Delhi District Court
Psit Supplies Pvt. Ltd vs Dmrc Ltd on 24 May, 2024
IN THE COURT OF DR. SHIRISH AGGARWAL:
ADJ-03 :NEW DELHI DISTRICT: PATIALA HOUSE
COURTS: NEW DELHI
ARBTN No.18701/16
CNR No.DLND01-013191-2016
M/s PS. IT Supplies Pvt. Ltd.,
C-4, Shadipur Metro Station,
(Opposite Patel Nagar Police Station)
Parking Side (Adjacent to Ranjeet Nagar,
Commercial Complex),
New Delhi-110008
Through Mr. Puneet Singhal, Director ...Petitioner
Versus
Delhi Metro Rail Corporation Ltd.,
Metro Bhawan, Fire Brigade Lane,
Barakhamba Road,
New Delhi-110001.
...Respondent
Date of institution : 21.07.2015
Date on which reserved for judgment : 17.05.2024
Date of decision : 24.05.2024
Decision : Petition dismissed
JUDGMENT
1. The present petition under Section 34 of Arbitration and Conciliation Act, 1996 has been filed against the award dated 20.03.2015. Digitally signed by Shirish Shirish Aggarwal Aggarwal Date:
2024.05.24 14:46:12 +0530 ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 1/18 Petition/Petitioner's version
2. It is the case of the petitioner that it had taken shop numbers KNR-1G, KNR-2G, KNR-3G and KNR-4G, Kirti Nagar Metro Station, Delhi from the respondent on license and had entered into a license agreement dated 03.09.2008. It is stated that this agreement contained the terms and conditions and included an Arbitration Clause.
3. It is stated that as per the terms and conditions, gas based cooking was prohibited in the shops.
4. However, later on 02.12.2009, the respondent acceded to the request of the petitioner and permitted gas based cooking at shop no. KNR-1G.
5. It is submitted that by letter dated 12.03.2010, the respondent intimated the petitioner that opening of a banquet-
cum-restaurant in all the shops was permissible subject to submission of a detailed design and execution procedure for DMRC approval.
6. It is stated that by communication dated 15.12.2011, the respondent intimated the petitioner that opening of a banquet hall in the shops was not permissible.
7. It is submitted that despite repeated requests of the petitioner, the respondent, without furnishing any reasons, unilaterally and arbitrarily, refused to give permission to set up a gas bank in shop no. KNR-2G, KNR-3G and KNR-4G, even though permission was granted for shop no. KNR-1G.
ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 2/18
8. It is stated that in the given circumstances, the petitioner invoked the Arbitration Clause. It is pleaded that due to the arbitrary and discriminatory act of the respondent, the petitioner suffered loss of business and therefore, claimed damages of Rs.40 lakhs on this account, of Rs.10 lakhs for mental agony and Rs. 1 lakh as a litigation expenses before the Arbitrator. It is pleaded that award dated 20.03.2015 was passed by which the claims of the petitioner were rejected by the Arbitrator.
9. The award of the Arbitrator has been challenged on the ground that it is contrary to law and against public policy.
Findings
10. I have heard the Ld. Counsels for the parties and have carefully gone through the record.
11. In the award dated 20.03.2015, the claim of the petitioner for damages was declined on the ground that the license agreement specifically prohibited installation of gas banks and this fact was known to the claimant at the time of bidding and signing the agreement. It was observed that since installation of gas bank is prohibited in the agreement, the request for the same is not tenable. It was noted that even if gas bank has been allowed in some other agreements, it does not entitle the claimant to have a gas bank installed in the shops as a matter of right.
12. Section 34 of The Arbitration and Conciliation Act 1996 deals with setting aside of an arbitral award. The scope and ambit ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 3/18 of court's jurisdiction under section 34 has been dealt with and explained in detail by the Hon'ble Apex Court in Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. (2022) 1 SCC 131 wherein it has been held as under:-
"22. The 1996 Act was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith, by taking into account the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration and the UNCITRAL Conciliation Rules. One of the principal objectives of the 1996 Act is to minimize the supervisory role of courts in the arbitral process. With respect to Part I of the 1996 Act, Section 5 imposes a bar on intervention by a judicial authority except where provided for, notwithstanding anything contained in any other law for the time being in force. An application for setting aside an arbitral award can only be made in accordance with provisions of Section 34 of the 1996 Act.
23. Relevant provisions of Section 34 (as they were prior to the Arbitration and Conciliation (Amendment) Act, 2015) read 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 sub-section (2) and sub-section (3). (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 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:
ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 4/18 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 subject-matter 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.--Without prejudice to the generality of sub- clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.
24. An amendment was made to Section 34 of the 1996 Act by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter, 'the 2015 Amendment Act'). A perusal of the statement of objects and reasons of the 2015 Amendment Act would disclose that the amendment to the 1996 Act became necessary in view of the interpretation of the provisions of the 1996 Act by courts in certain cases which had resulted in delay of disposal of arbitration proceedings and increase in interference by courts in arbitration matters, which had the tendency to defeat the object of the 1996 Act. Initially, the matter was referred to the Law Commission of India to review the shortcomings in the 1996 Act in detail. The Law Commission of India submitted its 176th Report, recommending various amendments to the 1996 Act. However, the Justice Saraf Committee on Arbitration constituted by the Government, was of the view that the proposed amendments gave room for substantial intervention by the court and were also contentious. Thereafter, on reference, the Law Commission undertook a comprehensive study of the amendments proposed by the Government, keeping in mind the views of the Justice Saraf Committee and other stakeholders. The 246th Report of the Law Commission was submitted on 05.08.2014. Acting on the recommendations made by the Law Commission in its 246th ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 5/18 Report, amendments by way of the 2015 Amendment Act were made to several provisions of the 1996 Act, including Section 34.
25. The amended Section 34 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 sub-section (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--
(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 subject-matter 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 in conflict with the most basic notions of morality or justice.
ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 6/18 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. (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 erroneous application of the law or by re- appreciation of evidence."
26. A cumulative reading of the UNCITRAL Model Law and Rules, the legislative intent with which the 1996 Act is made, Section 5 and Section 34 of the 1996 Act would make it clear that judicial interference with the arbitral awards is limited to the grounds in Section 34. While deciding applications filed under Section 34 of the Act, courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law. (See: Uttarakhand Purv Sainik Kalyan Nigam Limited. v. Northern Coal Field Limited. 2 , Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another 3 and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran 4 ).
27. For a better understanding of the role ascribed to courts in 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) 5 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: (SCC pp. 16971, paras 34-41) "34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49:
(2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar"
understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 7/18 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 Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), 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 ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 8/18 goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that 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 what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no 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 ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 9/18 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 characterised as perverse."
28. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by courts while examining the validity of the arbitral awards. The limited grounds available to courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'. What is prohibited is for courts to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 10/18 arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality'.
30. Section 34 (2) (b) refers to the other grounds on which a court can set aside an arbitral award. If a dispute which is not capable of settlement by arbitration is the subject-matter of the award or if the award is in conflict with public policy of India, the award is liable to be set aside. Explanation (1), amended by the 2015 Amendment Act, clarified the expression 'public policy of India' and its connotations for the purposes of reviewing arbitral awards. It has been made clear that an award would be in conflict with public policy of India only when it is induced or affected by fraud or corruption or is in violation of Section 75 or Section 81 of the 1996 Act, if it is in contravention with the fundamental policy of Indian law or if it is in conflict with the most basic notions of morality or justice.
31. In Ssangyong (supra), this Court held that the meaning of the expression 'fundamental policy of Indian law' would be in accordance with the understanding of this Court in Renusagar Power Co. Ltd. v. General Electric Co. 6 In Renusagar (supra), this Court observed that violation of the Foreign Exchange Regulation Act, 1973, a statute enacted for the 'national economic interest', and disregarding the superior courts in India would be antithetical to the fundamental policy of Indian law. Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confines of 'patent illegality' as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral award shocks the conscience of the court, it can be set aside as being in conflict with the most basic notions of justice. The ground of morality in this context has been interpreted by this Court to encompass awards involving elements of sexual morality, such as prostitution, or awards 6 1994 Supp (1) SCC 644 seeking to validate agreements which are not illegal but would not be enforced given the prevailing mores of the day."
ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 11/18
13. In Patel Engineering Ltd. Vs. North Eastern Electric Power Corporation Ltd. (2020) 7 SCC 167 it has been held as under:-
"15. In BCCI v. Kochi Cricket (P) Ltd., 2018 (6) SCC 287, the Supreme Court held that the Amendment Act, 2015 would apply to Section 34 petitions that are made after 23.10.2015 (the day on which the Amendment Act came into force). In the present case, admittedly, after the arbitral awards are dated 29.03.2016, the applications under Section 34 of the Act were filed before the Judicial Commissioner, Shillong as per the decision in BCCI, the provisions of the Amendment Act would apply.
16. Patent illegality as a ground for setting aside a domestic award was first expounded in the judgment of Saw Pipes Ltd.16 where this Court was dealing with a domestic award. This Court gave a wider interpretation to the 'public policy of India' in Section 14 Board of Control for Cricket in India v. Kochi Cricket Private Limited and Others (2018) 6 SCC 287 15 Board of Control for Cricket in India v. Kochi Cricket Private Limited and Others (2018) 6 SCC 287 16 Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 34(2)(b)
(ii) in Part I of the 1996 Act. The Court held that an award would be "patently illegal", if it is contrary to the substantive provisions of law; or, provisions of the 1996 Act; or, terms of the contract.
20. In Ssangyong Engineering and Construction Company Limited19, this Court was considering a challenge to an award passed in an international commercial arbitration, between the Appellant - company a foreign entity registered under the laws of Korea, and the Respondent, a Government of India undertaking. In paragraph (19) of the judgment, this Court noted that the expansive interpretation given to "public policy of India" in the Saw Pipes (supra) and Western Geco International Limited 20 cases, which had been done away with, and a new ground of "patent illegality" was introduced which would apply to applications under Section 34 made on or after 23.10.2015. In paragraphs (36) and (37) of the judgment, this Court held that insofar as domestic awards are concerned, the additional ground of patent illegality was now available under sub-section (2A) to Section 34. However, reappreciation of evidence was not permitted under the ground of "patent illegality" appearing on the face of the award.
21. In paragraphs (39) and (40) of Ssangyong Engineering (supra), the Court reiterated paragraphs (42.2) and (42.3) of ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 12/18 Associate Builders (supra) wherein, it was held that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes a contract in a manner which no fair minded or reasonable person would take i.e. if the view taken by the arbitrator is not even a possible view to take. In paragraphs (39) and (40), the Supreme Court held as under:-
"39. To elucidate, para 42.1 of Associate Builders v. Delhi Development Authority (2015) 3 SCC 49, 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 v. Delhi Development Authority (2015) 3 SCC 49, however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders v. Delhi Development Authority (2015) 3 SCC 49, 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 an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A)." (emphasis supplied)"
14. In Associate Builders Vs. Delhi Development Authority (2015) 3 SCC 49 it has been held as under:-
"17. It will be seen that none of the grounds contained in sub- clause 2 (a) deal with the merits of the decision rendered by an arbitral award. It is only when we come to the award being in conflict with the public policy of India that the merits of an arbitral award are to be looked into under certain specified circumstances.
.......33. It must clearly be understood 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 fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 13/18 master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score[1]. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts."
15. A bare reading of Section 34 and the law propounded by the Hon'ble Apex Court makes it crystal clear that the scope of inquiry and the grounds on which an award can be set aside are quite limited. This is because the Arbitrator is a Judge of 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 comes to a different conclusion on the same set of 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 the only grounds on which the award can be set aside are those mentioned in the Arbitration Act.
16. Where the arbitrator has assigned 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.
17. Interference with an arbitral award is permissible only when 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. Once it is found that the arbitrator's approach is neither arbitrary nor ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 14/18 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 matter and cannot be of trivial nature.
18. After going through the award, I find no infirmity whatsoever in the award. Also, the challenge to the award is not even remotely covered within the scope & ambit of section 34 of the Act. The petitioner has failed to demonstrate how the award is in conflict with the public policy of India i.e. same has been obtained by inducement or fraud or corruption or that it is in contravention of the fundamental policy of law or is in conflict with the most basic notions of morality or justice.
19. The approach of the Arbitrator was reasonable and judicious one. It was not even remotely arbitrary or whimsical. The Arbitrator had given reasonable opportunity to the petitioner to put in its best evidence and passed the award after fair appreciation of the record and the arguments advanced by the petitioner. There is no violation of statutory provisions or of the decisions of the Hon'ble Apex Court or the Hon'ble High Court. Neither is the award unfair or unreasonable to the extent that it shocks the conscience of the court. There is no illegality much less patent illegality which goes to the root of the matter. It is not the petitioner's case and otherwise also not borne out from the award that the same is against justice or morality or the interest of India.
ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 15/18
20. There is no infirmity, illegality and perversity in the above finding of the Arbitrator. Even otherwise, this court cannot substitute its own view/interpretation of the agreement with that of the Arbitrator nor re-appreciate or re-evaluate the evidence.
21. It is argued that since permission was granted for setting up of a gas bank at shop no. KNR-1G by letter dated 02.12.2009, the same could not have been refused in other shops bearing nos. KNR-2G, KNR-3G and KNR-4G. However, it is to be noted that there was no absolute permission granted even for shop no. KNR-1G and the permission was subject to certain conditions. There could be various reasons for not permitting setting up of a gas bank in shop nos. KNR-2G, KNR-3G and KNR-4G. It is not in dispute that these three shops are much smaller than shop no. KNR-1G. That could be a reason for not permitting a gas bank in these smaller shops. Moreover, location of a shop may also be a factor while determining if permission should be granted for setting up of a gas bank.
22. There is no allegation of the petitioner that contractual obligations were not fulfilled by the respondent. The contract was not violated by the respondent. Setting up of a gas bank was always prohibited in the license agreement. The petitioner could not have sought modification of the agreement as a matter of right. It is not the case of the petitioner that it was being victimized and treated unfairly. If that was the case, the petitioner would not have got permission for setting up of gas bank even in shop no. KNR-1G. It was not for the Arbitrator to have ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 16/18 compelled the respondent herein to modify one of the terms of the contract or to award damages on account of not modifying the contract.
23. The claim for damages and compensation for loss of business and mental agony is without any basis. It has been observed hereinabove that the respondent did not violate any terms of the contract and therefore, there is no question of the respondent compensating the petitioner for its losses, if any. Thus, the claim of the petitioner was rightly rejected by the Arbitrator.
24. The impugned award has been passed after due appreciation of facts, documents and law. Not only is the reasoning of the Arbitrator logical, but all the material documents were taken note of at the time of the passing of the impugned award. He has arrived at a just conclusion and there is no error of law or misconduct apparent on the face of the record. This Court cannot re-appraise the evidence and it is not open for this Court to sit in appeal over the conclusion/findings of facts arrived at by the Arbitrator. The impugned award does not suffer from vice of irrationality and perversity. No error is apparent on the face of the impugned award. The award is not against public policy nor against the terms of contract of the parties. No ground for interference is thus made out.
25. For the foregoing reasons, the petition is hereby dismissed.
ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 17/18
26. The parties are left to bear their own costs.
27. File be consigned to record room after necessary compliance.
(Announced in the open court
on 24.05.2024) Shirish
Digitally signed
by Shirish
Aggarwal
Aggarwal Date:
2024.05.24
14:46:19 +0530
(Shirish Aggarwal)
Additional District Judge-03
Patiala House Courts, New Delhi
24.05.2024
ARBTN 18701/16 M/s PS IT Supplies (P) Ltd. Vs. Delhi Metro Rail Corporation 18/18