Delhi District Court
Union Of India vs M/S Manish Construction Works on 11 August, 2023
IN THE COURT OF ANURAG SAIN, DISTRICT JUDGE
(COMMERCIAL COURT01), PATIALA HOUSE COURTS,
NEW DELHI
OMP (COMM) 23/2021
Union of India
Through Dy. CE/Construction,
Northern Railway,
Shivaji Bridge,
New Delhi110001
Mob. No. 9717630250
Email ID: [email protected]
.........Petitioner
Versus
M/s Manish Construction Works,
Govt. Contractor,
Through its Proprietor
Sh. Subhash Chand Sharma,
198/9/16, Sri Ram Nagar,
Shahdara, Delhi110032
Mob. No. 9210021674
.......Respondent
Date of institution : 20.02.2021
Date of reserving judgment : 15.07.2023
Date of pronouncement : 11.08.2023
JUDGMENT
1. The present objection petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed by the petitioner for setting aside the Award dated 09.11.2020 passed by Ld. Sole OMP (COMM) 23/2021 Page 1 of 22 Arbitrator Sh. Avinash Kumar, Dy. Chief Engineer/TMC/Line, Northern Railway, S.E. Road, New Delhi.
2. Briefly stated the facts of the case are that a tender was invited for the work for 'Additional and alteration of service building staff quarter & other allied works at Ghaziabad which was awarded to the respondent vide letter no. 74W/1/Misc/CSB/WA dated 15.03.1994 with original completion period of 15 months i.e. upto 15.06.1995, An agreement bearing no. 489W/Spl dated 20.05.1994 was executed between the parties in this regard. The work was completed on 29.02.1996 i.e. eight months extra time for which the date of completion was extended under Clause 17(A) of GCC1989 by the petitioner without penalty and without PVC. The PVC was applicable upto original DOC i.e. 14.06.1995 and thereafter the PVC was frozen w.e.f. 14.06.1996 and thus, the respondent was not entitled for PVC. Accordingly, vide letter dated 17.09.1999, the respondent was intimated that he is not entitled to any PVC for additional quantity of work. After completion of all the work including extra work within extended date of completion, dispute arose between the parties regarding applicability of PVC clause and price indicates. The dispute remain and unsolved. The respondent invoked the arbitration clause which was declined and aggrieved to the same, the respondent filed a petition under Section 11 of the Arbitration and Conciliation Act bearing petition no. 104/2002 and the Ld. District and Sessions Judge, Delhi vide judgment dated OMP (COMM) 23/2021 Page 2 of 22 07.12.2002 directed GM Northern Railway who appointed Sh. Avinash Kumar, the then Dy. Chief Engineer/C/TMC/Baroda House, New Delhi as Sole Arbitrator. After completion of the arbitral proceedings, award was published by Ld. Sole Arbitrator where PVC bill of Rs. 2,49,036/ was awarded in favour of the respondent along with interest @ 9% for total period of 24 years and 6 months i.e. May 1996 to November, 2020 to the tune of Rs. 18,07,855 on claim no.1 and the Ld. Sole Arbitrator has directed to pay an amount of Rs. 20,56,891/ within 90 days from the date of release of award failing which it will compound interest @ 18% p.a. till the date of actual payment of awarded amount.
3. Feeling aggrieved from the findings of the Ld. Sole Arbitrator, the present petition has been filed by the petitioner on the grounds such as the award passed by the Ld. Arbitrator is patently illegal and against the public policy to the extent of awarding interest on claim no.1 of PVC amount and the terms and conditions of the contract were not considered by the Ld. Sole Arbitrator; Ld. Sole Arbitrator has not considered the agreed terms and conditions of contract that as per clause 16(3) of GCC 1989, the interest cannot be awarded in favour of the respondent but the Ld. Sole Arbitrator has ignored the agreed terms and conditions of the contract which amounts to violation of pubic policy; and the Ld. Sole Arbitrator has totally ignored the terms and conditions of the contract as well as provision of Section 31(7)(a) of Arbitration and Conciliation Act and without OMP (COMM) 23/2021 Page 3 of 22 considering the provision of Clause 31(7) (a) of the Arbitration Act and clause 16(3) of GCC1989 which bars awarding of interest by Ld. Sole Arbitrator. On these premise, the instant petition has been filed on behalf of the petitioner for setting aside of arbitral award dated 09.11.2020 passed by Ld. Sole Arbitrator in the present case.
4. Reply to the present petition has been filed by the respondent wherein it has been averred that the respondent was granted work of construction of 14 staff quarters to be completed within 15 months but subsequently, in June 1995, additional work of construction of four more staff quarters was awarded and the time of completion of the work was extended upto 31.01.1996. The right of the respondent under the Price Variation Clause (PVC) was kept open, as was mentioned in the extension letter dated 25.09.1995 issued by the petitioner. The respondent had completed the entire work including the additional work within the stipulated period. After completion of the work, the petitioner made final measurement bill on 31.08.1999. Though the respondent had been assured that the claim of PVC shall be settled separately but on 17.09.1999, the petitioner informed that the claim of the respondent under PVC was not admissible. On 07.12.1999, the respondent received the final payment from the petitioner under protest as he had submitted his claim to the petitioner on 01.11.1999 and had invoked the arbitration clause. It has been further averred that the work was awarded to the OMP (COMM) 23/2021 Page 4 of 22 respondent vide petitioner's letter dated 15.03.1994 wherein it was admitted that the respondent is entitled to benefit of PVC but vide letter dated 17.09.1996, the petitioner informed that the respondent is not entitled to get the benefit of PVC in respect of additional work as the PVC was deemed to had frozen w.e.f. 14.06.1995. It has been averred that Ld. Sole Arbitrator has passed the award considering the laxity and delay caused by the petitioner and the objection petition is without any substance and deserves to be rejected. It has been further averred that the Hon'ble Supreme Court of India in a case titled as Union of India Vs Pradeep Vinod Construction Co., Civil Appeal No. 2099 of 2007 has held that the award of interest was justified, unless it is prohibited under the terms and conditions of the agreement. It has been further averred that the objections and the grounds made by the petitioner are per se false and devoid of any merit and prayed for the dismissal of the present petition.
5. I have heard Sh. Vipin Kumar, Ld. Counsel for the petitioner and Sh. Yashvir Sethi, Ld. Counsel for the respondent.
6. I have examined the Award dated 09.11.2020 in question, arbitration proceedings and also given due consideration to the facts and pleadings of the case and the submissions put forth by the respective Ld. Counsel for the parties and the relevant legal position.
7. Ld. counsel for the petitioner has argued that the impugned award is against the facts as well as against the law and has been passed OMP (COMM) 23/2021 Page 5 of 22 by the Ld. Sole Arbitrator without application of mind and the award is a nonspeaking award. It has been further argued that the impugned award is based on surmises and conjectures and it has been passed without considering the relevant clause of the agreement qua interest and documents on record and is against the public policy. On these premise, Ld. Counsel for the petitioner prayed that the impugned award be set aside. In support of his contentions, Ld. Counsel for the petitioner has relied upon following judgments:
(i) Garg Builders Vs. Bharat Heavy Electricals Ltd., Civil Appeal No. 6216 of 2021 (Arising out of SLP (C) No. 16320 of 2018) dated 04.10.2021 passed by the Hon'ble Supreme Court of India.
(ii) Union of India Vs. Manraj Enterprises, Civil Appeal No. 6592 of 2021 dated 18.11.2021 passed by the Hon'ble Supreme Court of India.
(iii) Ashi Limited Vs. Union of India passed in OMP No. 200/2015 on 19.05.2020 by the Hon'ble High Court of Delhi.
8. On the other hand, Ld. Counsel for the respondent has argued that the objections are not maintainable as the award has been passed by the Ld. Arbitrator after considering the material on record and it does not suffer from any infirmity or illegality as alleged by the petitioner. The objections are without any merit and are liable to be dismissed. In support of his contention, Ld. Counsel for the respondent has relied upon the judgment passed OMP (COMM) 23/2021 Page 6 of 22 by the Hon'ble Supreme Court of India in a case titled as Union of India Vs. M/s Pradeep Vinod Construction Co., Civil Appeal No. 2099 of 2007.
9. Before deciding the validity of the impugned Award, it is relevant to observe that the scope of inquiry in Section 34 of the Arbitration and Conciliation Act, 1996 proceedings is restricted to consideration whether any one of the grounds mentioned in Section 34 (2) of the Arbitration and Conciliation Act, 1996 exists for setting aside the Award. The scope of the interference by the court under Section 34 (2) of the Arbitration and Conciliation Act, 1996 has been time and again restricted in catena of judgments by the Hon'ble Superior Courts and it has been held that in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, the reappreciation of the facts, evidence or interpretation of the terms of contract is not permissible. What is permissible is, if there is a patent illegality, apparent error on the face of the record, perversity in the Award or misconduct by the Ld. Arbitrator.
10.Section 34(2) of the Arbitration and Conciliation Act, 1996 reads as under: "34.Application for setting aside arbitral award(1)Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with subsection (2) and subsection (3).
(2)An arbitral award may be set aside by the court only if
(a) the party making the application furnishes proof that OMP (COMM) 23/2021 Page 7 of 22
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that
(i) the subjectmatter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India. Explanation 1 For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if, (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is OMP (COMM) 23/2021 Page 8 of 22 in conflict with the most basic notions of morality or justice. Explanation 2. For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
11.Normally, the general principles are that 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 unsustainable, 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 OMP (COMM) 23/2021 Page 9 of 22 and only grounds on which the award can be cancelled are those mentioned in the Arbitration Act. Where the arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference 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 consideration the technical aspects of the matter, the court would generally not interfere with the award passed by the arbitrator.
12.The Hon'ble Supreme Court of India in a case titled as Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
13.The Hon'ble Supreme Court of India in a case titled as Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 has OMP (COMM) 23/2021 Page 10 of 22 held that under Section 34 (2A) of The Act, a decision which is perverse 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. A finding based on the 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. It is held that 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.
14.The Hon'ble High Court of Delhi in a case titled as J.K. Kashypal Vs. M/s M.G. Capital Services and another (2002) II AD, (Delhi) 363 has held : "that the objections are to be examined on the parameters given in section 34 of the Act and observed in the following words:
"Furthermore the objections are to be examined on the touch stone of Section 34 of the Arbitration and Conciliation Act, 1996 and such a contention raised by the petitioner is not covered by any of the provisions contained in Section 34 of the said Act. The Arbitrator was the best judge to adjudicate upon the merits of the case and this court is not supposed to fathom the mind of the Arbitrator or to arrive at its own conclusion on merits or to sit as an Appellant Authority over the findings of the Arbitrator."
15.In a case titled as Himachal Joint Venture Vs. Panilpina OMP (COMM) 23/2021 Page 11 of 22 World Transport (India) Pvt. Ltd. Reported in 2008 (3) Arbitration Law Reported 497, a Division Bench of the Hon'ble High Court of Delhi has held that :
"When the view taken by the Arbitrator is a plausible view, it is not permissible for the court to interfere with the Arbitrator's view merely because another view of the matter is possible. It is not permissible for the Court to reappreciate the evidence placed before the Arbitrator. It is wellsettled that the Arbitrator is the best judge of the quality as well as quantity of evidence and it will not be for the Court to take upon itself task of being a Judge of the evidence before the Arbitrator.
16.In a case titled as N.H.A.I. V. U.T.D. Cementation India Ltd., (2015) 14 SCC 21, Hon'ble Supreme Court of India has observed as follows:
"It is thus well settled that construction of the terms of a contract is primarily for an arbitrator to decide. He is entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the contract. The Court while considering challenge to an arbitral award does not sit in appeal over the findings and decisions unless the arbitrator construes the contract in such a way that no fairminded or reasonable person could do."
17.In a case titled as Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. in CA No.5628/2021 decided on 09.09.2021, the Hon'ble Supreme Court of India has observed as follows :
"23. For a better understanding of the role ascribed to courts in OMP (COMM) 23/2021 Page 12 of 22 reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong (supra) are noted as under:− "34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would not mean the "fundamental policy of Indian law: as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco [ONGC v.Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has beendone away with. In short, Western Geco [ONGC V. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as explained in paras 28 and 29 of Associate Builders {Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204], would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a) (iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v.
DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
OMP (COMM) 23/2021 Page 13 of 2235.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 basis notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204], as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36.Thus, it is clear that public policy of India is now constructed to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub−section (2−A), added OMP (COMM) 23/2021 Page 14 of 22 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 which it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders V. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], namely a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders (Associate Builders V. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows that is stated in paras 42.3 to 45 in Associate Builders [Associate Builders V. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes OMP (COMM) 23/2021 Page 15 of 22 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 an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2−A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders V. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by th parties, and therefore, would also have to be characterized as perverse."
18.Coming to the facts of the present case, the petitioner has only dispute with respect to the interest awarded by the Ld. Sole Arbitrator while allowing the claim of the respondent qua Price Variation Clause (PVC) for additional quantity of work along with interest and relied upon the interest clause, which is reproduced as under: "16. Earnestmoney and security deposit (1) The earnestmoney deposited by the Contractor with his tender will be retained by the Railway as part of security for the due and faithful fulfillment of the OMP (COMM) 23/2021 Page 16 of 22 contract by the Contractor. The balance to make up this security deposit which will be 10 per cent of the total value of the contract, unless otherwise specified in the special conditions, if any, may be deposited by the contractor in cash or in the form of Government Securities or may be recovered by percentage deduction from the Contractor's "on account" bills, provided also that in case of a defaulting contractor the Railway may retain any amount due for payment to the contractor on the spending 'on account bills' so that the amount or amounts so retained may not exceed 10% of the total value of the contract.
(2) Interest on amounts. No interest will be payable upon the earnest money or the security deposit or amounts payable to the Contractor under the contract, but Government Securities deposited in terms of subclause (1) of this clause will be repayable with interest accrued thereon.
19.Infact, the cause of dispute between the parties before the Ld. Sole Arbitrator was only with respect to applicability of the Price Variation Clause (PVC) for the extended period of the contract. In the contract agreement dated 20.05.1994 between the parties, it has been mentioned under the head of 'PRICE VARIATION DURING EXTENDED PERIOD OF CONTRACT' that price adjustment as work out above i.e. either increase or decrease will be applicable upto the stipulated date of completion of the work including the extended period of completion where such extension has been granted under clause 17(3) of the General Conditions of Contract. There is a letter dated 25.10.2002 for Price Variation Clause (PVC)Admissibility during extended period of contract, which is on record wherein it has been clarified that Price Variation is payable/recoverable during the extended period of the contract also, provided the Price Variation OMP (COMM) 23/2021 Page 17 of 22 Clause was part of the original contract and the extension has been granted on administrative ground i.e. under Clause 17A(i),
(ii) and (iii) of GCC and further, the total amount payable/recoverable would be restricted to the ceilings as applicable for the original completion period provided in the contract agreement. The record shows that vide letter dated 25.09.1995, the petitioner has written a letter to the respondent with respect to additions and alterations of service buildings, staff quarters and other allied works at Ghaziabad and vide this letter, the petitioner has accorded sanction to the date of completion for this work being extended upto 31.01.1996 without PVC and without penalty on the existing terms and conditions and regarding the benefit of PVC will be proceeded separately. The record further shows that the petitioner has also written a letter dated 10.06.1999 to the respondent vide which the extension upto 31.01.1996 was sanctioned by the petitioner without penalty and without benefit of PVC and further the case of extension with PVC upto 31.01.1996 was stated to be under consideration with the petitioner. There is another letter dated 17.09.1999 issued by the petitioner to the respondent mentioning therein that PVC is not admissible as the additional quantity of work (i.e. 4 additional quarters) was awarded in June, 95 and the PVC shall be deemed to be frozen on this date for extension of the additional quantity of work.
20.Perusal of the award reflects that Ld. Sole Arbitrator has taken OMP (COMM) 23/2021 Page 18 of 22 into consideration the dispute arose between the parties due to contradiction between the contract agreement conditions and the letter of extension with respect to the applicability of the Price Variation Clause (PVC) for the extended period of the contract. Ld. Sole Arbitrator has considered the letter dated 25.09.1995, letter dated 10.06.1999 and letter dated 17.09.1999 and noticed that there is no error in the claimed amount by the respondent being PVC a part of original agreement and original extension letter. Ld. Sole Arbitrator has considered the facts of the case as per the provisions of Arbitration and Conciliation Act, 1996 and concluded that the dispute was on the PVC bill and not on the earnest money, security deposit or any agreed amount payable to the contractor. Ld. Sole Arbitrator has also noticed that it was due to laxity and misunderstanding of the petitioner with respect to PVC clause due to which the time lost in releasing the payment within 90 days from the physical completion of work as per the contract agreement.
21.The judgments relied upon by the petitioner viz Garg Builders Vs. Bharat Heavy Electricals Ltd. (Supra), Union of India Vs. Manraj Enterprises (Supra) and Ashi Limited Vs. Union of India (Supra) are not on the point of applicability of the Price Variation Clause (PVC) for the extended period of the contract and interest thereupon.
22.In the instant case, the only ground raised by the petitioner to challenge the award is factual in nature which has been already OMP (COMM) 23/2021 Page 19 of 22 considered and adjudicated in the impugned award. It is outside the scope of Section 34 of the Act to reappreciate the entire evidence and come to conclusion because such an approach would defeat the purpose of arbitration proceedings. It has been consistently held that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently, errors of facts cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quality and quantity of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or no evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once, it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word on facts.
23.A bare perusal of the arbitral award shows that Ld. Sole Arbitrator has examined all the relevant aspects of the contract, the correspondences made by the parties, the terms of the contract and the conduct of the parties. Ld. Sole Arbitrator has remained inside the parameters of the contract and construed the provisions of the contract. Ld. Sole Arbitrator while deciding the issues has operated within the four corners of the contract and has not travelled beyond it. Ld. Sole Arbitrator has not decided the issue contrary to the terms of the contract, so it cannot be said that the Ld. Sole Arbitrator misconducted himself or the OMP (COMM) 23/2021 Page 20 of 22 interpretation given by him is not reasonable. The petitioner has failed to establish that Ld. Sole Arbitrator has travelled beyond the terms of the contract.
24.Having examined the various contentions of the petitioner on the touchstone of the parameters of interference as explicitly laid down by the Hon'ble Supreme Court of India in several judgments referred to above, I am of the view that the impugned Award does not call for interference. This Court cannot re appreciate evidence or interpret the Clauses of the Agreement which the petitioner is calling upon the Court to do. The contentions of the petitioner are thus, rejected having no merits. I am of the view that the arbitration award being a reasoned one and does not suffer from any infirmity or error apparent on the face of the record. It is not for this Court to sit in appraisal of the evidence led before the Ld. Sole Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the Ld. Sole Arbitrator which was subject matter of dispute. In the present case, the Ld. Sole Arbitrator has deliberated on the issues under reference which were within his competency. There are no allegations against the Ld. Sole Arbitrator of misconduct nor of having misconducted the proceedings which have either been specifically alleged by the petitioner or established. The Ld. Sole Arbitrator has duly explained the reasons for arriving at his decisions. There is nothing to indicate that the award violates Section 28 (3) of the OMP (COMM) 23/2021 Page 21 of 22 Act or that, it is in conflict with the basic notions of justice and the fair play and fundamental policy of Indian law or in contravention of the terms of the agreement or that it lacks reasoning as pleaded in the petition.
25.Taking into consideration the various dates and events on record, I am of the considered opinion that the conclusion drawn by the Ld. Sole Arbitrator is based on sound reasons and the Ld. Sole Arbitrator has passed the award after considering the facts, evidence and material on record. In the impugned award, the Ld. Sole Arbitrator has given logical reasoning in reaching the just conclusion of the case. The award is well reasoned as per the terms and conditions of the agreement. There is nothing on record to show that impugned award is against the terms of the agreement and against the public policy. Also, there is no patent illegality in the award. The award is a well reasoned award, based on evidence and mathematical calculations and not only a possible but a plausible view.
26.In view of the above discussions, objections under Section 34 of The Arbitration and Conciliation Act, 1996 are dismissed. No order as to cost.
27.File be consigned to record room.
(Announced in the Open Court today on 11.08.2023) (Anurag Sain) District Judge (Commercial Court)01), Patiala House Courts Complex, New Delhi OMP (COMM) 23/2021 Page 22 of 22