Madras High Court
The Chief Signal And vs Mcml Systems Private Limited on 12 March, 2020
Author: M.Sundar
Bench: M.Sundar
O.P.No.93 of 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 12.03.2020
CORAM
THE HONOURABLE MR. JUSTICE M.SUNDAR
O.P.No.93 of 2014
The Chief Signal and
Telecommunication Engineer/Project,
Southern Railway,
Park Town, Chennai-600 003.
... Petitioner
- Vs -
1. MCML Systems Private Limited,
Plot No.54/S, Second Floor,
Anupuram, ECIL,
Hyderabad-500 062.
2. Mr.M.Elavarasan,
(Presiding Arbitrator)
Chief Signal and Telecommunication
Engineer/Construction,
Southern Railway,
Egmore, Chennai-600 008.
3. Mr.John Thomas,
(Arbitrator)
Chief Electrical Lighting Engineer,
Southern Railway, Chennai-600 003.
4. Mr.A.Selvaraj,
(Arbitrator)
Financial Adviser and Chief Accounts Officer/General,
Southern Railway, Chennai-600 003.
... Respondents
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O.P.No.93 of 2014
Original Petition filed under Section 34 of the Arbitration and
Conciliation Act, 1996, to set aside the Arbitral Award of the respondents 2
to 4 dated 25.6.2013 made in relation to disputes arising out of agreement
No.SG.190/T/PROJ/CONT/VM-TPJ-DG-GOC-TJ-VM-PDY/BPCY dated
08.12.2008.
For Petitioner : Mr.M.Vijay Anand
Additional Standing Counsel for Railways
For Respondents : R1-No Appearance
R2 to R4-Arbitrators
***
ORDER
Mr.M.Vijay Anand, learned Additional standing counsel for Railways is before this Court on behalf of the petitioner. The first respondent is the contractor with whom petitioner i.e, Southern Railway had entered into an 'Agreement dated 08.12.2008, being Agreement No.CA No.SG.190/T/Proj/Con/VM-TPJ, DG-GOC TJ-VM and VM-PDY/BPAC' (hereinafter referred to as 'said Contract' for the sake of brevity and convenience). The said contract was for execution of works, which has been described as 'works relating to trenching, laying of signaling cables/6 QUAD cables in between station sections and provision of Block proving through 2/10 http://www.judis.nic.in O.P.No.93 of 2014 Axle Counter (BPAC) at 41 block sections between various stations' (hereinafter referred to as 'said work' for the sake of brevity and convenience). Suffice to say that arbitral disputes arose between the petitioner and first respondent Contractor, Arbitration agreement, which is in the form of a Clause qua said contract was invoked, respondents 2 to 4 constituting a three member Arbitral Tribunal came to be appointed, Arbitral Tribunal entered upon reference, adjudicated upon the arbitration disputes and passed an 'arbitral award dated 25.06.2013' (hereinafter referred to as 'impugned award' for the sake of brevity and convenience).
2. Instant 'Original Petition' ('OP' for the sake of brevity) has been filed assailing the impugned award. Before embarking upon the exercise of examining the grounds of challenge to impugned award, it is necessary to set out the scope and purport of Section 34 of 'The Arbitration and Conciliation Act 1996' (hereinafter referred to as 'A and C Act for the sake of brevity, clarity and convenience) by way of a Prefatory Note.
3. PREFATORY NOTE:
Challenge to an arbitral award under Section 34 of A and C Act, going by the language in which Section 34 of A and C Act is couched, is by way of 3/10 http://www.judis.nic.in O.P.No.93 of 2014 an 'application', but this Court is giving the nomenclature 'Original Petition' for such an application under Section 34 of A and C Act. Therefore, in this order, I will continue to refer to instant matter as 'OP'. A OP under Section 34 of A and C Act is neither an appeal nor a revision. It is not even a full-
fledged judicial review, but it is a limited judicial review within the contours and confines of Section 34 of A and C Act. By contours and confines of Section 34 of A and C Act, this Court refers to 8 designated slots adumbrated in Section 34 of A and C Act. To be noted, 5 slots are adumbrated under Section 34(2)(a), two slots are adumbrated under Section 34(2)(b) and one slot figures under Section 34(2A). This Court chooses to deploy the term 'slots' in preference to 'grounds' as instant OP is neither an appeal nor a revision and it is not even a full-fledged judicial review as mentioned in the earlier part of this order. To put it differently, it is a mere challenge to an award. When it comes to 'challenge to an arbitral award', the principle is, if a petitioner/applicant as protagonist of a matter like instant OP is able to fit his case into any one or more of the eight slots neatly and snugly, the arbitral award will be dislodged or in other words set aside. If that not be so, the arbitral award will not be interfered with/set aside. This is owing to 'minimum judicial interference' in 'Alternate Dispute Resolution' ('ADR') 4/10 http://www.judis.nic.in O.P.No.93 of 2014 mechanism, which is an important aspect of the sublime philosophy and salutary principles underlying the scheme of A and C Act. In this view of the matter, this Court chooses to describe the eight slots adumbrated in Section 34 as eight pigeon holes. To be noted, some of these pigeon holes are even in the nature of keyholes and pinholes, as some of these slots have been circumscribed by limitations, which are in the nature of concentric circles qua some slots/pigeon holes. To be noted, a) not entailing review on merits qua conflict with public policy of India slot, b) making re-appreciation of evidence impermissible and eliminating even erroneous application of law from patent illegality slot fall in this category.
4. FACTUAL MATRIX IN A NUTSHELL:
4(i) In the light of aforementioned prefatory note, it is not necessary to dilate in detail qua facts. In other words, short facts shorn of elaboration/details will suffice for disposal of instant OP owing to contours and confines of Section 34 of A and C Act. In this regard, this Court deems it appropriate to remind itself about Fiza Developers principle laid down by Hon'ble Supreme Court in Fiza Developers and Inter-Trade Private Limited Vs. AMCI (India) Private Limited reported in (2009) 17 SCC 5/10 http://www.judis.nic.in O.P.No.93 of 2014 796 and to be noted Fiza Developers principle was reiterated by Hon'ble Supreme Court in Emkay Global case being Emkay Global Financial Services Ltd. -Vs- Girdhar Sondhi reported in (2018) 9 SCC 49, wherein while reiterating Fiza Developers principle Hon'ble Supreme Court held that Fiza Developers principle is a step in the right direction. To be noted, Fiza Developers principle is to the effect that summary procedure is to be adopted for disposal of applications under Section 34 of A and C Act.
4(ii). Having set out the scope and purport of Section 34 of A and C Act by way of Prefatory note supra, it is not necessary to dilate further on facts. In other words, it will suffice to complete narrative of factual matrix, if summary of award as can be culled out from the impugned award is extracted and reproduced as the same gives all essential details (imperative for appreciating instant order) including disputes that arose between petitioner and first respondent qua said contract and said work. This court, therefore, usefully extracts and reproduces infra, summary of Award, which reads as follows:
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http://www.judis.nic.in O.P.No.93 of 2014 SUMMARY OF AWARD
1. Claimant's Claims:
Claim Brief Description of claim Claimed Amount Amount No. (Rs.) Awarded (Rs.)
1. Work done not paid 27,50,000.00 27,50,000.00
2. Advance payment 58,08,000.00 Rejected
3. Loss of Profit 53,97,408.00 Rejected
4. Loss of Infrastructure 9,00,000.00 Rejected
5. Under utilization of labour 35,57,791.00 Rejected force
6. Under utilization of Overheads 23,71,861.00 Rejected
7. Refund on account of encashed 26,98,704.00 26,98,704.00 Performance bank guarantee
8. Refund of Security Deposit 4,06,110.00 4,06,110.00 Total 58,54,814.00 (Rupees Fifty eight lakhs fifty four thousand eight hundred and fourteen only) II. Counter claims of respondent:
Claim Brief Description of claim Claimed Amount No. Amount Awarded (Rs.) (Rs.)
1. Excess works of locomotive 13,000.00 Nil
2. Excess fuel consumption 8,700.00 Nil
3. Reduced railway earning (if 16,800.00 Nil same loco and train is put into passenger service for delayed period)
4. Extra working of railway 9,500.00 Nil personnel Total 48,000.00 Nil Loss to Railways: 48000 X 1,22,40,000.00 Nil 255 days 7/10 http://www.judis.nic.in O.P.No.93 of 2014
5. Learned Additional Standing Counsel for Southern Railways as protagonist of instant OP raised two points.
6. One point is to the effect that certain items of said work have been done partially and this has been overlooked by the Arbitral Tribunal. This turns on merits and there is nothing to demonstrate that fits into anyone of the eight slots under Section 34 of A and C Act. The second point raised by learned counsel is that matters pertaining to security deposit and performance Bank guarantee are excepted matters qua arbitration.
7. Though it was argued that they are excepted matters, copy of the contract has not been produced before this Court. However, a careful perusal of the award reveals that the arbitral award refers to paragraph 18.4(d) of said contract and has dealt with security deposit and performance Bank guarantee. This is articulated in sub paragraph 5 of paragraph 17 of the impugned award. To be noted, paragraph 17 is captioned 'Discussion on the issue of termination of contract'. Relevant portion of sub paragraph 5 of Section 17 of the impugned award reads as follows:
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http://www.judis.nic.in O.P.No.93 of 2014 '(5)........................................... In terms of para 18.4(d) the respondent is entitled to forfeit the SD and to encash the PG amount whenever the contract is rescinded. Respondent forfeited the SD and encashed the PG under this on termination of contract.'
8. In the absence of any contra material to demonstrate that security deposit and bank guarantee fall under exceptions, this Court is unable to countenance the second point also. As both the points raised or canvassed in petitioner's challenge to impugned award in instant OP do not find favour [one point does not fit into any of the slots adumbrated in Section 34 of A and C Act and the other point has not been demonstrated with material in any manner], instant OP fails. As an inevitable sequitter, this Court holds that there is no ground to interfere with the impugned award.
9. Instant OP is dismissed. However, considering the nature of the matter and the submissions made today, there shall be no order as to costs.
12.03.2020 Index: Yes/No Speaking Order kmi 9/10 http://www.judis.nic.in O.P.No.93 of 2014 M.SUNDAR, J.
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