Delhi District Court
Also At: vs Insight Customer Call Solutions Pvt Ltd on 24 December, 2020
IN THE COURT OF SH. SANJEEV JAIN,
DISTRICT JUDGE (COMMERCIAL COURT)01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS, NEW DELHI
Presiding Officer: Sh. Sanjeev Jain, District Judge
(Commercial Courts)01
OMP (COMM) 17/18
In the matter of:
MAHANAGAR TELEPHONE NIGAM LTD
Through Senior Manager, MPC,
MTNL, Office of the General Manager (MM)
9, CGO Complex, Lodhi Road, New Delhi03
Also at:
MAHANAGAR TELEPHONE NIGAM LTD
Office of the GM (BBO)
6th Floor, Kidwai Bhawan, New Delhi110001
.... Petitioner
Versus
1. INSIGHT CUSTOMER CALL SOLUTIONS PVT LTD
B1, Masoodpur, Vasantkunj, New Delhi110070
2. SH. RAJENDER PRASAD, SOLE ARBITRATOR
Principal, General Manager (Training),
7th Floor, CETTM, Technology Street,
Near Hiranandani Garden, Powai, Mumbai76,
Also at: O/o GM (MM), Room no. 112,
Eastern Court, New Delhi110001
....Respondents
Date of institution : 30.10.2018
Final arguments concluded on : 23.12.2020
Date of judgment : 24.12.2020
OMP (COMM) 17/18 Page 1 of 39
Appearance:
For claimant/ petitioner : Ms. Poonam Aggarwal, Advocate and
Sh. Deelip Aggarwal, Advocate
For respondent no. 1 : Ms. Gunjan Chhabra, Advocate and
Sh. Ayushman Guaba, Advocate.
Cases referred by parties:
1. Sudarsan Trading Co. Vs Government of Kerala and Ors. by
Hon'ble Supreme Court of India decided on 14.02.1989.
2. P.R. Shah, Shares and Stock Broker (P) Ltd Vs. B.H.H.
Securities (P) Ltd and Ors. by Hon'ble Supreme Court of India decided
on 14.10.2011.
3. Harji Engg. Works (P) Ltd Vs BHEL, by Hon'ble High Court of
Delhi in 153 (2008) DLT 489.
4. BWL Ltd vs Union of India, by Hon'ble High Court of Delhi in
SCC online Del. 5873 FAO (OS) 398/2012, decided on 26.11.2012.
5. MMTC Vs Gian Gupta, by Hon'ble High Court of Delhi in OMP
(COMM) 355/2016 decided on 06.01.2012.
6. R.C. Sharma VS Union of India, by Hon'ble Surpeme Court of
India in 1976 (3) SCC.
7. N.J. Dewani Builders Pvt Ltd vs Indian Farmers Fertilizers
decided by Hon'ble High Court of Delhi in FAO (OS) No. 483/2018 vide
its judgment dated 05.12.2012.
JUDGMENT
1. These objections have been filed by applicant / petitioner Mahaganar Telephone Nigam Ltd. (herein after referred to as 'MTNL'.) u/s 34 of Arbitration and Conciliation Act (herein af- ter referred to as the 'Act') for setting aside the impugned OMP (COMM) 17/18 Page 2 of 39 award dated 26.07.2018 (herein after referred to as 'Award') passed in Arbitration Proceedings titled as M/s Insight Customer Cares Solutions Pvt Ltd VS Mahanagar Telephone Nigam Limited by Sh. Rajender Prasad, Sole Arbitrator (herein after referred as 'Ld. Arbitrator') against respondent M/s Insight Customer Calls Solutions Pvt Ltd (herein after referred to as 'Contractor').
2. By way of these objections MTNL has requested to ac- cept the objections and set aside and quash the award passed by learned arbitrator and for award of cost.
3. First of all for better understanding of facts, important dates, events / documents are mentioned in the table:
S.no Documents / Events Date
1 Notification of tender by MTNL 18.03.2010
2 Award of tender by MTNL to Contractor 29.05.2010
3 Award of work order of MTNL to Contrac- 14.06.2010
tor
4 Demand for increase of price in contract by Letter dated
contractor 01.04.2011
5 Reply of letter of demand dated 01.04.2011 11.04.2011
6 Letter of contractor to terminate the con- 03.05.2011
tract or increase of price
7 Reply of letter dated 03.05.2011 by MTNL 23.05.2011
8 Extension of contract by three months by Letter dated
MTNL with effect from 15.06.2011 to 13.06.2011
14.09.2011
9 Refusal to provide the services by contrac- Letter dated
tor without revision of rates 14.06.2011
OMP (COMM) 17/18 Page 3 of 39
10 Letter dated 15.06.2011 by MTNL to con- 15.06.2011
tractor with request to honour terms and
conditions of contract and to continue the
services in extended period of three months
11 Another letter of MTNL for further exten- 14.09.2011
sion of contract with effect from
15.09.2011 to 14.12.2011
12 Letter by contractor for request of revised 23.11.2011
rates or to terminate the contract
13 Letter by MTNL in response of letter dated 07.12.2011
23.11.2011 to continue the service
14 Another letter by MTNL for further exten- 15.12.2011
sion of contract with effect from
15.12.2011 to 14.03.2012 on same rates
15 Date of appointment of Arbitrator 27.08.2011
16 Date of award 26.07.2018
4. Brief Facts:
4.1 The dispute arises between the parties from tender for
management of BV Call Centers in MTNL Delhi vide tender dated 18.03.2010. The arbitration was invoked by contractor by virtue of its notice dated 29.05.2011 to the MTNL. MTNL also received letter dated 09.01.2012 from contractor for appoint- ment of arbitrator to adjudicate the dispute between the parties. Accordingly, learned arbitrator was appointed and arbitration reference was issued by MTNL, Delhi under the Act.
4.2 Vide order dated 17.08.2011, MTNL appointed the learned arbitrator and made the reference that "where as the Government of NCT of Delhi vide its order dated 15.03.2011 revised the minimum wages rates with effect from 01.02.2011 OMP (COMM) 17/18 Page 4 of 39 with an increase of 15% and due to this increase in minimum wages, total salary per person became Rs.8,734.50/- per month and whereas the services provider alleges that due to increase in minimum wages it has to pay Rs.33,89,247/- per month there by incurring a loss of Rs.5,01,920/- and asked MTNL to make good the loss on this account and revise the rates for the period from 01.02.2011 to 14.06.2011. It has also requested MTNL to terminate the contract and not to extend the contract after completion of one year."
4.3 As per the admitted facts between the parties MTNL invited the tenders for management of BV Call Centers Services in MTNL, Delhi on 24x365 basis. The contractor also submitted its bid and having the lowest bid, the claimant/contractor was declared as L-1 bidder and Letter of Intent (LOI) was issued to the contractor on 29.05.2010 for total 305 positions @ Rs.348 per position per 8 hours shift for 365 days at the total amount of Rs.3,87,41,100/-. As per LOI contractor was required to deposit performance security of Rs.19,37,100/-. Based on the LOI, the purchase order dated 09.06.2010 was issued to the contractor for a period of one year (from 15.06.2010 to 14.06.2011) along with the scope of the work.
4.4 In accordance with the contract, the contractor started its work on regular payment basis. During the period of contract, government issued notification pertaining to increase in minimum wages and as a result of the said notification contractor had written a letter to MTNL on 01.04.2011 OMP (COMM) 17/18 Page 5 of 39 requesting for revision in rates due to revision in minimum wages. In response of the said letter MTNL replied on 11.01.2011 refuting the request of the contractor on the ground that as per terms of NIT tender was on fixed rates basis.
4.5 As mentioned in important dates of events and docu- ments, there had been a round of letters by the contractor and replies by MTNL on the similar lines wherein the contractor requested to terminate the contract and not to extend it unless rates are revised. On the other hand, in replies consistently the stand of the MTNL was that contract was on fixed rates basis and the contractor was bound to continue his services as per the terms of the contract in the period of contract as well as the extended period of contract.
4.6 Contractor filed his claim before the learned arbitrator and MTNL filed its reply. On the basis of pleadings and documents learned arbitrator framed the following issues:
1. "Whether the claimant is entitled to claim an amount of Rs.74,07,296/- from the respondent as arrears ?
2. Whether the claimant is entitled to claim enhance rates contract as per past and prevailing minimum wages notifi-
cation of the employee in accordance with the new notifica- tion issued by the Government of NCT dated 31.10.2011 ?
3. Whether the claimants entitled to claim interest @24% per annum for the alleged loss to the claimant ?
4. Whether the claimant is entitled to claim loss of business opportunity and profit for a tune of Rs.40,00,000/- due to extension of contract ?
OMP (COMM) 17/18 Page 6 of 395. Whether the claimant is entitled to claim damages for men- tal agony and harassment in the tune of Rs.2,00,000/- against the respondent ?
6. Whether the claimant is entitled to claim Rs.2,00,000/- as costs of litigation / arbitration proceedings against the re- spondents ?
7. Whether the present claim application is filed, signed and verified by duly authorized person ?
8. Whether the claim application of the application is without any cause of action against the respondent ?
9. Whether the defendant is within its right not to increase the rate as per the minimum wages notification as per clause 8, section 4 of NIT ?
After framing of issues parties led their evidence / produced their witnesses and they were examined and cross exam- ined.
4.7 Vide award dated 26.07.2018 learned arbitrator via detailed speaking award passed following directions and orders:
1. I, therefore, direct the respondent to tender the sum of Rs.74,07,296/- (Rupees Seventy four lacs seven thousand two hun-
dred ninety six only) calculated till 31.12.2011 due to increase in minimum wages vide Notifications dated 18.03.2011, 26.07.2011, 31.10.2011 whereby the minimum wages were enhanced to the claimant.
2. I, therefore, direct the respondent to tender a sum of Rs.50,14,381/- (Rupees Fifty Lakh Fourteen Thousand Three Hundred Eighty One Only) on account of payments made in compliance of minimum wages paid from January 2012 to June 2012 due to increase in minimum wages vide Notifications dated 31.10.2011 and 20.04.2012 whereby the minimum wages were enhanced.
3. I, therefore, also direct the Respondent to forthwith reconcile and tender the outstanding sum of Rs.15,13,712/- (Rupees Fifteen Lakhs Thirteen Thousand Seven Hundred and Twelve only) in terms of the orders made in the interim application made during the course of hearing.
OMP (COMM) 17/18 Page 7 of 394. The respondents are directed that the interest @ 9% per annum shall be paid from the date of interest till realization of the out- standing payments.
5. Contentions on behalf of the MTNL /Petitioner:
5.1 As per the clause 6 of section IV of the Special Condition of Contract, contract was initially for a period of one year extendable for another one year on the same terms and conditions. The claimant agreed and accepted tender and its terms and conditions and submitted unequivocal and unconditional acceptance to the terms and conditions and statutory compliance.
5.2 As per clause number 8 of the Special Condition of Contract, (SCC), the vendor was under an obligation to take care of all statutory requirements / provisions of payment and Wages Act / Labour Act / PF etc. and responsible for strict compliance of provisions of Labour Laws applicable from time to time.
5.3 As per clause 14 of section IV SCC, it was very clear in tender itself that vendor will be responsible for all statutory levies and duties including PF/ESI and MTNL will not be responsible for any payment except all inclusive unit price quoted for price bid accepted by the parties.
5.4 As per clause 16 of Section IV of SCC, payment of wages by the vendor as per minimum Wages Act including PF / ESI / bonus was sole responsibility of contractor.OMP (COMM) 17/18 Page 8 of 39
5.5 As per clause 15.2 of Section IV of General Conditions of Contract (herein after referred to as GCC), that arbitrator from time to time with consent of both the parties enlarge the time frame of making and publishing the award subject to the conditions of Arbitration and Conciliation Act, 1996 and made thereunder, any modifications thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this clause.
5.6 As per clause 8.1 (1) (a) of section -III of GCC prices charged by supplier (contractor) for services performed under the contract shall not be higher than the prices quoted by the supplier in its bid and no increase shall be permitted in the case of revision of statutory levis/taxes.
5.7 As per clause 8.1 (ii) (a) of Section -III of GCC / NIIT, prices mentioned in column 7 of table of the price schedule in Section XI of the tender document, price once fixed will remain valid during the scheduled delivery period.
5.8 As per clause 9.2 of Section II of Instructions of Bidders, the supplier shall quote as per price schedule given in Section XI for all items given in schedule of requirement for category in which the bidder is participating.
5.9 As per clause 5.1 and 6 of Instructions to Bidders, a prospective bidder requiring any clarifications of the bid documents may notify in writing at the purchaser mailing address at any time prior to the date of submissions of bids.OMP (COMM) 17/18 Page 9 of 39
The purchaser may for any reason whether at his own initiative or in response to a clarification requested by prospective bidder may modify the bid documents by amendments.
5.10 That no amendment was sought by claimant-bidder in regard to terms and conditions of contract neither till its acceptance nor thereafter and accepted its all terms willfully without any protest and with its free will being very much satisfied and rendered service upto extended one year in terms of contract and received payment regularly as admitted by CW1 in his cross examination.
5.11 That contractor started unlawful demand to increase the bid/rate of contract with effect from 01.02.2011 under the grab of notification date 13.03.2011 issued by the Government by sending letter dated 01.04.2011. The MTNL denied the demand of contractor vide its reply dated 11.04.2011.
5.12 As per reference letter/order dated 27.08.2011 in respect of appointment, learned arbitrator was required to decide the question of enhancing minimum wages by 15% under notifications dated 18.03.2011. In violation of arbitration reference, learned arbitrator exceeded his jurisdiction by enhancing minimum wages upto 32% in regard to 4 notifications of increase of minimum wages issued by the Government. The findings of ld. arbitrator by enhancing minimum wages in respect of all four OMP (COMM) 17/18 Page 10 of 39 notifications upto 32% was beyond the scope of reference. Therefore, learned arbitrator has committed a patent illegality which itself is the ground to set aside the award. In respect of the notifications dated 26.07.2011 and 31.10.2011 issued by the Government neither there was any mention in letter dated 27.08.2011 i.e. reference to arbitrator nor they were part of the statement of claim nor any issue was framed. The award passed in respect of these notifications suffered from patent illegality.
5.13 There was no escalation clause in the contract and MTNL as well as the contractor were well aware about these terms of contract. Despite the specific terms and conditions of no escalation the price, the claimant unlawfully demanded for enhancing the bid price in the grab of four notifications issued by the Government in respect of the increase of minimum wages. The said demand for increase by contractor was contrary and in violation of clause 14 of Section IV of SCC and clause 8 (I) and (II) of Section III of GCC.
5.14 That there is ambiguity in award which does not disclose at what rate, the sum of Rs.50,14,381/- was awarded to the contractor. As per enhanced minimum wages for period January 2012 to June 2012 against the notifications dated 31.10.2011 and 20.04.2012, it is not quoted that with effect from which date the enhanced amount is calculated against notification dated 20.04.2012. Therefore, the said award is patently illegal.
OMP (COMM) 17/18 Page 11 of 395.15 Ld. arbitrator granted a sum of Rs.15,13,712/- to the claimant against false and time barred invoice generated in October 2012 for an arrear of fifteen days work which was neither part of pleadings nor any issue was pressed or framed by learned arbitrator. This relief was claimed by the contractor after a period of five years of arbitration proceedings by filing an application under Section 17 of the Act and that too at the stage of final arguments before the ld. arbitrator without amending its claim to this effect. This application under Section 17 of the Act was not even signed by authorized person and the same was filed by new advocate under his signatures without filing any vakalatnama in his favour. The said application was neither duly supported by affidavit of authorized person nor filed by authorized person nor by authorized advocate. This application was opposed by MTNL by filing the reply and the said claim awarded by ld.arbitrator under Section 17 of the Act was hit by Section 43 of the Act.
5.16 That CW1 admitted in his cross examination that he has not placed on record any copy of the ledger account/ balance sheet in support of claim of Rs.70,07,296/- as arrears against MTNL. In the absence of any cogent evidence on record and admission of CW1, the said claim of contractor was not at all proved. Ld.arbitrator still awarded the aforesaid amount in favour of the claimant / contractor as the arrears against three notifications of the Government dated 15.03.2011, 26.07.2011 and 31.10.2011 which is patently OMP (COMM) 17/18 Page 12 of 39 illegal and against the public policy. Further the award of Rs.74,07,296/- to claimant/contractor is contrary to clear terms of contract in clause 8.1 (I) (a) and 8.1 (II) (a) of Section 3 of GCC and clause 14 of Section (IV) of SCC. Ld. arbitrator overlooked the pleadings/evidence and terms of contract and not only awarded the said amount but also interest @ 9% per annum on the said amount without any justified reason which is patently illegal and against fundamental law, public policy, justice and morality.
5.17 That written arguments were filed by parties before the ld. arbitrator and oral arguments were also heard on 11.02.2018. Thereafter, ld. arbitrator reserved the case for pronouncing of award. Learned arbitrator did not pronounce his award till 25.07.2018. The unexplained and inordinate delay on the part of learned arbitrator in pronouncement of award is also a patent illegality as held by Hon'ble Supreme Court and various High Courts and is violation of Section 14 and 29 (a) of the Act. Therefore, the award is liable to be set aside.
5.18 That findings of learned arbitrator in the award dated 26.07.2018 is perverse and by misinterpreting the terms of the contract and therefore the award suffers from the patent illegality and is liable to be set aside.
6. Contentions of the Respondent:
6.1 That a speaking, reasoned and detailed award has been passed by learned arbitrator after carefully analyzing and OMP (COMM) 17/18 Page 13 of 39 appreciating the relevant facts; terms and conditions of agreement; evidence before it; and the substantive law. The scope of Section 34 of the Act is limited to the grounds provided in section 34 (2) of the Act. Petitioner has failed to make out any ground under Section 34 (2) of the Act. The sphere of Section 34 (2) is limited and it is not open to the court to re-examine the correctness of the findings of learned arbitrator on a re-appraisal of the evidence. The court can not re-examine the correctness of findings of the arbitral tribunal as if is sitting in appeal over the findings of the tribunal. The appraisal and/or sufficiency of evidence can not be a matter of challenge under Section 34 (2) of the Act.
6.2 That the petitioner/MTNL has not come to the court with clean hands. MTNL has failed to mention that as per clause 15 of the contract, the arbitrator was appointed who was their General Manager at that time. Despite having their own employee as sole arbitrator, MTNL has attempted to allege that learned arbitrator was biased and impartial.
6.3 That award can only be challenged if the same is patently illegal or is against fundamental policy of Indian law or against the interest of India or against justice and morality and this position of law has been consistently held by various judgments of the Hon'ble Supreme Court for reference "PR Shah Shares and Stock Brokers Private Limited Vs B.H.H. Securities (Supra)".OMP (COMM) 17/18 Page 14 of 39
6.4 That MTNL has raised the objection the claim petition was not signed by duly authorized person whereas the witness of respondent/MTNL in his cross examination before the learned arbitrator admitted to having seen/perused the board resolution in favour of Sh. Divij Singhal the AR/ Director of claimant/Contractor and therefore, the said objections is not tenable.
6.5 That as per the terms of the contract, contractor was (as per clause 8 of the contract) under the responsibility to comply with all labour laws specifically the minimum wages and to pay its employees in terms of enhanced minimum wages in presence of officials of respondent which has been done up to 14.06.2012. The fix price clause was related to the increase and decrease of taxes and other statutory taxes.
The fix price clause of the contract was not in relation to the increase of minimum wages. It was implied contract between the parties in respect of the increase of rates of bid according to the increase of minimum wages.
6.6 That during the operation of the contract between the parties the rates of minimum wages per employee was increased from Rs.7020/- (per month per employee) to Rs.8060/- (per month per person) resulting in increase of approximately 15% from the original tender cost.
6.7 By the period of question of contract, due to notifications of the government, the minimum wages were increased upto Rs. 8502/- (per employee per month) which OMP (COMM) 17/18 Page 15 of 39 was much higher than the original bid price. Due to increase in minimum wages the claimant/contractor suffered a loss of Rs.1,24,21,677/-.
6.8 That learned arbitrator in his detailed award has very rightly analyzed and interpreted the terms of contract and concluded that fix price clause is limited to taxes and other taxes but there was an implied contract between the parties in respect of the increase of minimum wages and enhancement of bid price.
6.9 That frivolous objections have been filed by the petitioner/MTNL without any basis just to defer its liability.
7. I have heard the learned counsel for the parties, gone through the written submissions and judgments referred by the parties along with original arbitral record. I have carefully considered the respective submissions.
8. Scope of section 34 (2) of Arbitration and Conciliation Act.
Section 34 (2) of the Arbitration and Conciliation Act reads as under:
(2)An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indi-
cation thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or OMP (COMM) 17/18 Page 16 of 39
(iv) the arbitral award deals with a dispute not contem- plated by or not falling within the terms of the submis- sion to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submit- ted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbi- tral procedure was not in accordance with the agree- ment of the parties, unless such agreement was in con- flict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of set- tlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation -I- For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India only if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81."
ii) It is in contravention with the fundamental policy of Indian law;
iii) It is in conflict with the most basic notions of moral- ity or justice.
Explanation-II- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. [2 (A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erro- neous application of the law or by re-appreciation of evidence.
OMP (COMM) 17/18 Page 17 of 398.1 Normally, the general principles are that the Arbitrator is a Judge of the choice of the parties and his decision unless there is an error apparent on the face of the award which makes it un- sustainable, is not to be set aside even if the court as a court of law would come to a different conclusion on the same facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. It is not open to the court to set aside a finding of fact arrived at by the arbitrator and only grounds on which the award can be can- celled are those mentioned in the Arbitration Act. Where the ar- bitrator assigns cogent grounds and sufficient reasons and no er- ror of law or misconduct is cited, the award will not call for in- terference by the court in exercise of the power vested in it. Where the arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into considera- tion the technical aspects of the matter, the court would gener- ally not interfere with the award passed by the arbitrator.
8.2 In the case titled G. Ramchandra Reddy v. Union of In- dia (2009) 6 SCC 414 the Apex court asserted that courts should not normally interfere with the award of an arbitrator, unless there was a gross error apparent on the face of the record.
8.3 In Sudarsan Trading Co. v. Government of Kerela & Anr. 1989 AIR 890, the observations of the Supreme Court have been that Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had OMP (COMM) 17/18 Page 18 of 39 acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitra- tor in the case. By purporting to construe the contract the court, could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction.
8.4 In the case of Hiedelberg Cement India Ltd (supra), the High Court observed:
"In the case of Associate Builders v/s Delhi Development Authority, (2015) 3 SCC 49, the Supreme Court has held as under:-
"19. When it came to construing the expression the public policy of India contained in Section 34(2)(b)(ii) of the Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 : held:
31. Therefore, in our view, the phrase public policy of India used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied O.M.P. (COMM) 413/2019 Page 30 of 37 from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term public policy in Renusagar case [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal.
The result would be award could be set aside if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.74.
OMP (COMM) 17/18 Page 19 of 39In the result, it is held that: (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if the party making the application furnishes proof that:
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the O.M.P. (COMM) 413/2019 Page 31 of 37 submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.
(2) The court may set aside the award:
(i)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, (b) failing such agreement, the composition of the Arbitral Tribunal was not in accordance with Part I of the Act,
(ii) if the arbitral procedure was not in accordance with: (a) the agreement of the parties, or (b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate. (c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
(3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to: (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or
(d) if it is patently illegal. (4) It could be challenged: (a) as provided under Section 13(5); and (b) Section 16(6) of the Act."
8.5 In McDermott International Inc. vs. Burn Standard Co. Ltd. & Ors. (2006) 11 SCC 181, the Supreme Court has held as under:-
OMP (COMM) 17/18 Page 20 of 39"The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by O.M.P. (COMM) 413/2019 Page 33 of 37 opting for arbitration as they prefer the expediency and finality offered by it."
8.6 In the very recent judgment, the Hon'ble Supreme Court has once again reiterated the law related to the examination by a Court of an Award under Section 34 of the Act. In Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India Ltd. 2019 SCC OnLine SC 677, the Supreme Court has held as under:-
"35. 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 paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the Renusagar understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), 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 paragraph 30 of Associate Builders (supra).
36. 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 OMP (COMM) 17/18 Page 21 of 39 morality or justice. This again would be in line with O.M.P. (COMM) 413/2019 Page 34 of 37 paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
37. 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 paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). 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 (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in particular, is now done away with.
38. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (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.
39. 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.
40. To elucidate, paragraph 42.1 of Associate Builders (supra), namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award.
Paragraph 42.2 of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would O.M.P. (COMM) 413/2019 Page 35 of 37 certainly amount to a patent illegality on the face of the award.
41. The change made in Section 28(3) by the Amendment Act really follows what is stated in paragraphs 42.3 to 45 in Associate Builders (supra), namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits OMP (COMM) 17/18 Page 22 of 39 an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2A).
42. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), 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." ......
45. Recently, in Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors., 2019 SCC OnLine SC 1520, the Apex Court has held as under:-
"55. Further, this Court has repeatedly held that an application under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit - see Canara Nidhi Ltd. v. M. Shashikala 2019 SCC O.M.P. (COMM) 413/2019 Page 36 of 37 OnLine SC 1244 at paragraph 20. As a result, a court reviewing an arbitral award under Section 34 does not sit in appeal over the award, and if the view taken by the arbitrator is possible, no interference is called for - see Associated Construction v.
Pawanhans Helicopters Limited. (2008) 16 SCC 128 at paragraph 17 "
9. Let us take the arguments of petitioner and respondent in the light of legal principles laid down by Hon'ble superior courts in above mentioned judgments.
9.1 "First of all the relevant and important observations from the award is reproduced herein below:
"4.5 It is further also an admitted position that the entire NIT or the PO or any other document governing the contract between the claimant and the respondent does not bear any clause or provision for enhancement of the contract price in the eventuality as at hand.OMP (COMM) 17/18 Page 23 of 39
Further, it is also an admitted position that the prices of the con- tract has been clearly stipulated. It is further admitted by the re- spondent that minimum wages is different from statutory taxes / taxes.
4.6 In light of the above mentioned admitted premises what has now to be seen is whether a change in law which is also a statutory obligation could cast and an additional burden on the claimant out of his profits or it could enable the claimants to be reimbursed for such additional liability.
4.7 Considering the fact that the respondent is itself a state within the meaning of the Constitution of India and that the state / union territory of Delhi had promulgated a notification casting a statu- tory obligation upon the claimant, it can not be that two wings of the Government take a contrary stand against a part (in this case private party) for its own benefit. It has become also necessary to observe that the claimant has paid the wages/ salaries as per the enhanced rates not pursuant to any term of the contract but be- cause of the mandate of law. It also has to be seen that what is the underlying obligation and motive of the terms of the contract. In the present case, the specific clause of the contract caste a duty and an obligation including but not limited to the payment of wages as per the Minimum Wages Act and for such obligation the respondent had also obtained a specific undertaking from the claimant which is reproduced as follows:-
"We (M/s Insight Customer Call Solutions Pvt Limited) hereby de- clare that our bid is in compliance with the instrument mentioned in section-II as per NIT (T.E. No. AGM (MPL) / call center / 2009- 10/01 dated 18.03.2010). We also assure that we will be abiding by the clause 8 and 16 of section IV, we have made provisions for waged act, Labour Act, PF etc. and will be making timely payment of wages as per Minimum Wages Act (including / applicable PF / ESI / Bonus ect.)"
4.8 Therefore what has to be seen is that the real floor test of the clauses of the contract between the parties can be read as a neces- sary conditions of the contract to that what was agreed upon. It has basically to be seen whether there was an implied contract between the parties and within the agreement of reimbursing the increased cost on account of an increase in rates of wages. In the present cases all clauses stipulating a strict compliance of laws by the claimant and the above mentioned undertaking also to be read with, it makes an implied contract between the claimant and the re- spondent of reimbursing the claimant in case of any additional re- sponsibility or cost implication added upon the claimant by virtue of or a creature of mandate of law. If such interpretation is not OMP (COMM) 17/18 Page 24 of 39 given to the terms of the contract it would imply that on the one hand the claimant has not been granted an increase in the contract price and on the other hand the claimant can not violate any of the law as mentioned."
9.2 In his award ld. arbitrator has also discussed the following judg- ments and observed:
"4.9 Therefore the law laid down by the Hon'ble Supreme Court in Tara- pore and Company VS. State of M.P. 1994 3 SCC 521 squarely applies to the present case and can be observed as follows:
"26. Let us now be seen whether the claim of the appellant because of the escalation in the rates of aforesaid wages can be agreed upon. As the increased payment owes its origin either to increase in rates of wages pursuant to notifications issued in exercise of power under Clause (b) of Sub-section 1 (i) of Section 5 of th e Minimum Wages Act, 1948 (copies of some of which notifications are at page 62-67 and 95-96 of Volume II) or to increase in rates of wages by the Wage Committee of the concerned Division of the PWD (some of which determinations are at page 72-79 and 86-93) it has to be seen whether there on account of rise of rates or wages on both the counts. Payment of wages as per the rates fixed under the minimum wages act being statutory obligation and the terms of the contract being silent about payment of minimum wages, as the relevant term (Para 1 of Annexure B) speaks of "fall wages", as would appear from what was stated by this court in Hindustan Times ltd. V. Their Workmen MANU / SC / 0283 / 1962: (1963) I LLJ 108 SC, which decision was cited with approval in Hindustan Antibiotics ltd vs. Their Workmen MANU / SC / 0187 / 1966: (1967) I LLJ 114 SC, Workmen of Gujarat Electricity Board Vs Gujarat Electricity Board 1962 2 LLJ 791, we hold that insofar as increased payment in concerned, the parties were not in any sort of agreement or im- plied to reimburse the same. The appellant paid as per these rates not in pursuant to any term of the contract but because of the man- date of law.
27. But then, the terms at hand did require the appellant (who is the contractor) not to pay less than fair wages as would appear from what has been stated in para 2.10 and para 1 of Annexure B. The explanation to latter para states that where fair wages has not been notified these wages would be the one prescribed by the PWD (Irrigation Department) for the division in which the work is done. Now these wages were being increased from time to time as would appear from the decision of the Wage Committee referred above; and if the appellant was being required to pay wages as per these OMP (COMM) 17/18 Page 25 of 39 decisions, we do not read a meeting of mind insofar as the claim of escalated payment on account of increase of fair wages is con- cerned. It has to be assumed that when the appellant was required to pay fair wages at increased rates, the authorities did visualize that the appellant would not do so by cutting down its profit. By asking the appellant to give tender by taking into account the fair wages notified at the time of inviting tender, the authorities did give an impression that fair wages to be paid would be the one then no- tified / prescribed, a la the explanation to Para 1. In such a situa- tion, if rates of fair wages were raised afterwards, the tendered sum can not be taken to be agreed amount of the authorities requiring the appellant to pay wages at rates higher than those prescribed or notified at the time of inviting tenders. On this fact situation, we hold that the State had by necessary implication agreed to reim- burse this increase payment."
10. In the above mentioned judgments, issue was pertaining to grant or refusal of enhancing of bid price in the cases of "fixed price clauses" in different contracts. Learned counsel for petitioner and respondent had also referred these cases during their arguments. Learned counsel for petitioner also referred N.J. Dewani Builders Pvt Ltd vs Indian Farmers Fertilizers (Supra).
11. The perusal of judgments referred by learned counsels for parties and by learned arbitrator on the point of enhancing of rates/bid price in case of "fix price clauses" in contracts, there are two categories of cases. Consistently the Hon'ble Superior Courts have held that where ever there is clause of fix price in the contract, parties have to abide by it and enhancing of price is not permissible. In case where there is any ambiguity in contract or there is any clause for enhancing of fixed price, Hon'ble Courts have considered for the enhanced prices. It has also been held by the superior courts that profit or loss is the part of the commercial transactions. Courts can not decide in OMP (COMM) 17/18 Page 26 of 39 terms of profit or loss caused to one or other party. At the time of bid, it is for the parties to decide the terms of the contract in respect of the fixed price or provision for enhancement of price. The contractors/bidders have to mention their quotations in tender documents but once the terms of the contract are settled between the parties, there is no need of unnecessary interpretation except in rare circumstances where there are gaps or ambiguity or conflict in different terms and conditions of the contract.
12. After consideration and analyzing number of judgments by foreign and Indian Courts, the Hon'ble Supreme Court of In- dia in the case of "Nabha Power Ltd Vs. Punjab State Power Corporation Limited (PSPCL) and another (CA No. 179/2017; judgment dated 05.10.2017) laid down the following principles:
A: The contract should be read as it reads, as per its express terms.
B: The concept of implied terms come into subject only when there is a strict necessity of it.
C: Commercial courts had to be mindful of the contemporary knowledge and must not endeavor to imply terms into the contract.
Hon'ble Court meticulously analyzed domestic and international jurisprudence on the concept of implying terms and conditions. However, while attempting to imply the said base, the court stated that such standardized principles should not substitute the courts to view of the presumed understanding of the commercial terms of parties.OMP (COMM) 17/18 Page 27 of 39
13. In the case of Novartis Vaccines and Diagnostics INC vs Aventis Pharma Ltd, dated 11.12.2009, the Hon'ble Bombay High Court has once again innumerate the principles of commercial contracts. His Lordship while re-affirming his earlier observations in Reliance Industries Resources Ltd vs Reliance Industries Ltd (2007) (Supp) Bombay CR 925, further laid down the following principles for the interpretation of commercial contract.
"1. Ordinary Meeting: This principle essentially signifies that the words in the contract are to be construed in their ordinary and popular sense. The underlying principle being that parties to a contract, as reasonable men must have intended to use the word in its commonly used sense.
2. Business like interpretation: It signifies that a commercial contract must be interpreted in a manner which conforms with sound commercial principles and good business sense. In this regard Lord Diplock's observation Antaios Cia Navieras SA V Salen Rederierna (1984) 3 ALL ER 229, is apposite: "if a detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business commons sense."
3. Commercial Object: This principle is based on a rather well established rule that the "the contract should be read as a whole"
in light of the purpose of the contract.
4. Construction to Avoid Unreasonable Results: if the wording of a clause is ambiguous, and one reading produces a fairer result than the alternative, the reasonable interpretation should be adopted. It is to be presumed that the parties, as reasonable men would have intended to include reasonable stipulation in their contract.
The traces of these principles can also be found in the apex courts recent decision in Vimal Chand Ghevarchand Jain & ORs. V. Ramakant Eknath Jajoo (2009 (5) SCALE 59)"
OMP (COMM) 17/18 Page 28 of 3914. The main dispute in this case is pertaining to the interpretation of different clauses of contract between the parties and interpretation of different clauses accepted by the learned arbitrator in his award. In view of the above mentioned judgments, first of all it is required to analyze, whether the contract between the parties in this case require any interpretation and if so, to what extent and in what manner ?
15. At the cost of repetition let us reproduce the main clauses of contract between the parties :
"Clause 8 of Section III:
8 Prices ....8.1 (ii) (a) Prices mentioned in col 7 of table of the price sched- ule in section XI of the tender documents once fixed will remain valid during the schedule delivery period. Increase and decrease of taxes and other statutory taxes will not affect the price during this period.....
Section IV Special Conditions of Contract Clause 8: The vendor shall take care of all statutory requirements / provisions of payments with PF & ESI authorities under the labour contract act 1970 and has to provide a certificate to MTNL in this regard. The vendor shall strictly comply with the provisions of labour laws applicable from time to time.
Clause 14: The vendor will be responsible for all statutory levies and duties including PF & ESI and MTNL will not be responsible for any payment except all inclusive unit price quoted in the price bid and accepted in the P.O. The contractor shall indemnify MTNL against payments to be made under and for the observance to the applicable laws.
Clause 16: ..... Timely payment of wages by the vendor as per the minimum wages act (including admissible PF/ ESI / Bonus etc) to OMP (COMM) 17/18 Page 29 of 39 the call center staff / field engineers is of utmost importance for satisfactory and trouble free call center operations...."
16. It is established principle of law that the terms of contract should be read as the whole to ascertain the meaning and purpose by taking plane dictionary meanings. At the first instance the terms of the contract should be understood with the eyes of a reasonable person with its plain meaning. Let us see if there is any ambiguity in different terms of the contract or is there any scope of inserting any other meaning by way of interpretation. Is there any scope for presuming any implied contract between the parties beyond the plain meaning of different clauses of contract?
17. Clause 8 of Section 3 clearly mentions that the price in column VII of the title of price schedule in section 11 of the ten- der documents, once fixed will remain fixed during the schedule period. Increase and decrease of taxes and other statutory taxes will not affect the price during the said period. Ld. arbitrator and respondent/contractor has interpreted the said clause with fixed price in respect of the taxes and other statutory taxes. Let us see column VII of the price schedule in section 11 of the tender documents. The table is reproduced here below:-
OMP (COMM) 17/18 Page 30 of 39Section-XI Price Schedule T.E. No. AGM (MPL) / Call Center/2009-10/01 dated 18.03.2010 Cate- Item of Basic Rate per Any Service Tax All Incl.
gory Work position per 8 other charges per
hrs per day for charges position per
cat-I & II 8 hrs per
day / per
Or Basic rate fault
per fault / job
for cat-III & (Rs..)
IV
Rate Amt
.
18. The above mentioned Section XI gives details of the price schedule in first column. It mentions about the categories; in second column (item of work); in third column (basic rate per position per eight hours per day for category I and II or basic rate per job [Category III and IV]); any other charges in column IV; rate and amount of service taxes in column V and VI respectively; and all including charges per position per eight hours per day in rupees in column VII. This price schedule clearly clarifies that prices mentions in clause 8 of section 3 talks about the consolidated charges per position per eight hours per day which includes the basic rate per position per eight hours per day along with any other charges and services tax.
This price schedule was the part of tender documents and was accepted by the parties and ultimately became the part of the contract. The fixed price in bid were given by the contractor and therefore, he was found to be a successful bidder. The price OMP (COMM) 17/18 Page 31 of 39 schedule makes it clear that clause 8.1 of Section 3 does not talk only about increase or decrease of taxes and the statutory taxes as interpreted by learned arbitrator and emphasized by learned counsel for respondent/contractor. A careful perusal of the tender documents and terms of contract clearly provides that basic rate per position per eight hours per day given in column 3 also attract the tax component of the price schedule. From the stage of invitation of the bids, submission of bids, issuance of work order, it was clear to both the parties that what price schedule is all about and what are its components. In rounds of letters by contractor and its replies by MTNL, the stand of MTNL had been consistent that it was the contract of "fixed price" and the demand for enhancing of price on account of increase in minimum wages was illegal.
19. It is required to be seen that is there any ambiguity in clause 8.1 of Section 3 i.e. price clause and other clauses of the contract.
Ld. Arbitrator observed that MTNL is a state. In the contract it was clear that contractor is bound to comply with the provisions / requirements of law including payment of wages/ labour act / PF etc. But MTNL declined to increase the rates despite repeated demands by the contractor. The commercial contracts required to be seen with the practical view, keeping in view the prevailing commercial practices.
20. MTNL is statutory body of the Government. Tenders are invited by public institutions to maintain transparency and to find out best and suitable bidder for completion of work. The process of tenders also gives opportunity to different stake OMP (COMM) 17/18 Page 32 of 39 holders to submit their bids in respect of NITs. Healthy competition between the service providers and availability of best services at lowest price is also one of the purpose of open tender system. In case the terms of contract are interpreted as has been interpreted in the award, it will give opportunity for malpractice, corruption and nepotism. In that scenario the contractor may give the lowest price in a bid to compete with the other bidders and after getting the contract may pressurize the public institutions to increase the rates by threatening to discontinue the services.
20.1 The terms of contract and object behind it must be seen (by learned arbitrator as well as the Court) from the terms of the contract itself. In the given case where services are provided by contractor in all call centers of Delhi in an institution like MTNL by providing about 350 persons on the basis of 24x365, the contractor may always be in a position of threatening to discontinue the services by way of terminating of contract. Public departments can not afford the discontinuation of essential services in this manner. Therefore, the object of fix time period of contracts with clause of extension of contract at the discretion of departments are kept in the contracts.
20.2 Further in government departments there is a process of annual budget allocation which is being planned in different heads for any financial liability/expenditure. Every government department have to follow the procedure of expenditure or allocation of funds on account of audit etc. Therefore, in order OMP (COMM) 17/18 Page 33 of 39 to stream line the different projects and progress of work, in many contracts, fixed price clause are being kept by the departments.
20.3 It has been held by superior courts that fixed price clause in contract is neither unheard of nor the same is illegal or unconstitutional. It was held by Hon'ble High court of Delhi in the case of NJ Dewani Builders Pvt Ltd vs Indian Farmers Fertilizers Corporation Limited etc (supra) on 05.12.2012 that :
"The imposition of limitation on the amount of escalation that the contractor may claim by a contractual term can not be said to be a term which offends public policy or to be forbidden by law. It also held that such kind of contracts are not unknown to law. Fixed price or lump sum contractors are commonplace. It is for the promisor to make his own es- calation and evaluation on the basis of his experience and to make his offer on that basis, keeping in view the contrac- tual terms."
21. In view of the above discussion, I have no hesitation to conclude that clause 8.1 of Section 3 read with price schedule of Section 11 was duly accepted by parties. Since the beginning of execution of contract it was clear in its meaning and object. In my opinion, it was clear to both the parties from the word go that fixed price clause is in relation with price schedule which includes basic rate per position per person. Therefore, there is neither any requirement nor any scope for giving any other interpretation to these terms of contracts by presuming any implied contract between the parties in respect of enhancing of minimum wages. In my opinion, the findings of learned arbitrator on the principle of implied contract is neither OMP (COMM) 17/18 Page 34 of 39 warranted not permissible in the given facts and circumstances of the case. Therefore, the findings are patently illegal. The conclusions drawn by learned arbitrator are based on an interpretation of implied contract (between the parties) pertaining to the enhancing of minimum wages. Therefore, the findings of learned arbitrator is contrary to the law and not sustainable at all.
22. As per original arbitral record learned arbitrator concluded the arguments on 11.09.2017 at 04.30 PM and fixed the case for final orders and it was mentioned that pronouncement shall be notified separately. Thereafter, proceedings dated 02.05.2018, 16.07.2018 and 04.06.2018 reflect the reason to defer the orders on the ground of signatures and counter signatures of parties on documents and each page of written submissions and after completion of the same, the award dated 26.07.2018 was pronounced.
23. Ld. Counsel for MTNL submitted that the pronouncement of award after about eight months of conclusion of arguments is illegal and liable to be set aside.
23.1 Learned counsel also referred the case i.e. M/s Harji Engineering Works Pvt Ltd Vs Bharat Heavy Electricals Limited' decided by Hon'ble High Court of Dehli on 22.12.2008 in OMP no. 241/06, wherein it was held that:
"It is natural for any arbitrator to forget any contention and pleas raised by parties during the course of the argument if there is a substantial delay between the last effective hearing and date on which the award was made and publish without any satisfactory OMP (COMM) 17/18 Page 35 of 39 explanation for the delay. The said unexplained delay is contrary to justice and would defeat justice. The said defects defunct the very purpose and fundamental basis for alternator dispute redressal. The undue delay without any explanation is therefore unjust and is the ground to set aside the award."
Similar view was taken by Hon'ble Supreme Court in the case of BWL Limited vs Union of India and anr., decided on 26.11.2012 in FAO (OS) 398/2012 and 399/2012 and in the case of RC Sharma VS Union of India and Ors, 1976, AIR 2037.
24. The original arbitral record indicate that after conclusion of arguments, the pronouncement of award was deferred for signatures of parties on documents and on the pages of written submissions. This can not be a reasonable ground to defer the award for such a long time as it should have been checked at the time of conclusion of final arguments. It is not the case of the parties that learned arbitrator has missed any material argument in his award or the merits of the award has been suffered due to delay in pronouncement of award. Though the delay in pronouncement of award is undesirable, but it can not be the sole ground to set aside the award in this case.
25. Learned counsel for petitioner/MTNL also submitted that learned arbitrator awarded the amount of Rs.15,13,712/- to claimant/contractor against the time barred invoices generated in October 2012 which was neither part of pleadings nor any issue was pressed or framed by learned arbitrator. Despite objections by MTNL, learned arbitrator allowed this claim by way of an application under section 17 of the Act along with final award. It is clear from the arbitral proceedings that this OMP (COMM) 17/18 Page 36 of 39 amount of Rs.15,13,712/- was not part of the claim. Neither any issue was framed in respect of the said amount nor any evidence was produced. This issue was not the part of the reference of arbitral tribunal. Otherwise also, Section 17 of the Act provides for interim measures by arbitral tribunal. The careful perusal of section 17 makes it clear that section 17 is applicable during the arbitral proceedings and thereafter for the purpose of interim protections pertaining to appointment of guardian for minor or person of unsound mind; for interim measure for protection and preservation of any good/property; for securing the amount in dispute in arbitration; for detention / preservation / inspection of any property which is subject matter of the dispute in arbitration; for interim injunction or appointment of receiver; and such other interim measures of protection as may appear to the arbitral tribunal convenient and reasonable.
26. Section 17 does not envisage the final decision on substantial claim without pleadings and without giving fair opportunity to the parties. In my opinion, the findings of the learned arbitrator in respect of the award of the said amount of Rs.15,13,712/- was beyond the scope of Section 17 of the Act and contrary to the principles of natural justice and suffer from the patent illegality.
27. From the record, it is established that Ld. Arbitrator exceeded his jurisdiction of the arbitral reference vide letter dated 27.08.2011. The reference was only for the dispute of OMP (COMM) 17/18 Page 37 of 39 15% increase in price. Ld. Arbitrator without any authority decided in respect of other notifications of Government (for hike in minimum wages) in violation of arbitral reference which is patent illegality apparent on the face of award.
28. I also agree with the contention of MTNL that award of Rs.50,14,381/- by Ld. Arbitrator does not clarify from which date and in what manner the amount has been calculated.
29. In view of the clause 6 of Section IV of Special Conditions of Contract, contract was for one year which could be extended by MTNL for another one year. Clause is clear that it was option of MTNL to extend the contract. Nothing was provided that extension of contract will be with the consent of contractor or contractor has any right to terminate the contract after one year. Therefore, in my view contentions of contractor is without merit that he was forced or pressurized to extend the contract.
30. In light of the above discussion, in my opinion, the award is contrary to the provisions of law and terms and conditions of the contract. The award is against the evidence on record without any acceptable reasoning. Though the scope of section 34 (2) of the Act is limited and this court can not re-appreciate the evidence as the court of appeal, but in this case the findings of the learned arbitrator suffers from patent illegality which is against the law and public policy. In my considered view, the award is against basic notions of justice and morality and OMP (COMM) 17/18 Page 38 of 39 illegality goes to the root of the matter. Therefore, the award is liable to be set aside.
31. Conclusion:
In view of the above discussion, the award dated 26.07.2018 passed by Ld. Arbitrator Sh. Rajender Prasad is set aside. The petition is accordingly allowed.
32. No order as to cost.
33. File be consigned to Record Room after due compliance.
Pronounced in the open Court on this 24th of Dec, 2020 (Sanjeev Jain) District Judge (Commercial Courts)01 New Delhi District, Patiala House Courts, New Delhi The order contains 39 pages all checked and signed by me.
OMP (COMM) 17/18 Page 39 of 39