioner on the counter claim were deliberately curtailed and not heard at length. It is further argued that even the detailed application which was submitted by email on 27.08.2018 was not considered while dismissing the counter claim which shows that the Learned Arbitrator was biased while dismissing the counter claim through the impugned Award. It is further submitted that the Learned Arbitrator has committed 02 CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 14 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 mistakes i.e. denial of natural justice and secondly unethical conduct in not recording admission of the claimant. Thirdly, the Learned Arbitrator Tribunal has committed legal error in his order dated 29.08.2019 because it has given reasoning for an order passed by it on 21.08.2019 without explaining as to why no proceedings were recorded on 21.08.2019.
19. It is further argued that once arbitral proceedings have started, a separate reference order on counter claims is not required, provided that the same falls within the scope of the arbitration agreement. It is not necessary to get a separate reference order from the appointing authority as per the contractual stipulation to refer counter claims to an ongoing Arbitration. As per Learned Senior Counsel, this is fortified by the following : a. As per Section 2(9) of the Arbitration & Conciliation Act, 1996, "Where this Part, other than clause (a) of section 25 or clause (a) of subsection (2) of section 32, refers to a claim, it shall also apply to a counterclaim, and where it refers to a defence, it shall also apply to a defence to that counter claim." This section makes it clear that counter claims are equally arbitrable as claims.
Section 2A has been inserted in Section CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 15 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 23 by the Amendment Act of 2015, which reads as under:
"23. Statement of Claim and Defence. (2A) The respondent, in support of his case, may also submit a counter claim or plead a setoff, which shall be adjudicated upon by the arbitral tribunal, if such counter claim or setoff falls within the scope of the arbitration agreement."
The intention of the Legislature in incorporating the above amendment as proposed by the Law Commission of India in its 246th Report is as under:
"In section 23, after subsection (1) and before subsection (2), add the words "Explanation: In his defence the respondent may also submit a counter claim or plead a set off, which shall be treated as being within the scope of reference and be adjudicated upon by the arbitral tribunal notwithstanding that it may not fall within the scope of the initial reference to arbitration, but provided it falls within the scope of the arbitration agreement."
[NOTE: This explanation is in order to CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 16 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 ensure that counter claims and set off can be adjudicated upon by an arbitrator without seeking a separate/new reference by the respondent so long as it falls within the scope of the arbitration agreement, in order to ensure final settlement of disputes between parties and prevent multiplicity of litigation.]"
b. The above aspect was also noticed by the Hon'ble Supreme Court in the case of State of Goa v. Praveen Enterprises [(2012) 12 SCC 581], in paragraph 29 and 32.
20. Written arguments of Petitioner / Counter Claimant 20.1 In his written arguments the learned counsel for petitioner has submitted that the impugned Award is liable to be set aside on the following grounds : "(a) Apparent bias and prejudicial conduct of the Learned Arbitrator while rejecting the justifying counter claim of the petitioner.
(b) Factual perversity in the Award.
(c) Denial of natural justice.
(d) Patently illegal and against the
public policy of India.
CS (Comm) No. 131/19
Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.Page 17 of 68
(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
(e) Nonconsideration and rejection of the counter claim contrary to the statued and settled law."
20.2 In support of his arguments learned counsel for petitioner / counter claimant has referred upon the following judgments:
(i) Oil and Natural Gas Corporation Ltd. vs. SAW Pipes Ltd. 2003 (5) SCC 705 wherein it was held that an Award is liable to be set aside being in conflict with public policy of India on the ground : "(a) it being contrary to fundamental policy of Indian law on;
(b) Contrary to the interest of India;
(c) Contrary of justice of morality;
(d) Patently illegal;
The patent illegality should go to the very root of the matter and not a trivial illegality. The Award can also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court."
(ii) In Associated Engg. Co. V. Govt. of A.P. [1991 (4) SCC 93]the Hon'ble Supreme Court observed at page 103, Para 24: CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 18 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 "24. The arbitrator cannot act arbitrarily, irrationally,capriciously or independently of the contract. His sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction."
(iii) In State of Goa vs. Praveen Enterprises [2012) 12 SCC 581] wherein the Hon'ble Supreme Court held that the respondent in an arbitration proceeding can file a Counter Claim and once such Counter Claim is filed before the Arbitrator, the Arbitrator has to decide the same, including the question whether such Counter Claim falls within the scope of the Arbitration Agreement and whether he has jurisdiction to adjudicate all those disputes and if the answer is in the affirmative, proceed to adjudicate upon the same.
(iv) In P. Radhakrishna Murthy vs M/S. N.B.C.C. Ltd [2013(3) SCC 747] it was held at Para 15 : "15. The High Court has rightly held that the Arbitrator is not a conciliator and his duty is to decide the disputes submitted to him according to the legal rights of the parties and not according to what he may CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 19 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 consider to be fair and reasonable..........."
(v) State of Goa v. Praveen Enterprises [2012 12 SCC 581] of which relevant portion is reproduced herebelow: "29 Where the arbitration agreement requires the disputes to be formulated and referred to arbitration by an appointing authority, and the appointing authority fails to do so, the Chief Justice or his designate will direct the appointing authority to formulate the disputes for reference as required by the arbitration agreement. The assumption by the courts below that a reference of specific disputes to the arbitrator by the Chief Justice or his designate is necessary while making appointment of arbitrator under Section 11 of the Act, is without any basis.
Equally baseless is the assumption that where one party filed an application under Section 11 and gets an arbitrator appointed the arbitrator can decide only the disputes raised by the applicant under Section 11 of the Act and not the counterclaims of the respondent."
32. A counterclaim by a respondent presupposes the pendency of proceedings relating to the disputes raised by the claimant. The respondent could no doubt raise a dispute (in CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 20 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 respect of the subjectmatter of the counterclaim) by issuing a notice seeking reference to arbitration and follow it by an application under Section 11 of the Act for appointment of arbitrator, instead of raising a counterclaim in the pending arbitration proceedings. The object of providing for counterclaims is to avoid multiplicity of proceedings and to avoid divergent findings. The position of a respondent in an arbitration proceeding being similar to that of a defendant in a suit, he has the choice of raising the dispute by issuing a notice to the claimant calling upon him to agree for reference of his dispute to arbitration and then resort to an independent arbitration proceeding or raise the dispute by way of a counterclaim, in the pending arbitration proceedings."
(vi) Western Coalfields Limited, Nagpur v. M/s Narbada Constructions, Jabalpur [(1999) 1 MP LJ 55] of which relevant portion is reproduced herebelow : "True, the order of reference does not speak of counter claim but as the disputes having arisen between the parties in relation to the claims and counter claims of the parties concerning the CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 21 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 contract covered by Arbitration agreement Arbitrator was bound to decide and a separate reference on counter claims was not necessary..."
(vii) K.V. George v. Secy. to Govt., Water and Power Deptt., [(1989) 4 SCC 595] of which relevant portion is reproduced herebelow : "It is the duty of the arbitrator while considering the claims of the appellant to consider also the counterclaims made on behalf of the respondents and to make the award after considering both the claims and counterclaims."
(viii) BPCL v. Go Airlines [2019 (10) SCC 250] decided on 23.10.2019, of which relevant portion is reproduced herebelow: "Whether it is arbitrable and whether it falls beyond the scope of reference to arbitration and such other related questions, are to be determined only during the enquiry. It may be that after enquiry, the arbitrator might reject the counterclaim for Cenvat invoices as not arbitrable and the counterclaim beyond the scope of reference to arbitration. But to reject the counterclaim at the threshold on CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 22 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 the ground that the arbitrator has no jurisdiction would not be proper. The High Court, in our view, has rightly set aside the order of the learned arbitrator dated 1842011."
(ix) Gokul Projects v. Cyclone Energy Pvt. Ltd. Decided on 01.10.2018 [2018 SCC Online Del 11814] of which relevant portion is reproduced herebelow: "In Ramesh Chand Ardawatiya (Supra), the Supreme Court had also explained the advantage of allowing a counter claim by stating that the purpose of the provision enabling filing of a counterclaim is to avoid multiplicity of judicial proceedings and save upon the court's time as also to exclude the inconvenience to the parties by enabling claims and counterclaims, that is, all disputes between the same parties being decided in the course of the same proceedings. The Court held that allowing such counter claim to be filed at a belated stage is a matter of discretion to be exercised by the court keeping in view all the circumstances.
In Vijay Prakash Jarath v. Tej Prakash CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 23 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 Jarath, (2016) 11 SCC 800, the Supreme Court set aside the order passed by the High Court denying the opportunity to the Appellant therein to file counter claim because of delay of two andahalf years in filing of the same, by holding that no prejudice would have been caused to the other side if such counter claim would have been taken on record."
(x) AKM Enterprises Pvt. Ltd. v. Ahluwalia Contract (India) Ltd. Decided on 07.03.2019 [2019 SCC Online Del 7614] : " This Court in BSNL v. Rivacom Pvt.
Ltd. 2017 SCC OnLine Del 11860 has again reiterated as under : As far as the issue of nonservice of notice to the respondent before raising a counter claim is concerned, the same is no longer res integra and it has been authoritatively held by Supreme Court in State of Goa v. Praveen Enterprises (2012) 12 SCC 581 that the object of providing for counter claims is to avoid multiplicity of proceedings and to avoid divergent findings. The arbitrator will have jurisdiction to entertain any counter claim, CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 24 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 even though it was not raised at a stage earlier to the stage of pleadings before."
(xi) Ssangyong Engg. & Construction Co. Ltd. v. NHAI, Decided on 08.05.2019 [(2019) 15 SCC 131] of which relevant portion is reproduced herebelow: "34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now 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 been done away with.
In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 25 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 (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 basic notions of morality or justice".
This again would be in line with paras 36 to 39 of Associate Builders CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 26 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 [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 constricted 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 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 CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.Page 27 of 68
(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under subsection (2A), 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 when 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 CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 28 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 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 what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 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 fairminded 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 CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 29 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 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 the parties, and therefore, would also have to be characterized as perverse."
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 30 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
21. In the additional written arguments, it is submitted that the reliance by the respondent / claimant on the case of Ashok Kumar Kalra vs. Wing Commander Surender Agnihotri is misconceived for the following reasons : " (i) Section 19(1) of the Arbitration and Conciliation Act, 1996 clearly holds that, "the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908". It is too well settled and reiterated in a catena of cases that the rigors of the code of Civil Procedure, 1908 are not to be applied for the purpose of adjudication by the Arbitral Tribunals under the framework of the Arbitration and Conciliation Act, 1996. The following judgments shall be referred in this regard:
Mahanagar Telephone Nigam Limited vs. Applied Electronics [(2017) 2 SCC37] "10. On a perusal of the said provision, in juxtaposition with the provisions contained in the 1996 Act, it seems to us that the legislature has intentionally not kept any provision pertaining to the applicability of CPC. On the contrary, Section 5 of the 1996 Act lays the postulate, that notwithstanding anything CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.Page 31 of 68
(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 contained in any other law for the time being in force in matters covered by part I, no judicial authority shall intervene except so provided wherever under this Act." "
22. Arguments of respondent 22.1 Sh. Dinkar Singh, Learned counsel for respondent / claimant has argued that impugned order is perfectly legal because the allegations of bias and misconduct are false and unjustified because the admission of the respondent herein regarding the genuineness of the counter claim was not recorded by the Learned Arbitrator in the proceedings because both the parties have made a request to the Learned Arbitrator not to make those submissions as part of the record because the representative of petitioner herein / counter claimant has sought adjournment to take necessary instructions being a Government Authority. Learned counsel for respondent herein submitted that he is ready to make a submission at bar in that regard and after these submissions of the learned counsel for respondent herein, the Learned Senior counsel appearing for petitioner / counter claimant stated nothing in that regard and seems to have withdrawn the submissions in that regard as it was being vehemently argued by Learned Senior Counsel for petitioner that nonrecording of the admissions of respondent / claimant regarding genuineness of the counter claim no. 1 was a patent illegality and misconduct by the Learned Arbitrator while conducting the arbitral proceedings. Learned counsel for CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 32 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 respondent / claimant further argued that the counter claim has been rightly rejected because no counter claim can be filed after framing of issues. It is further submitted that issues were finalized on 28.02.2019 and the counter claim having been filed on 08.07.2019 at a belated stage has been rightly rejected and there is no patent illegality in that regard. Learned counsel for respondent / claimant relied upon the case of Ashok Kumar Kalra vs. Wing Commander Surender Agnihotri reported as 2020 (2) SCC 394 para 18 and 19 are relevant and reproduced hereunder : "18. As discussed by us in the preceding paragraphs, the whole purpose of the procedural law is to ensure that the legal process is made more effective in the process of delivering substantial justice. Particularly, the purpose of introducing Rule 6A in Order VIII of the CPC is to avoid multiplicity of proceedings by driving the parties to file separate suit and see that the dispute between the parties is decided finally. If the provision is interpreted in such a way, to allow delayed filling of the counterclaim, the provision itself becomes redundant and the purpose for which the amendment is made will be defeated and ultimately it leads to flagrant CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 33 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 miscarriage of justice. At the same time, there cannot be a rigid and hyper technical approach that the provision stipulates that the counterclaim has to be filed along with the written statement and beyond that, the Court has no power. The Courts, taking into consideration the reasons stated in support of the counterclaim, should adopt a balanced approach keeping in mind the object behind the amendment and to sub serve the ends of justice. There cannot be any hard and fast rule to say that in a particular time the counterclaim has to be filed, by curtailing the discretion conferred on the Courts. The trial court has to exercise the discretion judiciously and come to a definite conclusion that by allowing the counterclaim, no prejudice is caused to the opposite party, process is not unduly delayed and the same is in the best interest of justice and as per the objects sought to be achieved through the amendment. But, however, we are of the considered opinion that the defendant cannot be permitted to file counter claim after the issues are framed and after the suit has proceeded CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 34 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 substantially. It would defeat the cause of justice and be detrimental to the principle of speedy justice as enshrined in the objects and reasons for the particular amendment to the CPC.
19. In this regard having clarified the law, we may note that the Mahendra Kumar Case (supra) needs to be understood and restricted to the facts of that case. We may note that even if a counterclaim is filed within the limitation period, the trial court has to exercise its discretion to balance between the right to speedy trial and right to file counterclaim, so that the substantive justice is not defeated. The discretion vested with the trial court to ascertain the maintainability of the counterclaim is limited by various considerations based on facts and circumstances of each case. We may point out that there cannot be a straitjacket formula, rather there are numerous factors which needs to be taken into consideration before admitting counterclaim."
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 35 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
23. Written arguments on behalf of respondent / claimant 23.1 The Respondent herein, raised preliminary objection on the maintainability of the counter claims filed by the petitioner herein, on the ground that the petitioner herein/counter claimant before the Ld. Arbitrator filed the counter claim at the belated stage without complying the procedure stipulated in Clause 25 of the GCC as applicable. 23.2 It is relevant to mention herein that as per Clause 25 of GCC, as applicable in this case, both the parties to the agreement have agreed that in terms of the contract the Arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against each dispute and claim referred to him as per the terms of the contract.
23.3 Specific claims, as submitted by the respondent herein, were referred to arbitration vide reference letter dated 27.06.2017 (RefPg 2829 of the award file vol1 submitted in the High Court). It is worth to mention the reference " I, V. N. Vibek, Chief Engineer, DTTDC by powers conferred on me, under Clause 25 of the said Agreement, hereby appoint, Shri Om Prakash Bhatia, as Sole Arbitrator, to decide and make his award regarding the claims / disputes by the Contractor, if any, as shown in the statement enclosed subject always, however, to their admissibility under Clause 25 of the aforesaid agreement."
23.4 The Claimant/respondent herein, challenged the CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 36 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 appointment of Sh. O.P. Bhatia under Section 14 of the Arbitration Act 1996. The Hon'ble High Court, vide order dated 21st February 2018 (Pg 24 of the vol1 of the Arbitral Award file), allowed the petition and substituted the current Arbitrator to adjudicate the claims already submitted by the Respondent herein/claimant before the Ld. Arbitrator.
Thus, from bare reading of the clause 25 of the GCC, read with the reference and order dated 21st Feb 2018, it is evident that the Arbitral Tribunal was constituted to adjudicate the disputes as mentioned in the statement of disputes submitted by the respondent herein.
23.5 The respondent herein submits that during the course of arguments on the objections raised by the respondent herein on the maintainability of the counter claims filed by the Petitioner herein, both the parties herein placed reliance on the Judgment passed by Hon'ble Apex Court in 'State of Goa vs M/S Praveen Enterprises' on 4 July, 2011 in Civil Appeal No. 4987 of 2011.
The answering respondent craves leave to quote relevant Para 32 of the Judgment passed by Hon'ble Apex Court in 'State of Goa vs M/S Praveen Enterprises' on 4 July, 2011 in Civil Appeal No. 4987 of 2011 "32. The position emerging from above discussion may be summed up as follows:
(a) Section 11 of the Act requires the Chief Justice or his designate to either appoint CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.Page 37 of 68
(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 the arbitrator/s or take necessary measures in accordance with the appointment procedure contained in the arbitration agreement. The Chief Justice or the designate is not required to draw up the list of disputes and refer them to arbitration. The appointment of Arbitral Tribunal is an implied reference in terms of the arbitration agreement.
(b) Where the arbitration agreement provides for referring all disputes between the parties (whether without any exceptions or subject to exceptions), the arbitrator will have jurisdiction to entertain any counter claim, even though it was not raised at a stage earlier to the stage of pleadings before the Arbitrator.
(c) Where however the arbitration agreement requires specific disputes to be referred to arbitration and provides that the arbitrator will have the jurisdiction to decide only the disputes so referred, the arbitrator's jurisdiction is controlled by the specific reference and he cannot travel beyond the reference, nor entertain any additional claims or counter claims which are not part of the disputes specifically CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 38 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 referred to arbitration."
The Ld. Arbitrator in the order impugned herein by the petitioner has made deliberation on the submissions submitted by both the parties and the judgment passed by Hon'ble Apex Court in 'State of Goa vs M/s Praveen Enterprises' on 4 July, 2011 in Civil Appeal No. 4987 OF 2011. Thereafter, the Ld. Arbitrator vide the order impugned herein by the petitioner, relying upon clause (c) of Para 32 of the above quoted judgment, dismissed the counter claims filed by the petitioner on the premise that it has no jurisdiction to entertain any new claims/Counter claims from the parties directly without any reference by the appointing authority. 23.6 Thus, according to the respondent herein, the Ld. Arbitrator has passed reasoned order in accordance with the law of the land after giving reasonable opportunity to both the parties to present their respective submissions. Further the order impugned herein by the Petitioner can in no circumstances be said to against the public policy. Hence, this Petition should be dismissed with cost.
23.7 It is further submitted in the written arguments that the Learned Arbitrator vide impugned order dated 29.08.2019 has also dismissed the application of the respondent / claimant seeking amendment in the claim petition alongwith counter claim of the petitioner herein. Thus, there has been no procedural impropriety in conducting the arbitral proceedings and the Learned Arbitrator has acted in a very fair and CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 39 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 reasonable manner while dismissing the amendment in the claim petition alongwith additional documents of the respondent / claimant and the counter claim of the petitioner / counter claimant on the ground of having been filed at a belated stage because the final arguments of respondent / claimant were already heard. The Learned Arbitrator has thus acted in a perfectly legal manner while upholding the spirit of alternative dispute resolution system which envisages the expeditious disposal of the matter before the Learned Arbitrator.
24. In rebuttal arguments learned Senior counsel for the petitioner has submitted that the CPC is not applicable while conducting arbitral proceedings therefore embargo on a counter claim is not applicable to the arbitral proceedings and the counter claim can be filed before the Learned Arbitrator even after framing of issues. Reliance has been placed on the case of M/s. Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd., 2011 (8) SCC 333, wherein it was held that : " Where the special act sets out a self contained code the applicability of general law procedure would be impliedly excluded. "
25. To these rebuttal arguments, the learned counsel for respondent / claimant has submitted that the learned Senior counsel cannot blow hot and cold in the same breath because in the rejoinder to the reply the petitioner themselves referred and CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 40 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 relied upon Order 8 Rule 6A of the CPC. Para 2 of the said rejoinder is relevant and is reproduced as under : " It is further submitted that Order 8 Rule 6A CPC is an enabling provision for filing of counter claim to avoid multiplicity of proceedings thereby saving the time of the Courts and avoiding inconvenience to the parties."
26. The Hon'ble Karnataka High Court in Parvathamma vs. K.R. Lokanath & Ors. AIR 1991 Karnataka 283 has raised a point for consideration as to what is the time limit for filing the counter claim? The said point has been answered in para no. 8 of the judgment as under : "8. Point No. 2 : In both the decisions of the Supreme Court referred to above there is no indication as to when the counter claim can be set up. Both the decisions are only to the effect that the counter claim must relate to the cause of action which had arisen before the filing of the suit or before the filing of the written statement or the last date fixed for filing the written statement. Therefore, it is necessary to determine as to what is the CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 41 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 time limit for setting up a counter claim. A reading of Rules 6A and 6G of Order 8 of the C.P.C. makes it clear that the counter claim has to be treated as a crosssuit and it has to be tried along with the original claim made in the suit. When the counter claim has to be tried along with the original claim and all the rules of pleading apply to a counterclaim and it becomes a plaint in the crosssuit and the plaintiff is entitled to file a written statement in answer to the counterclaim of the defendant, it necessarily follows that a counterclaim, if not set up in the written statement, it has to be set up before the issues are framed, at any rate, before recording of the evidence commences. If a counter claim is permitted to be set up after the evidence is adduced, it would cause great prejudice to the plaintiff in the suit because at the time of adducing evidence, he will not be aware of the counterclaim, as it will not be on record. Therefore, he cannot be expected to, and he is not required to, adduce evidence having a bearing on the counterclaim.
Further allowing the counterclaim to be CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 42 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 set up after the evidence is recorded would be doing nothing but ignoring Rules 6A to 6C of Order VIII of the C.P.C. It would also result in protracting the trial and would defeat the very object of treating the counterclaim as a crosssuit and trying the issues arising therefrom along with the issues arising in the suit. The object of this is to avoid delay not only in the trial of the suit but also to decide all the controversies arising between the parties to the suit before filing the written statement or before the last date fixed for filing the written statement inasmuch as by directing the counter claim to be tried along with the main suit, the controversies or the disputes between the parties can be settled in one proceeding. Therefore, even though the Rules do not specifically lay down that a counter claim should be filed with a particular date but, reading of Rules 6A and 6G together would make it clear that the counter claim cannot be permitted to be filed when once recording of evidence commences. Point No. 2 is answered accordingly."
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 43 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
27. During these arguments and counter arguments of the learned senior counsel for petitioner / counter claimant and learned counsel for respondent / claimant, I have put a specific question to the learned senior counsel for the petitioner / counter claimant asking Whether the procedure in arbitration proceedings should be expeditious in comparison to the procedure of a regular trial before the Court and if the Hon'ble Supreme Court has put an embargo for filing the counter claim before the framing of the issues, Whether the said time limit should not be applicable to the arbitral proceedings which otherwise are proceedings by way of ADR and by its very nature needs to be expeditious visàvis trial before a Civil Court of a lis between the parties? To my dismay learned Senior counsel did not assist this Court on these aspects. Nothing was submitted regarding contentions raised by learned counsel for respondent / claimant to the effect that the learned counsel for petitioner / counter claimant himself has referred and relied the provision of CPC regarding filing of the counter claim under Order 8 Rule 6A CPC.
28. For these given facts and circumstances, the arguments raised by learned counsel for respondent / claimant are more convincing to the effect that the counter claim even in arbitration proceedings needs to be filed at the earliest and before framing of the issues and the case relied by learned counsel for respondent / claimant referred Ashok Kumar Kalra vs. Wing Commander Surender Agnihotri (supra) is applicable CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 44 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 to the arbitration proceedings also and squarely covers the facts and circumstances of the present case. The finding of the Learned Arbitral Tribunal holding the counter claim having been filed at a belated stage does not seem to be suffering from any illegality and is found to be reasoned and as per settled law.
29. Regarding the other challenge to the impugned Award, I have examined the impugned order to find out Whether the points raised by learned counsel regarding the patent illegality / error of law and failure to follow the principle of natural justice violating of fundamental policy of Government of India etc. are legally sustainable in the eyes of law or not. In order to appreciate the above challenge to the impugned Award, it is necessary to examine the proceedings dated 29.08.2019 alongwith annexure1 regarding findings and decisions of the Learned Arbitrator and the two issues which are placed as annexure P1 from page 25 to 37 of the present petition.
30. The reproduction of the entire proceedings dated 29.08.2019 alongwith annexure1 by the Learned Arbitrator is necessary to appreciate the correctness / alleged perversity of the impugned Award / the order challenged in the present petition. The impugned order is as under : "Before Shri A. K. Singhla, Arbitrator DG (W) CPWD (Retd.) Flan Not. B2012, Gaur Green City Vaibhav Khand, Indrapuram, Distt. Ghaziabad, Pin Code 201014 File No. ARB/AKS/DTTDC/1 Dated : 29/08/2019 CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 45 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 IN THE MATTER OF ARBITRATION BETWEEN
1. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
..............Claimant V/s
2. Delhi Tourism & Transportation Development Corporation ............ Respondent Ref NO. OMP (T) (COMM) 58/2017 & IA Nos. 8217/2017 & 9839/2017 Name of Works : Development of Dilli Hat at Janakpuri, New Delhi (SH. Civil, Water Supply, Sanitary Installation, drainage, development & Internal Electrical Installation Works etc.) Agreement No. 01/EE/DTTDC/Engg./201112 (Order Sheet of the hearing dated 21.08.2019 & 23.08.2019) A. Order Sheet relating to hearing held on 21.08.2019
1. Bothe the parties attended the hearing. The Attendance sheet enclosed. 2 (i) The claimant has filed an application dated 06.07.2019 under Section 23 of the Arbitration & Conciliation Act, 1996 (duly amended) to amend its pleading of its claim No. 9 & 10 relating to damages and also file some documents relating to its amended claim No. 9 & 10. The respondent during the hearing held on 08.07.2019 refuted the contention of the Claimant and submitted that it would file the reply to the said application. Accordingly the Respondent filed its objection on the application of the Claimant and submitted that the application filed by the Claimant is not merely a correction as contented by it but vide this application the Claimant has modified its pleadings in respect of claim No. 9 & 10 submitted by it in its Statement of Claims (SoC) and Rejoinder. The respondent further submitted that these modifications in Claim No. 9 & 10 are being done by the Claimant when the Claimant is about to complete its oral arguments on its claims. There is no justification brought out by the Claimant in its application to modify its claim No. 9 & 10 & submit supporting CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 46 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 documents at such a belated stage. The Claimant has also not given any reason to justify this abnormal delay. The Respondent therefore submitted that the application of the Claimant for modification of its claims No. 9 & 10 and submission of supporting documents should not be allowed at this belated stage & the application should be dismissed.
(ii) The claimant reiterated the contents contained in the application dated 06.07.2019. After hearing both the parties AT intimated that the order/decision on the application will be conveyed to the parties during the hearing to be held on 23.08.2019. 3 (i) Similarly the Respondent had moved an application dated 08.07.2019 to submit its Statement of Counter claims (five in numbers) on 08.07.2019 during the hearing. The Claimant had submitted that it would file a reply to the application before the same is taken up for oral submission & decision of AT. The Claimant filed its objection on this application vide its reply dated 19.08.2020. The application dated 08.07.2019 submitted by the Respondent to file its counter claims was also heard in detail during the hearing when both the parties made their submissions.
(ii) The Respondent reiterated the contents mentioned in its letter dated 08.07.2019 and submitted that these counter claims have been filed with in the period of limitation and in accordance with the provisions of Arbitration & Conciliation Act, 1996. The Respondent also referred to the Supreme Court Judgment delivered on 04.07.2011 in the case related to State of Goa v/s Praveen Enterprises in respect of Civil Appeal No. 4987 of 2011. The Respondent specifically relied para 9 (c) where it is mentioned that "Where the parties fail to concur in the appointment of arbitrator/s as required by the arbitration agreement, or the authority named in the arbitration agreement failing to nominate the arbitrator and refer the disputes raised to arbitration as required by the arbitration agreement, on an CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 47 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 application by an aggrieved party, the court can appoint the arbitrator and on such appointment, the disputes between the parties stand referred to such arbitrator in terms of the arbitration agreement."
(iii) The claimant in its reply dated 19.08.2019 refuted the contents of the Respondent and submitted that Respondent should have filed its counter claims while submitting the reply to the Statement of Claims (SoC). But the Respondent did not do so. The Respondent has submitted its counter claims at the fag end of the arbitration case when the Claimant has almost completed its oral arguments in its claims and the Respondent is to start its oral arguments on the claims of the claimant. At such a belated stage the submission of its alleged counter claims before the AT is not justified and accordingly the same should not be allowed and dismissed by the AT.
(iv) The Claimant further submitted that the Respondent in the present application has placed on record its counter claims without complying the procedure stipulated in clause 25 of the GCC (General Conditions of Contract) of the contract agreement as applicable in this case. Under clause 25 of the GCC of contract agreement both the parties have agreed that the Arbitrator shall adjudicate on such disputes as are referred to him by the appointing authority. As it is the term if the contract that arbitrator shall adjudicate on only such dispute that are referred to him by the appointing authority and give separate award against each dispute & claim referred to him by the appointing authority.
(v) The Claimant further submitted that it had initially submitted its claim before the appointing authority as mentioned in Clause 25 of the GCC and the submitted claims were initially referred by appointing authority to the Arbitrator but the Claimant challenged the reference as the reference was done by the authority having no jurisdiction to refer the submitted disputes to the Arbitrator. Then the Claimant filed CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 48 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 petition under section 14 (2) of the Arbitration and Conciliation Act, 1996 in the Hon'ble High Court of Delhi where the Claimant prayed for appointment of Arbitrator to adjudicate the claims already submitted to the appointing authority of the Respondent as per clause 25 of GCC. The Respondent file its reply but did not raise any such counter claim in the said petition. Finally the Hon'ble High Court vide order dated 21.02.2018 appointed the Arbitrator to adjudicate the disputes that have arisen between the parties. The Claimant also closed the order dated 21.02.2018 of the Hon'ble High Court of Delhi and submitted that the present Arbitrator has been appointed to adjudicate the disputes that have arisen between the parties in or before the date of passing the order dated 21 st February, 2018. The Claimant Submitted that the Respondent admittedly never raised any claim against the Claimant prior to filing of the present 'Statement of Counter Claims', Hence the present Statement of Counter Claims submitted on 8th July, 2019 should not be allowed and dismissed. In addition the Claimant also referred to para 32 (c) of the same Supreme Court Judgment in respect of the case i.e. State of Goa V/s Praveen Enterprises in Civil Appeal No. 4987 of 2011 delivered on 4 th July, 2011 which was quoted and discussed by the Respondent and submitted that the Hon'ble Supreme Court in the said judgment has clearly agreed with the contention of the Claimant in para 32 (c) of the judgment which states as under: "Where however the arbitration agreement requires specific disputes to be referred to arbitration and provides that the arbitrator will have the jurisdiction to decide only the disputes so referred, the arbitrator's jurisdiction is controlled by the specific reference and he cannot travel 28 beyond the reference, nor entertain any additional claims or counter claims which are not part of the disputes specifically referred to arbitration."
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 49 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 The Claimant therefore prayed that Statement of Counter Claim should not be allowed and dismissed.
(vi) Thus both the parties concluded their oral arguments. The AT intimated that the decision will be conveyed in the hearing fixed for 23.08.2019.
4. After hearing both the parties on the above mentioned two issued in para (2) & (3), the Respondent submitted that the Claimant should not start oral arguments on the claim No. 9 & 10 till such time the AT decides whether the application given by Claimant is allowed or not. However, the Respondent had no objection if the Claimant to make oral arguments on its claims of the Interest & Arbitration cost. Accordingly the Claimant made its oral arguments on the Claim of Interest & Arbitration cost. After that hearing was adjourned for 23.08.2019.
B. Order sheet of the hearing dated 23.08.2019
1. Both the parties attended the hearing. The Attendance sheet is enclosed.
2. The Respondent submitted that the oral arguments on Claims No. 9 & 10 should not be taken up by the Claimant till such time the AT conveys its decision on the two issues.
3. The AT agreed with the submission of the Respondent and conveyed its decision as under:
(i) The application of the Claimant dated 06.07.2019 regarding Modification of the Claims No. 9 & 10 and submissions of documents in support of its Claim No. 9 & 10 is not allowed and the same is dismissed.
(ii) The Counter Claims of the Respondent are not allowed & accordingly the application of the Respondent regarding Counter Claims is dismissed.
(iii) It was intimated to both the parties that reasons of taking above decision by AT will be conveyed in the order Sheet CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 50 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 of the hearing dated 23.08.2019. Accordingly the reasons of taking above decision are enclosed as AnnexureI.
4. After hearing the above decision from AT the Claimant submitted that it should be permitted to start its oral arguments on its claim No. 9 & 10 without considering the amendment to its claim No. 9 & 10 and its supporting documents. The Respondent also did not have any objection of the Claimant in oral arguments restricts itself to its old claim No. 9 & 10 as submitted in the Statement of Claims and Rejoinder.
5. The Claimant started its oral arguments/submission on its claim NO. 9 & 10 and concluded the same. Thus the Claimant completed its oral arguments on its claims.
6. From the next date hearing the Respondent will start oral arguments on the claims of the Claimant.
7. The Respondent needed time to prepare for the oral arguments on claims of the Claimant. Accordingly with the consent of both the parties 14.10.2019, 15.10.2019 & 16.10.2019 from 4 PM to 6 PM were fixed as next dates of hearing.
8. It is brought in the notice of both the parties that as per section 29 (A) 9i) of the Arbitration and Conciliation Act, 1996 the award was to be published within a period of 12 months from the date arbitral tribunal enters upon reference. The period of one year expired on 07.03.2019. However both the parties with mutual consent during the hearing held on 26.03.2019 extended the period by 6 months i.e. upto 07.09.2019 as per Section 29 (A) (3) of Act. Accordingly the mandate of the AT will expire on 07.09.2019 unless the court has either prior to or after the expiry of the period so specified, extended the period. Both the parties are requested to approach the court for further extension of the tenure of AT beyond 07.09.2019 so that the proceedings of the case can be continued & award published.
9. The Respondent is directed to make necessary arrangements for the venue and intimate the Claimant & the undersigned well in advance.
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 51 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
10. The parties are directed to attend the next hearing on 14.10.2019 at 4 PM.
SD/ (A. K. Singhal) Arbitrator DA/Annexure I By Speed Post,
1. M/s Swadeshi Civil Infrastructure PVt. Ltd., Regd. Off.
302, DLF Tower 'B', Jasola, New Delhi110025 (Email [email protected])
2. The Executive Engineer (MBI), Dilli Haat, Janakpuri, Behind DTC Bus Depot, Hari Nagar, Opp. Virender Nagar, Janakpuri, New Delhi110058 (Email [email protected]) CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 52 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 Annexure I The findings and decision of AT on the two issues (A) Application of the Claimant dated 06.07.2019 under Section 23 (3)of the Arbitration and Conciliation Act, 1996 (duly amended)
(i) The Claimant filed application dated 06.07.2019 to amend its pleadings of its claim No. 8 & 10 relating to damages & also to add some documents supporting to its amended claim No. 9 & 10. This application was filed by the Claimant under Section 23 (3) of the Arbitration & Conciliation Act,1996 which states as under: Section 23 (3) "Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it."
(ii) Considering the submission of the Respondent & Claimant the AT finds that: The Respondent has rightly objected that the claimant in the a application has not requested only to make a small correction in its Statement of Claims/Rejoinder but in the application the Claimant intends to modify its pleading in respect of Claim No. 9 & 10 given in the Statement of Claims & Rejoinder and accordingly add supporting documents. This attempt of the Claimant is not justified at this belated stage, when the Claimant is about to complete its oral arguments submission on its claims. Further the Claimant has not given any justification or convincing reasons in the application for delay which has place in submitting this application of modification of claims No. 9 & 10 and the related supporting documents. Under the circumstances the AT (Arbitral Tribunal) considers inappropriate to allow the amendment as requested by the claimant in its application dated 08.07.2019 having regard to the delay in submitting this application.
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 53 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 Under the circumstances the application of the Claimant dated 06.07.2019 is not allowed and the same is dismissed. (B) Counter Claims on behalf of Delhi Tourism & Transportation Development Corporation (DTTDC) by the Respondent. The Respondent during the hearing on 08.07.2019 submitted its Statement of Counter Claims (five in numbers). The Claimant submitted that it would file its reply to the Counter Claims before the same is considered and decided by AT. The Claimant filed its reply on 19.08.2019. The oral arguments were taken up during the hearing held on 21.08.2019.
(ii) The contents of the Respondent is that the Counter Claims are not barred by Limitation and therefore should be considered by the AT. In support of its contention the Respondent submitted a copy of the Judgment of Hon'ble Supreme Court of India given in respect of the case between State of Goa & Praveen Enterprises Civil Appeal No. 4987 of 2011 delivered on 04.07.2011. The submission of the Respondent was that in this case Appointment of Arbitrator has been done by the Hon'ble High Court of Delhi under Section 11 of the Arbitration and Conciliation Act, 1996 vide order dated 21.02.2018 where Sh. A. K. Singhla (Retired) Director General CPWD has been appointed as Sole Arbitrator without any reference to the disputes and therefore both the parties are at liberty to file its claim/counter claims before the Sole Arbitrator for adjudication. The Respondent quoted para 9 (c) of the above judgment in specific which states as under: "Where the parties fail to concur in the appointment of arbitrator/s as required by the arbitration agreement, or the authority named in the arbitration agreement failing to nominate the arbitrator and refer the disputes raised to arbitration as required by the arbitration agreement, on an application by an aggrieved party, the court can appoint the arbitrator and on such appointment, the disputes between the CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 54 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 parties stand referred to such arbitrator in terms of the arbitration agreement."
Accordingly the Respondent requested to entertain its counter claims which are not barred by time limitation.
(iii) The claimant has refused the contention of the Respondent. The submission of the claimant is given in para 3 (iii) 3(iv) & 3 (v) of order sheet dated 29.08.2019relating to hearing held on 21.08.2019.
(iv) Considering the submission if the Claimant and the Respondent the AT finds as under:
(a) The Counter Claims are being submitted by the Respondent at the fage end of case when the claimant has completed its oral arguments on its claims. The is no jurisdiction of bringing the Counter claims at such a belated stage. If at all the Respondent intended to submit its Counter Claim then as a normal practice it should have submitted while giving reply to the Statement of Claim (SoC). But the respondent did not do so. AT agrees with the contention of the Claimant that the Counter claims have been by the respondent at a belated and there is no justification for the delay.
(b) The appointment of Sh. A. K. Singhla (Retd.) Director General CPWD as Sole Arbitrator in this case has been done by the Hon'ble High Court of Delhi vide order dated 21.02.2018 under Section 14 (2) of the Arbitration & Conciliation Act, 1996. The Claimant also showed a copy of the petition dated 15.07.2017 filed before the Hon'ble High Court of Delhi. From the petition it is evident that the petition had been submitted by the Claimant under Section 14 (2) of the Arbitration & Conciliation Act, 1996. Therefore it is observed that the Appointment of the Sole Arbitrator has been done under Section 14 (2) of the Act and therefore Section 11 of the Act is not applicable. Further in the order the Hon'ble High Court of Delhi in para 5 it has been mentioned that.
"Accordingly with the consent of parties this court CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.Page 55 of 68
(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 appoints Sh. A. K. Singhla (Retd.) Director General CPWD as Sole Arbitrator to adjudicate the disputes that have arisen between the parties......"
Further in para 7 of the same order the Hon'ble tHIgh Court of Delhi has mentioned that "In view of the consequence between the parties the mandate of Sh. O. P. Bhatia who was appointed to act as an Arbitrator stands terminated."
Therefore the contention of the Respondent, that as the appointment has been done under Section 11 of the Act. Without any reference to the claims of the Claimant of the Arbitrator therefore both the parties can submit their Claims/Counter Claims before the Arbitrator, is not correct & justified. In this case the Sole Arbitrator is bound by the reference vide which Sh. O. P. Bhatia earlier Arbitrator was appointed by the appointing authority as Sole Arbitrator under clause 25 of the contact agreement.
After perusal of the order dated 21.02.2018 of the Hon'ble High Court of Delhi, AT finds that Hon'ble High Court of Delhi in para 5 of the order has limited by scope of adjudication of disputes of the Arbitrator to adjudicate the disputes that have arisen between the parties. From this portion of the order it is evident that the Arbitrator can adjudicate only those disputes which had arisen between the parties upto 21.02.2019.From the action of the Respondent evident the Counter claims of the Respondent were not in existence on 21.02.20218 otherwise the "Statement of Counter claims" could have been submitted alongwith "Reply to Statement of Claims". Thus the submission of Statement of Counter claims is a later development after 21.02.2018 and therefore according to the order of the Hon'ble High Court of Delhi the Counter claims of the Respondent submitted on 08.07.2019 cannot be entertained & adjudicate.
(c) Further in this clause 25 of GCC of the contract agreement is related to CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 56 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 Settlement of Disputes & Arbitration. Under this clause in para 25 (ii) it is mentioned that " It is also a term of this contract that the arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority and give separate award against the dispute and claim referred to him and in all cases where the total amount of the claim by any party exceeds Rs. 1,00,000/, the arbitrator shall give reasons for the award." Therefore, it is evident that according to the above clause in contract agreement, the AT can adjudicate on only such disputes as are referred to him by the appointing authority. Present in this arbitration case the Claimant has submitted before AT only those claims which were referred to by the Claimant to the appointing authority while making a request to the appointment of Arbitrator and the same were referred to Sh. O. P. Bhatia by appointing authority while appointing him as Sole Arbitrator. It is also observed that the Counter Claims of the Respondent were not referred to the earlier Arbitrator while appointing him as a Sole Arbitrator. Therefore, as per clause 35 of the contract agreement the Counter claims of the Respondent submitted on 08.07.2019 cannot be entertained & adjudicate.
(d) If the judgment of the Hon'ble Supreme Court of India delivered in respect of State of Goa & Praveen Enterprises in Civil Appeal No. 4987 of 2011 relied upon by both the parties is perused then it will be observed that the Arbitrator is bound by the clause 25 relating to settlement of Disputes & Arbitration mentioned in the contract agreement. In this clause 25 of GCC it is clearly mentioned that "Arbitrator shall adjudicate on only such disputes as are referred to him by the appointing authority." Therefore in this case the AT cannot entertain any Claim/Counter Claim of the parties directly without any reference to the AT by the appointing authority. Para 31 (c ) of the judgment may be referred which states that CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 57 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 "Where however the arbitration agreement requires specific disputes to be referred to arbitration and provides that the arbitrator will have the jurisdiction to decide only the disputes so referred, the arbitrator's jurisdiction is controlled by the specific reference and he cannot travel beyond the reference, nor entertain any additional claims or counter claims which are not part of the disputes specifically referred to arbitration." Under the circumstances when there exists clause 25 of GCC in the contract agreement AT has no jurisdiction to entertain any new Claims/Counter claim from the parties directly without any reference by the appointing authority and therefore the 'Counter claims' of the DTTDC submitted by the Respondent on 08.07.2019 cannot be entertained & considered.
(iv) Decision of AT In view of the above mentioned facts & circumstances AT decides not to consider the counter claims of the Respondent submitted during the hearing on 08.07.2019. Accordingly the Counter claims of the Respondent are allowed and application relating to the Counter claims is dismissed.
SD/ (A. K. Singhal) Sole Arbitrator"
31. The principle of law that emerges from the above discussions and the law referred and relied by the parties can be summarized as under : (A) Where the arbitration agreement requires specific disputes to be referred to arbitration and that Learned Arbitrator CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.Page 58 of 68
(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 will have the jurisdiction to decide the disputes so referred. The Arbitrator's jurisdiction is controlled by the specific reference and he cannot travel beyond reference nor entertain any additional claim or counter claim which are not parts of the disputes specifically referred to arbitration (the reliance placed on para 32
(c) of Apex Court judgment in State of Goa vs. M/s Praveen Enterprises (supra) (B) The position of a respondent in an arbitration proceeding being similar to that of a defendant in a suit, he has the choice of raising the dispute by issuing a notice to the claimant calling upon him to agree for reference of his dispute to arbitration and then resort to an independent arbitration proceeding or raise the dispute by way of a counterclaim, in the pending arbitration proceedings.
(C) An Award can be set aside as being in conflict with the "most basic notions of morality or justice", only if such award shocks the conscience of the court.
(D) An Award can be set aside on the ground of patent illegality, in case, the patent illegality appearing on the face of CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 59 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 the award refers to such illegality as goes to the root of the matter but which does not amounts to mere erroneous application of the law.
(E) 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.
(F) A finding 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.
(G) The counter claim even in arbitration proceedings need to be filed at the earliest. In view of Order 8 Rule 6A and 6G CPC, the counterclaimant cannot be permitted to file counter claim after the issues are framed and after the suit has proceeded substantially. (reliance has been placed upon Ashok Kumar Kalra vs. Wing Commander Surender Agnihotri (supra) and also Parvathamma vs. K.R. Lokanath & Ors. AIR 1991 Karnataka
283).
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 60 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
32. I have examined the impugned Award in the light of the above principle of law to find out whether the impugned Award suffers from apparent bias and prejudicial conduct of the Learned Arbitrator; factual perversity; denial of natural justice; patently illegality. As is evident from the impugned Award, Learned Arbitrator has dismissed the counter claim on the two grounds :
(a) Firstly, the counter claim having been submitted at the fag end of enquiry when the claimant has completed his oral arguments on its claim. Further the counter claimant did not file the counter claim alongwith statement of defence and it has been found at a belated stage without any justification for the delay.
(b) Secondly, as per Clause 25 of General Clauses of Contract (GCC) in the contract agreement dated 21.08.2011, Arbitral Tribunal has no jurisdiction to entertain any new claim / counter claim from the parties directly without any reference by the Appointing Authority and therefore the counter claim filed by the respondent on 08.07.2019 cannot be entertained or considered (relevant CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 61 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 portion of clause 25 is as under : "It is also a term of this contract that the Arbitrator shall adjudicate only on such disputes as are referred to him by the Appointing Authority and give separate Award against each dispute and claim referred to him and in all cases where the total amount of the claims by any party exceeds Rs.
1,00,000/, the Arbitrator shall give reasons for the Award.").
33. It is evident from the impugned Award that the Learned Arbitrator has given detailed reasons for rejecting the counter claim which was filed at a belated stage when the final arguments on the claim petition from the claimant were heard and issues were already framed and it was the fag end of the enquiry before the Learned Arbitrator. It was argued on behalf of petitioner / counter claimant that the Learned Arbitrator has misdirected himself while rejecting the counter claim on the ground that same is not having been referred to it by the Appointing Authority. It was also argued by the Senior Counsel for petitioner / counter claimant that the said restriction upon the Learned Arbitrator was a machinery provision only and shall be deemed to have been done away with by the order of the Hon'ble High Court of Delhi in appointing the new Sole Arbitrator under provision of the Arbitration Act, 1996.
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 62 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 However, on perusal of the order of the Hon'ble High Court of Delhi dated 21.02.2018, it is to be noticed that the petition in Hon'ble High Court of Delhi was filed u/s 14(2) of the Arbitration Act and the Hon'ble High Court with the consent of the parties has appointed the new Sole Arbitrator and the mandate of Mr. O.P. Bhatia, the earlier Sole Arbitrator was thus terminated.
34. I do not find force in the arguments of the Learned Senior counsel of the petitioner / counter claimant that the order of the Hon'ble High Court has enlarged the scope of reference as referred to the original Arbitrator substituting the reference of the Appointing Authority. I find force in the arguments of the learned counsel for respondent that in case the petitioner herein was so interested in the counter claim he could have approached the Appointing Authority and would have got a reference of the counter claim to the Arbitrator as this was the general prevalent practice being followed in such matters.
35. There is no dispute that Clause 25 of GCC clearly mentions that Arbitrator shall adjudicate on only such disputes as are referred to him by the Appointing Authority. The reference letter dated 27.06.2017 as reproduced in para 23 (3) of this order has mentioned that Sh. O.P. Bhatia, Sole Arbitrator is appointed to decide and make his Award regarding the claims / disputes by the contractor, if any, as shown in the statement enclosed subject always, however, to their admissibility under Clause 25 of the aforesaid CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 63 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 agreement.
36. It is thus evident from the above reference to the original Learned Sole Arbitrator Sh. O.P. Bhatia that the claims / disputes by the contractor (claimant / respondent herein) only was referred for adjudication. It does not speak of any counter claim by the petitioner / counter claimant.
37. The Hon'ble High Court of Delhi in para no. 5 of the order dated 21.2.2018 in OMP (T) (COMM) 58/2017 & IA Nos. 8217/2017 & 9839/2017 has mentioned, "accordingly with the consent of parties this Court appoints Sh. A.K. Singhal, Director General, CPWD (retired) as the Sole Arbitrator for adjudication and resolution of the dispute between the parties." Admittedly, there was no counter claim allegedly raised by the petitioner herein before the original Arbitrator whose mandate was terminated. Therefore, with due respect to his lordship, the Hon'ble High Court does not seem to have expanded the scope of reference before the substituted arbitrator and the original reference was the only dispute which was to be adjudicated upon by the Learned Arbitrator having arisen between the parties at the time of appointing Mr. O.P. Bhatia, the sole Arbitrator whose mandate was terminated by the Hon'ble High Court of Delhi.
38. Another challenge / grievance of the petitioner to the impugned Award is that the reasons for the decision has been given subsequent to the dismissal of the counter claim and CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 64 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 amendment application of claimant and the reasons has not been given on the same date and that it amounts to misconduct on the part of the Learned Arbitrator. It was also argued that an application was submitted by the petitioner herein by sending the same on the email of the Learned Arbitrator on 27.08.2019 i.e. one day before 29.08.2019 when the reasons for dismissal of counter claim and rejection of amendment application of claimant was given by the Learned Arbitrator. It was argued that nonconsideration of that application is a patent illegality in the impugned Award. Both of these contentions raised by the learned counsel does not hold water in view of the detailed reasons given by the Learned Arbitrator for dismissing the counter claim having been submitted at a belated stage and also being beyond reference of the dispute by the Appointing Authority to the Learned Arbitrator. On perusal of the Annexure P1 appended to the order dated 29.08.2019, it is noticed that the impugned order dismissing the counter claim is dated 23.08.2019 and on 29.08.2019, the Learned Arbitrator has issued the ordersheet of hearing dated 21.08.2019 and 23.08.2019. The ordersheet of the hearing dated 23.08.2019 in para 3 (i) and (ii) are regarding dismissal of the application of the claimant dated 06.07.2019 and counter claim of the respondent. Para 3 of the ordersheet dated 23.08.2019 is relevant and reproduced hereunder: "3. The AT agreed with the submission of the Respondent and conveyed its decision CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 65 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 as under:
(i) The application of the Claimant dated 06.07.2019 regarding Modification of the Claims No. 9 & 10 and submissions of documents in support of its Claim No. 9 & 10 is not allowed and the same is dismissed.
(ii) The Counter Claims of the Respondent are not allowed & accordingly the application of the Respondent regarding Counter Claims is dismissed.
(iii) It was intimated to both the parties that reasons of taking above decision by AT will be conveyed in the order Sheet of the hearing dated 23.08.2019. Accordingly the reasons of taking above decision are enclosed as AnnexureI."
39. Thus, there was no question of adjudication of application dated 27.08.2019 of the petitioner and nothing is shown on behalf of petitioner as to whether nonadjudication of that application which was presented only through email has prejudiced the petitioner in any manner or has affected the decision of the Learned Arbitrator dismissing the counter claim of the petitioner on 23.08.2019.
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 66 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020
40. Learned Arbitrator has also dismissed the amendment application of the claimant alongwith counter claim of the petitioner herein and thus acted in a fair and reasonable manner while rejecting the relief of both the parties having been submitted at a belated stage when enquiry before the Learned Arbitrator was at fag end and likely to be concluded as the arguments of the claimant to the claim petition were already heard.
41. Another contention of the learned counsel for petitioner / counter claimant is to the effect that the Learned Arbitrator has acted in a biased manner as it has given the opportunity to the claimant for submitting their arguments at length whereas the arguments of the petitioner were curtailed. After perusing the impugned Award it is found that the Learned Arbitrator has clearly stated that both the parties were heard at length and thereafter, the reasoned order has been passed while rejecting the application of the claimant for amendment of the claim petition and dismissing the counter claim of the petitioner. The reasoning given by the Learned Arbitrator therefore shows that principle of natural justice has been followed while passing the impugned Award.
42. For the above reasons I do not find any perversity and patent illegality in the impugned Award. There is nothing to show that the Learned Arbitrator has misconducted himself and was biased while passing the impugned order and dismissing the CS (Comm) No. 131/19 Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 67 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020 counter claim of the petitioner / counter claimant. The petition is therefore, devoid of merits and is accordingly dismissed.
Announced through Video Conferencing on 15.10.2020.
(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) South East/Saket Courts New Delhi.
CS (Comm) No. 131/19Delhi Tourism and Transportation Development Corporation. vs. M/s Swadeshi Civil Infrastructure Pvt. Ltd.
Page 68 of 68(RAJ KUMAR CHAUHAN) District Judge (Commercial Court) /SE/Saket/ND/15.10.2020