Delhi District Court
Mahanagar Telecom Nigam Ltd vs Transcon India Pvt Ltd on 21 November, 2025
IN THE COURT OF ANUBHAV JAIN, DISTRICT JUDGE-05, NEW
DELHI DISTRICT, PATIALA HOUSE COURTS, NEW DELHI
DLND010030692016
Arbitration No: 13765/2016
IN THE MATTER OF: -
Mahanagar Telecom Nigam Limited
IInd Floor, K L Bhawan,
Janpath, New Delhi-110050 ... Petitioner
VERSUS
Transcon India Pvt. Ltd
WZ-29, Dasghara Post, Pusa,
New Delhi-110012 ... Respondent
PETITION UNDER SECTION 34 OF THE ARBITRATION &
CONCILIATION ACT, 1996
Date of institution : 10.05.2016
Date when judgment reserved : 27.09.2025
Date of Judgment : 21.11.2025
J U D G M E N T:-
1. Present objections are filed by the Petitioner/ Claimant against the order passed by Ld. Arbitrator vide order dated 04.02.2016, whereby claim of the claimant/objector for amount of Rs. 24,30,325/- was dismissed and ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.1/26 Counter Claim of the respondent was partly allowed for amount of Rs. 8,39,095/- alongwith 6% p.a. simple interest.
For the sake of convenience, parties MTNL shall be referred as Claimant/petitioner/objector while Transcon India Pvt. shall be referred as Respondent/counter claimant in the present order.
CLAIM OF THE CLAIMANT
2. As per the averments so made by the claimant in his claim are that respondent is a Private Limited Company and was awarded a contract for transportation of store other than cable Drums, vide letter no. AGM (MM- III)/Carriage/RC/97-98/47 as well as rate contract No. AGM (MM-II/Carriage/RC/2002-03/18 dated 05.10.2002 for the period from 21.09.1998 to 20.09.1999. It is further stated that the amount of work awarded was of Rs. 4,00,000/-. Further, rate of contract was further extended for another year i.e. till 20.09.2000.
2.1 It is further averred that a complaint was received by the claimant/petitioner with regard to payments being released to the respondent on the production of bogus bills and that funds of the petitioner were being misappropriated by the respondent in connivance with the petitioner officials. It is further stated that the said complaint was investigated in detail by Vigilance Cell of the claimant and during investigation it was found that respondent company had received payment of Rs. 86,81,341/- during the period 21.09.1998 to 20.09.1999 and an amount of Rs. 10806652/- during the extended period from 21.09.1999 to ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.2/26 22.08.2001. It is further stated that after completion of investigation it was found that the respondent has received excess payment by inflating weight of material transported, thereby causing a loss to the claimant of Rs. 48,60,650/-.
2.2 It is further stated that on 09.04.2003, a show cause notice was issued upon the respondent calling upon the respondent to explain as to why the recovery of abovesaid amount should not be recovered from him and why he be not blacklisted from further tendering in MTNL. That the said show cause notice was duly replied by the respondent vide reply dated 17.04.2003 and after considering the same, claimant vide order dated 15.06.2004, decided to black list and debar the respondent firm from further participation in the MTNL tender and directing respondent to deposit the amount of Rs. 24,30,325/-.
2.3 It is further stated that the order dated 15.06.2004, whereby the respondent company was blacklisted, was challenged by the respondent before Hon'ble High Court of Delhi and Hon'ble High Court vide order dated 21.02.2007 disposed off the writ petition while setting aside the order of blacklisting of respondent company and further maintained the issue of over payment subject to arbitration proceedings between the parties with respect to the same.
By way of present claim, claimant has sought that respondent be directed to pay an amount of Rs. 24,30,325/- to the claimant.
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.3/26 REPLY TO THE CLAIM
3. The said claim of the claimant was duly replied by the respondent, wherein he admitted obtaining the contract/ work order from the claimant. It is stated that respondent was required to transport any kind of goods or store of claimant from one location to another within Delhi. It is further stated that the nature of job being carried out by the respondent for the claimant is not limited to carriage but also manual labour since the goods has to be moved to the higher floor. It is further stated that the respondent was also required to maintain vehicles of two capacities i.e. for load upto 6 MT and for load upto 5 MT to 9 MT. It is further stated that the respondent was also required to engage large number of laborers for loading or unloading and manually carry from point to point. It is further stated that bills so raised by the respondent were duly checked/verified by officials of the claimant and only after that the payment was released in favour of the respondent. Respondent further denied all the other allegations/averments so made by the claimant in his claim and prayed for dismissal of the same.
COUNTER CLAIM FILED BY RESPONDENT TRANSCON INDIA PVT. LTD:
4. It is pertinent to state in here that the respondent herein has also filed counter claim against the claimant herein, seeking recovery of following amount:
a) Rs. 7,11,295/- (530835/-+ 180460/-), towards amount due not paid;
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.4/26
b) Rs. 1,97,800/-(127800/-+70,000/-), towards security money;
c) Rs. 3.5 lacs/- towards damages;
d) Rs. 10 lac towards damages for defamation;
e) Cost of Rs. 5 lacs.
4.1 It is stated by the counter claimant in his counter claim that the respondent has challenged the order of the claimant, whereby the claimant was blacklisted for applying for tenders of the claimant and Hon'ble High Court of Delhi vide order dated 21.02.2007 quashed the said order of MTNL/claimant.
4.2 It is further stated that the claimant has illegally and unauthorizedly retain a sum of Rs. 7,11,295/-/- towards the said work done for which invoices were raised. It is further stated that counter claimant is also entitled for interest @ 24 % per annum in case bills are not paid within 15 days.
4.3 It is further stated that at the time of execution of contract, counter claimant/respondent has issued two security deposit amounting to Rs. 1,97,800/- (Rs.1,27,800/- towards courier contract and Rs. 70,000/- towards transportation contract).
4.4 It is further stated that since the counter claimant was blacklisted by MTNL, he could not bid for other tenders floated by the claimant as well as other authorities, thereby causing him a loss of Rs. 3.5 lacs per year. Counter claimant/respondent further seeks damages of Rs. 10,00,000/- resulted due to defamation caused as he was blacklisted. Counter claimant ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.5/26 has further sought interest @ 24 % upon the said outstanding amount along with cost of Rs. 5 lacs.
REPLY TO COUNTER CLAIM:
5. In reply to the counter claim, it is averred by the claimant/petitioner that the counter claimant is not entitle for any amount as sought and excess amount which is already paid to the counter claimant is to be recovered. It is further stated that bank guarantee of the counter claimant was forfeited since he failed to discharge his duties and committed breaches of contract.
Claimant denied the averments so made by the counter claimant and reiterated those as made by him in his claim.
GROUNDS OF OBJECTION U/S 34 OF ARBITRATION AND CONCILIATION ACT
6. Objection under Section 34 of Arbitration and Conciliation Act filed by the Objector/Petitioner. Among others, Petitioner/Claimant has pressed upon following objections to the impugned award:
a) That the impugned award is against the Public Policy of the India and same is passed ignoring the proposition of law;
b) That the Arbitrator has failed to appreciate the findings of the Vigilance Commission Form by petitioner;
c) That the Arbitrator has dealt with the dispute which are beyond his scope.
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.6/26 REPLY TO OBJECTIONS
7. Reply to the said objection were duly filed by the respondent wherein he denied the averments so raised by the petitioner/objector and prayed for dismissal of the same.
8. I have heard the arguments so led by the Ld. Counsels for the parties and perused the case file carefully.
LAW ON OBJECTIONS U/S 34 OF ARBITRATION AND CONCILIATION ACT
9. Before proceedings further with the present objection in hand, this court deems it appropriate to discuss in here the law with regards to scope of Section 34 of the Act. For the same, this court may gainfully refer to the observation made by Hon'ble Apex Court in Delhi Airport Metro Express Pvt. Ltd. vs. Delhi Metro Rail Corporation Ltd. (09.09.2021 - SC) :
MANU/SC/0623/2021, wherein it was observed as follows:
24. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by courts while examining the validity of the arbitral awards. The limited grounds available to courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.7/26 and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
25. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality.
In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'. What is prohibited is for courts to re- appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award Under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a Clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality'.
26. Section 34(2) (b) refers to the other grounds on which a court can set aside an arbitral award. If a dispute which is not capable of settlement by arbitration is the subject- matter of the award or if the award is in conflict with public policy of India, the award is liable to be set aside. Explanation (1), amended by the 2015 Amendment Act, clarified the expression 'public policy of India' and its ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.8/26 connotations for the purposes of reviewing arbitral awards. It has been made clear that an award would be in conflict with public policy of India only when it is induced or affected by fraud or corruption or is in violation of Section 75 or Section 81 of the 1996 Act, if it is in contravention with the fundamental policy of Indian law or if it is in conflict with the most basic notions of morality or justice.
In Ssangyong (supra), this Court held that the meaning of the expression 'fundamental policy of Indian law' would be in accordance with the understanding of this Court in Renusagar Power Co. Ltd. v. General Electric Co.
MANU/SC/0195/1994 : 1994 Supp (1) SCC 644. In Renusagar (supra), this Court observed that violation of the Foreign Exchange Regulation Act, 1973, a statute enacted for the 'national economic interest', and disregarding the superior courts in India would be antithetical to the fundamental policy of Indian law. Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confines of 'patent illegality' as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral award shocks the conscience of the court, it can be set aside as being in conflict with the most basic notions of justice. The ground of morality in this context has been interpreted by this Court to encompass awards involving elements of sexual morality, such as prostitution, or awards seeking to validate agreements which are not illegal but would not be enforced given the prevailing mores of the day.
27. In light of the principles elucidated herein for interference with an arbitral award by a court in exercise of its jurisdiction Under Section 34 of the 1996 Act, we proceed to consider the questions that arise in these Appeals as to whether the Division Bench of the High Court was right in setting aside the award of the Arbitral Tribunal dated 11.05.2017.
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.9/26 OBJECTIONS WITH REGARD TO APPOINTMENT OF ARBITRATOR
10. Ld. Counsel for the petitioner/claimant during the course of his arguments raised the objections with regards to the appointment of Arbitrator. It is argued by Ld. Counsel for petitioner that the present award was passed by the sole Arbitrator duly appointed by claimant and was under
the employment of claimant at the time of passing of award and thereby, same is not valid in terms of judgment passed by the Ld. Apex Court in Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd. ARBITRATION APPLICATION NO.32 OF 2019 dated 26.11.2019, wherein it was observed by Hon'ble Apex Court that:
15. It was thus held that as the Managing Director became ineligible by operation of law to act as an arbitrator, he could not nominate another person to act as an arbitrator and that once the identity of the Managing Director as the sole arbitrator was lost, the power to nominate someone else as an arbitrator was also obliterated. The relevant Clause in said case had nominated the Managing Director himself to be the sole arbitrator and also empowered said Managing Director to nominate another person to act as an arbitrator. The Managing Director thus had two capacities under said Clause, the first as an arbitrator and the second as an appointing authority. In the present case we are concerned with only one capacity of the Chairman and Managing Director and that is as an appointing authority. We thus have two categories of cases. The first, similar to the one dealt with in TRF Limited4 where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.10/26 decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Limited4 , all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an Arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an Arbitrator.
16. But, in our view that has to be the logical deduction from TRF Limited. Paragraph 50 of the decision shows that this Court was concerned with the issue, "whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator" The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in the paragraph, further show that cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party.
But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and recognised by the decision of this Court in TRF Limited.
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.11/26
11. On the other hand, Ld. Counsel for respondent opposed the same on the ground that once the petitioner herein themselves appointed the Arbitrator, they cannot question its validity, moreso when the award was passed by the arbitrator against the claimant itself. It is further stated that in the present case, the Arbitration was commenced prior to 2015 Amendment and thereby the appointment of Arbitrator shall not be hit by the Amendment of 2015. It is further argued by Ld. Counsel for the respondent that the said defence was never raised by the petitioners herein in their petition/objection under Section 34 of the Act and that at this stage the petitioner cannot be permitted to challenge the appointment of Arbitrator at this stage.
12. I have considered the arguments so led by Ld. Counsels for the parties with regard to appointment of Arbitration.
13. As per the record, the Arbitration in the present case was initiated way back in the year 2006. From 12.05.2006 to 27.12.2007 Justice Harbans Lal has acted as Arbitrator in the present matter, after which from 28.12.2007 to 02.06.2010, the Arbitration was conducted by Mr. Shiv Shankar. Finally on 03.06.2010 Sh. Rajinder Prasad, GM (West) MTNL was appointed as Arbitrator to the present dispute who finally passed an award on 04.02.2016.
14. The sole question, as such, which requires to be determined is whether appointment of arbitrator in the arbitration proceedings, which has commenced prior to amendment in Arbitration Act 2015, can be challenged ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.12/26 on the ground that Sole Arbitrator, who has passed the award, was employee of the claimant at the said point of time?
15. In this regards, Hon'ble Apex Court in Union Of India vs Parmar Construction Company on 29 March, 2019 AIR 2019 SUPREME COURT 5522, observed as follows:
24. As on 1st January, 2016, the Amendment Act, 2015 was gazetted and according to Section 1(2) of the Amendment Act, 2015, it deemed to have come into force on 23 rd October 2015. Section 21 of the Act, 1996 clearly envisage that unless otherwise agreed by the parties, the arbitral proceedings in respect of a dispute shall commence from the date on which a request for that dispute to be referred to arbitration is received by the respondent and the plain reading of Section 26 of Amendment Act, 2015 is selfexplicit, leaves no room for interpretation. Section 21 & 26 of the Act, 1996/Amendment Act, 2015 relevant for the purpose is extracted hereunder:
"21. Commencement of arbitral proceedings. -- Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.
26. Act not to apply to pending arbitral proceedings - Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."
25. The conjoint reading of Section 21 read with Section 26 leaves no manner of doubt that the provisions of the Amendment Act, 2015 shall not apply to such of the arbitral proceedings which has commenced in terms of the ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.13/26 provisions of Section 21 of the Principal Act unless the parties otherwise agree. The effect of Section 21 read with Section 26 of Amendment Act, 2015 has been examined by this Court in Aravali Power Company Private Limited Vs. Era Infra Engineering Limited (supra) and taking note of Section 26 of the Amendment Act, 2015 laid down the broad principles as under:
"22. The principles which emerge from the decisions referred to above are:
22.1. In cases governed by 1996 Act as it stood before the Amendment Act came into force:
22.1.1. The fact that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality or lack of independence on his part. There can however be a justifiable apprehension about the independence or impartiality of an employee arbitrator, if such person was the controlling or dealing authority in regard to the subject contract or if he is a direct subordinate to the officer whose decision is the subject matter of the dispute.
22.1.2. Unless the cause of action for invoking jurisdiction under Clauses (a), (b) or (c) of subsection (6) of Section 11 of the 1996 Act arises, there is no question of the Chief Justice or his designate exercising power under subsection (6) of Section 11.
22.1.3. The Chief Justice or his designate while exercising power under subsection (6) of Section 11 shall endeavour to give effect to the appointment procedure prescribed in the arbitration clause.
22.1.4. While exercising such power under subsection (6) of Section 11, if circumstances exist, giving rise to justifiable doubts as to the independence and impartiality of the person nominated, or if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, the Chief Justice or his designate may, for reasons to be recorded ignore the designated arbitrator and appoint someone else.
22.2. In cases governed by 1996 Act after the Amendment Act has come into force: If the arbitration clause finds foul ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.14/26 with the amended provisions, the appointment of the arbitrator even if apparently in conformity with the arbitration clause in the agreement, would be illegal and thus the court would be within its powers to appoint such arbitrator(s) as may be permissible." which has been further considered in S.P. Singla Constructions Pvt. Ltd. case(supra).
"16. Considering the facts and circumstances of the present case, we are not inclined to go into the merits of this contention of the appellant nor examine the correctness or otherwise of the above view taken by the Delhi High Court in Ratna Infrastructure Projects case; suffice it to note that as per Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 the provisions of the Amended Act, 2015 shall not apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the Principal Act before the commencement of the Amendment Act unless the parties otherwise agree. In the facts and circumstances of the present case, the proviso in clause (65) of the general conditions of the contract cannot be taken to be the agreement between the parties so as to apply the provisions of the amended Act. As per Section 26 of the Act, the provisions of the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after the date of commencement of the Amendment Act, 2015(w.e.f. 23.10.2015). In the present case, arbitration proceedings commenced way back in 2013, much prior to coming into force of the amended Act and, therefore, provisions of the Amended Act cannot be invoked."
26. We are also of the view that the Amendment Act, 2015 which came into force, i.e. on 23 rd October, 2015, shall not apply to the arbitral proceedings which has commenced in accordance with the provisions of Section 21 of the Principal Act, 1996 before the coming into force of Amendment Act, 2015, unless the parties otherwise agree.
16. Furthermore in, SP Singla Constructions Pvt. Ltd. vs State Of Himachal Pradesh on 4 December, 2018 2019 (2) SCC 488, it was observed that:
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.15/26
15. Considering the facts and circumstances of the present case, we are not inclined to go into the merits of this contention of the appellant nor examine the correctness or otherwise of the above view taken by the Delhi High Court in Ratna Infrastructure Projects case; suffice it to note that as per Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 the provisions of the Amended Act, 2015 shall not apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the Principal Act before the commencement of the Amendment Act unless the parties otherwise agree. In the facts and circumstances of the present case, the proviso in clause (65) of the general conditions of the contract cannot be taken to be the agreement between the parties so as to apply the provisions of the amended Act. As per Section 26 of the Act, the provisions of the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after the date of commencement of the Amendment Act, 2015 (w.e.f. 23.10.2015). In the present case, arbitration proceedings commenced way back in 2013, much prior to coming into force of the amended Act and therefore, provisions of the Amended Act cannot be invoked.
16. In Board of Control for Cricket in India v. Kochi Cricket Private Limited and others, (2018) 6 SCC 287, this Court has held that the provisions of Amendment Act, 2015 (with effect from 23.10.2015) cannot have retrospective operation in the arbitral proceedings already commenced unless the parties otherwise agree and held as under:-
"37. What will be noticed, so far as the first part is concerned, which states-- "26. Act not to apply to pending arbitral proceedings.--Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree...." is that: (1) "the arbitral proceedings"
and their commencement is mentioned in the context of Section 21 of the principal Act; (2) the expression used is "to" and not "in relation to"; and (3) parties may otherwise agree. So far as the second part of Section 26 is concerned, namely, the part which reads, "... but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act" makes it clear that the ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.16/26 expression "in relation to" is used; and the expression "the" arbitral proceedings and "in accordance with the provisions of Section 21 of the principal Act" is conspicuous by its absence."
17. This court further cannot turn nelson eye towards the fact that the arbitrator who has passed the award was employee of objector/claimant only and since the award is passed against the objector/claimant, he cannot challenge the authority of Ld. Arbitrator to pass the impugned award.
18. It is further pertinent to note herein that neither of the party have challenged or questioned the appointment of arbitrator before him at the time of arbitration proceedings. Further, the petitioner herein never challenged the appointment of Arbitrator in initial objection so raised by him and only it was for the first time during the course of arguments that the said defence was raised.
19. In view of the law and facts discussed above, since in the present case in hand, arbitration proceedings were initiated prior to Amendment Act of 2015, arguments so led by Ld. Counsel for the claimant qua challenging the appointment of arbitrator holds no merits.
OBSERVATIONS ON MERITS
20. Now coming upon the present objection in hand on merits, Ld. Counsel for petitioner has placed entire reliance upon the outcome of Vigilance Report dated 26.04.2002 passed by Sh. Ram Narayan, GM Vigilance of Claimant department.
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.17/26 20.1. Before proceedings further with the abovesaid contentions on merits, this court deems it appropriate to discuss herein law with regards to Departmental inquiry. For the same I may gainfully referred the observations made by Hon'ble Apex Court in Roop Singh Negi vs Punjab National Bank & Ors on 19 December, 2008 AIR 2008 SC (SUPP) 921, wherein in was observed as follows:
10. Indisputably, a departmental proceeding is a quasi judicial proceeding. The Enquiry Officer performs a quasi judicial function. The charges leveled against the delinquent officer must be found to have been proved. The enquiry officer has a duty to arrive at a finding upon taking into consideration the materials brought on record by the parties. The purported evidence collected during investigation by the Investigating Officer against all the accused by itself could not be treated to be evidence in the disciplinary proceeding. No witness was examined to prove the said documents. The management witnesses merely tendered the documents and did not prove the contents thereof. Reliance, inter alia, was placed by the Enquiry Officer on the FIR which could not have been treated as evidence. We have noticed hereinbefore that the only basic evidence whereupon reliance has been placed by the Enquiry Officer was the purported confession made by the appellant before the police. According to the appellant, he was forced to sign on the said confession, as he was tortured in the police station. Appellant being an employee of the bank, the said confession should have been proved.
Some evidence should have been brought on record to show that he had indulged in stealing the bank draft book. Admittedly, there was no direct evidence. Even there was no indirect evidence. The tenor of the report demonstrates that the Enquiry Officer had made up his mind to find him guilty as otherwise he would not have proceeded on the basis that the offence was committed in such a manner that no evidence was left.
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.18/26 20.2. Further, in The State Of Uttar Pradesh vs Ram Prakash Singh on 23 April, 2025 Civil Appeal No. 14724/2024, it was observed as follows:
14. What follows from a conjoint reading of the above two decisions is and what applies here is that, 'materials brought on record by the parties' (to which consideration in the enquiry ought to be confined) mean only such materials can be considered which are brought on record in a manner known to law. Such materials can then be considered legal evidence, which can be acted upon. Though the Indian Evidence Act, 1872 is not strictly applicable to departmental enquiries, which are not judicial proceedings, nevertheless, the principles flowing therefrom can be applied in specific cases. Evidence tendered by witnesses must be recorded in the presence of the delinquent employee, he should be given opportunity to cross- examine the witnesses and no document should be relied on by the prosecution without giving copy thereof to the delinquent - all these basic principles of fair play have their root in such Act. In such light, the documents referred to in the list of documents forming part of the annexures to the chargesheet, on which the department seeks to rely in the enquiry, cannot be treated as legal evidence worthy of forming the basis for a finding of guilt if the contents of such documents are not spoken to by persons competent to speak about them. A document does not prove itself. In the enquiry, therefore, the contents of the relied-on documents have to be proved by examining a witness having knowledge of the contents of such document and who can depose as regards its authenticity. In the present case, no such exercise was undertaken by producing any witness.
20.3. Bare perusal of the said Vigilance Report shows that same was initiated upon complaint of individuals namely, Sh. Shyam Singh, Suresh Chand, Sumer Singh and Sh. S.C Dabar. From the perusal of report it can be made out that an inquiry committed by the Department against its own ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.19/26 officials for their lapses/shortcomings in either awarding of work order, clearing of bills and non-enforcing of clauses.
20.4. Although, from the perusal of inquiry report it can be seen that same that even the statements of representatives of respondent were also recorded, however, the said report in no manner goes to show that the said inquiry was conducted against the respondent herein or any notice was issued by the concerned officials upon the respondent herein giving opportunity to defend himself in the said inquiry.
20.5. Further as per the conclusion so arrived at in the said inquiry, it was found that it was the official of the petitioner who were at fault, if any.
The conclusion of the said inquiry report is appeared to be arrived at merely on the basis of clarification sought by the inquiry official from the other officers/branches of its own department.
20.6. From the bare perusal of the record, there is nothing to show that during the vigilance inquiry, respondent was given right to cross examine the witness etc, on the basis of which the said inquiry was completed.
20.7. It is pertinent to note herein that even in said inquiry report the concerned officials have observed the store material which was transported was never weighed at any stage of transportation. As such, even if it is believed that there were some lapses on the part of the department, the respondent herein cannot be held liable for the same, since it was for the ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.20/26 department to get all the material weighed and get the same duly cross verified from the bills so raised by the respondent herein.
20.8. As such, considering the law and facts discussed above, it cannot be said that due opportunity was given by the petitioners herein to the respondent to put his defence or to cross examine the witness. Furthermore, there is nothing on record to show that the witnesses/officials which were part of vigilance inquiry were summoned or examined before the Ld. Arbitrator to prove the allegations so leveled, nor any opportunity was granted to the respondent to cross examine the said witnesses/officials on the basis of which the said vigilance report was drawn.
FORGERY OF BILLS
21. Be that as it may, it is the grievance of the claimant that the respondent produced forged and fabricated bills and further in connivance with the officials of the claimant department, got the said bills clear resulting into loss of Rs. 48,60,650/- to the claimant department.
21.1 As such, it was for the claimant department to atleast prima facie show as to which all bills were forged and fabricated. The claimant department for the reason best known to itself has never mentioned in the entire claim petition or in objections, the number or date of said bills which are alleged to be forged or fabricated.
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.21/26 21.2 Further, there is nothing on record to show that the respondent entered into conspiracy or conveyance with that of the officials of the claimant department in order to get the said bills clear.
21.3 Further, admittedly all the said bills are verified and cross checked by several officials of the claimant department, after which they were cleared. As such, in absence of any evidence as to the connivance between the respondent and that of the officials of the claimant department, the claimant cannot be said to have proved its claim or the averments so made by it.
21.4 Further, the petitioner herein has not placed on record, apart from the said inquiry report, any evidence which could show a proof that the said bills so raised by the respondent upon the petitioner department are false and fabricated. The inquiry official infact does not seems to have clarified in his entire report as to which all specific bills were bogus or have mentioned exaggerated amount or to what extent. It was also for the petitioner, as per law, to prove the contents of the said inquiry report, during their arbitration proceedings, which was never done so.
SCOPE ON INTERFERANCE U/S 34 OF THE ACT
22. At this stage, this court deems it appropriate to discuss in here few instances, as recorded by judicial pronouncements, wherein court u/s 34 of the Arbitration and Conciliation Act can interfere into the findings of the Arbitration Award. They are summarized as under:
ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.22/26
a) The arbitrator takes a view which is not even a possible or interprets a Clause in the contract in such a manner which no fair-minded or reasonable person would; or
b) If the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them;
c) Where an arbitral award failed to state reasons for its findings;
d) The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse;
e) On the ground of conflict with public policy of India i.e. when it is induced or affected by fraud or corruption or is in violation of Section 75 or Section 81 of the 1996 Act;
f) If it is in contravention with the fundamental policy of Indian law i.e. contravention of a statute only if it is linked to public policy or public interest;
g) If an arbitral award shocks the conscience of the court;
h) If it is in conflict with the most basic notions of morality or justice i.e. awards involving elements of sexual morality, such as prostitution, or ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.23/26 awards seeking to validate agreements which are not illegal but would not be enforced given the prevailing mores of the day.
CONCLUSION ON CLAIM OF CLAIMANT
23. Apart from the Vigilance report, there is no evidence placed on record by the petitioner to show that the present award passed by Ld. Arbitrator dated 04.09.2016 is patently illegal or against the Public Policy of India. In view of the same, this court find no merits in objection so raised by the petitioner under Section 34 of Arbitration Act and same stands dismissed.
COUNTER CLAIM OF RESPONDENT
24. It is pertinent to state herein that upon the claim so filed by the claimant before Ld. Arbitrator, a counter claim was filed by the respondent herein before the Ld. Arbitrator. By way of said counter claim, so moved by the respondent/counter claimant, it had sought recovery from the petitioner MTNL on following grounds:
a) Rs. 7,11,295/- towards amount due not paid,
b) Rs. 1,97,800/- towards security money,
c) Rs. 3.5 lacs/- towards damages and
d) Rs. 10 lac towards damages for defamation.
e) Cost of Rs. 5 lacs.
25. Of the said amount so claimed, Ld. Arbitrator in award dated 04.02.2016 held that the counter claimant is entitled to amount of ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.24/26 Rs.7,11,295/- as mentioned in point (a) and Rs. 1,27,800/- in point (b), along with simple interest @ 6% per annum on total amount, while Ld. Arbitrator declined the amount so claimed as per point (c), (d) and (e).
26. That the claimant herein has never filed any separate objections u/s 34 of the Act, challenging the amount so granted by the Arbitrator to the respondent/counter claimant and the claimant/petitioner herein by way of present petition has simply sought quashing of award dated 04.02.2016.
27. Further from the perusal of objections u/s 34 of the Act, so filed by the objector, there is no objection found that the said counter claim suffers from patent illegality or is against the Public Policy of Country.
28. Be that as it may, from the perusal of award dated 04.02.2016, it can be seen that the Ld. Arbitrator has considered the evidence and documents so placed on record by the parties while deciding the said counter claim and has further observed that the claimant/petitioner never questioned the said counter claim during the cross examination and has merely relied upon Vigilance Report.
29. As such, considering the fact that the petitioner herein has never moved separate objections with regard to the amount granted to the respondent/counter claimant by the Arbitrator, nor any arguments is raised with respect to the said counter claim and further considering the observations made above and the scope/power of courts in dealing with the objections u/s 34 of the Arbitration and Conciliation Act (As mentioned ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.25/26 para no.29), this court find no grounds to interfere in the findings passed by Ld. Arbitrator in the counter claim so filed by the counter claimant/respondent.
30. In view of the abovesaid discussion, the present petition stands dismissed and disposed off accordingly.
File be consigned to record room after due compliance.
Digitally signed by ANUBHAV ANUBHAV JAIN Announced in the open Court JAIN Date: 2025.11.21 04:27:08 +0530 on 21st November 2025 (Anubhav Jain) District Judge -05, NDD, PHC/ND/21.11.2025 ARBTN No. 13765/2016 MTNL Vs. M/s Transcon India Pvt. Ltd. Page Nos.26/26