Bangalore District Court
In The Karnataka State Road Transport vs In Radiant Info Systems Limited on 27 November, 2021
1
Com.A.S.No.17 & 24 of 2019
In the Court of LXXXIV Addl. City Civil & Sessions Judge
(CCH-85 Commercial Court), Bengaluru
Dated this the 27th day of November 2021
Present: Smt.H.R.Radha B.A.L., LL.M.
LXXXIV Addl. City Civil and Sessions Judge,
(CCH-85 Commercial Court)
Bengaluru.
Com.A.S.No.17/2019
c/w
Com.A.S.No.24/2019
Plaintiff in The Karnataka State Road Transport
Com.A.S.17/2019 Corporation, a statutory Corporation
having its office at Post bag no.2778,
&
K.H.Road, Shantinagar, Bangalore -
1st Defendant in 560027 Represented by its Managing
Com.A.S.24/2019 Director through its Chief Systems
Manager
(By Sri.P.D.Surana Advocate)
Vs
Defendant in Radiant Info Systems Limited, a
Com.A.S.17/2019 Company incorporated under the
provisions of the Companies Act, 1956,
&
having its office at 2227/1, Div. No.52A,
Plaintiff in 9Th Main, BSK II stage, Bengaluru -
Com.A.S.24/2019 560070 represented by its authorized
representative Sri.Mallikarjun Prasad
(By Sri.Sourabh R. Kurubarahally, Adv.)
Respondent No.2
Justice Mohamed Anwar,
in
Former Judge High Court of Karnataka,
Com.A.S.24/2019
Arbitration Centre Bengaluru, Khanija
Bhavana, #49, 3rd Floor,
East Wing, Race Course Road,
Bangalore - 560001
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Com.A.S.No.17 & 24 of 2019
Date of Institution:
1. Com.A.S. No.17/2019 18.02.2019
2. Com.A.S.No.24/2019 25.02.2019
Nature of the petitions For Setting aside the arbitral
award U/Sec.34 of the
Arbitration and Conciliation Act
Date on which judgment 27-11-2021
pronounced
Total Duration Years Months Days
1. Com.A.S. No.17/2019 02 09 07
2. Com.A.S.No.24/2019 02 09 01
LXXXIV Addl. City Civil & Sessions Judge
(C.C.H-85 Commercial Court) Bengaluru
COMMON JUDGMENT
Com.A.S.No.17/2019 and 24/2019 are filed U/s 34 of the
Arbitration and Conciliation Act, 1996 ('the Act' for short)
respectively, by the respondent and the claimant in
A.C.No.128/2017 for setting aside the award dated 20.11.2018
passed by the Arbitral Tribunal in A.C.No.128/2017 and
therefore, taken up together for common disposal.
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Com.A.S.No.17 & 24 of 2019
2. The parties are referred as per their original rank before
the Arbitral Tribunal for clarity.
3. Brief facts of the claimant's case are that they are a
company is engaged in the development of information
technology systems, supplying software and integrating the
hardware developed by it for online ticket booking travel
platforms. They, in association with consortium partners M/s
Bharat Electronics Limited ('BEL') and Central Railway
Information System (CRIS) designed, developed, executed and
maintained AWATAR [Anywhere Anytime Advance Reservation
System] a web based Passenger Reservation System (PRS for
short) in 36 months on the server located in the respondent's
premises in 2005. That apart in 2007, they satisfactorily
carried out the work of developing, establishing, operating and
maintaining Disaster Recovery Center (DRC) and Data Center
(DC) for the respondent's AWATAR PRS. The respondent
decided to upgrade the same to AWATAR 2.0 to increase the
limit from 500 concurrent users to 3000 with maximum limit of
5000 concurrent users and issued letter of intent dated
11.02.2011 to M/s BEL detailing the scope of work on Build
Own Operate and Transfer (BOOT) model. M/s BEL replied on
23.02.2011 that it will be executed by the claimant.
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Com.A.S.No.17 & 24 of 2019
3(a). That the respondent entered into an agreement with
them on 20.04.2011 for AWATAR 2.0 project for 5 years period
commencing from 31.01.2013; and their fee per ticket booked
was fixed at Rs.5.50 per ticket for first three years and Rs.4.95
for 4th and 5th year. They developed AWATAR 2.0 by incurring
huge cost of Rs.29,00,00,000/- and also established DRC and
DC. Though AWATAR 2.0 was ready for launch it was delayed
at the respondent's request and the migration of AWATAR PRS
to AWATAR 2.0 was successfully done on 31.03.2013. Although
there was no breach on their part, the respondent issued
notice dated 14.01.2016 terminating the agreement w.e.f.
14.07.2016 for untenable reasons. At that time the respondent
was due a sum of Rs.3,99,48,720/- towards transaction fee on
the tickets booked using AWATAR 2.0 from November 2015 to
July 2016.
3(b). That the respondent floated fresh tenders on
17.05.2016 and 20.05.2016 for developing AWATAR 3 and
AWATAR 2.1 respectively assuring that AWATAR 2.0 would be
revived. Therefore they participated in the bid for AWATAR 2.1,
but the respondent awarded the work contract to M/s AbhiBus
Services India Pvt. Ltd. ('AbhiBus' for short) though not
qualified and competent to carry out the work and also failed
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Com.A.S.No.17 & 24 of 2019
to revive AWATAR 2.0. Apprehending that the source code of
AWATAR 2.0 would be shared with AbhiBus, they filed an
application U/s 9 of the Act in A.A.No.25006/2016 to restrain
the respondent from terminating the agreement in respect of
AWATAR 2.0. The said application came to be disposed on
30.07.2016 observing that the respondent was in breach of
the contract. On 31.07.2016 the source code of AWATAR 2.0
was shared with AbhiBus in violation of their right to run the
PRS till February 2018 resulting in loss of revenue, goodwill
and reputation and serving as disqualification for similar
contracts. Therefore they got issued notice dated 27.06.2016
invoking the arbitration clause in the agreement dated
20.04.2011.
3(c). Their claim before the Arbitral Tribunal was for
Rs.3,99,48,770/- towards the transaction fee under Ex.P1, and
Rs.1,16,97,292/- towards interest at 18% p.a. thereon;
Rs.4,24,58,293/- and Rs.3,13,49,588/- for loss of revenue by
way of commission at Rs.4.95 per ticket from 01.08.2016 to
01.08.2017 and 31.08.2017 to 28.02.2018, respectively;
Rs.4,92,000/- being the commission amount at Rs.80/- per bus
on the tickets booked on casual contract basis from the
respondent's 123 bus station; Rs.1,00,00,000/- towards loss of
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Com.A.S.No.17 & 24 of 2019
reputation, goodwill and for illegally sharing the source code
to AbhiBus and also illegal termination of the agreement
resulting in blacklisting by other four contracts, cost and
interest at 18% p.a.
4. The respondent filed the statement of objections denying
the claim and also raised counter claim for Rs.18,66,83,449/-
contending that the contract for AWATAR in 2005 and the one
for DRC and DC in 2007 was awarded to M/s BEL alone and the
claimant was not a privy to the same. The said projects were
developed and implemented by M/s BEL. To enhance online
booking facility AWATAR 2.0 PRS was developed on BOOT
model entirely at its cost and expenses. Only upgrading of the
software had to be done by adding additional servers to meet
the target of AWATAR 2.0. This did not involve an intellectual
or research work and BEL had submitted the offer letter dated
09.06.2009 for upgrading AWATAR data. Only after the letter
of intent dated 11.02.2011 was issued, M/s BEL wrote back on
13.04.2011 stating that AWATAR 2.0 will be taken by its
associate, the claimant. As such agreement dated 20.04.2011
was entered into with the claimant, but the purchase order
was issued to M/s BEL.
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Com.A.S.No.17 & 24 of 2019
4(a). That the claimant misrepresented claiming that they
had to invest 21.42 crore to develop, integrate and operate
AWATAR 2.0 and thereby got fixed the revenue at an
exorbitant rate of Rs.5.50 per ticker during first three years
and Rs.4,95 per ticket in the last two years. The mandatory
procedure under the Karnataka Transparency in Public
Procurement Act, 1999 ('the KTPP Act' for short) was not
followed while awarding this project to claimant and the officer
who executed Ex.P1 was not authorized by the competent
authority. Therefore the agreement was void ab initio. As per
the third party audit report dated 01.04.2015 the claimant
was running the project on hired infrastructure instead of its
own software and hardware, to upgrade, develop and operate
AWATAR 2.0 PRS on BOOT model. The claimant failed to
provide training to the staff on technical aspects and to place
one DC under its exclusive control.
4(b). That the claimant, after persistent follow up delivered
useless and incomplete source code and also failed to take
effective measures to prevent hacking of AWATAR 2.0. As a
result the same was hacked on 17.04.2015 and a complaint
was lodged with in this regard. The claimant is also guilty of
setting up insufficient and malfunctioning DC and DRS for
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Com.A.S.No.17 & 24 of 2019
AWATAR 2.0. On account of these, it terminated the
agreement by issuing notice dated 14-01-2016, that too after
writing letters bringing to the notice of the claimant all these
breaches. The claimant is liable to refund transaction fee of
Rs.10,86.02,548/- received by misrepresenting that it had to
invest huge money in the project; Rs.2,53,32,600/- for non
availability of booking facility for four days when the claimant
unauthorizedly shifted the facility from M/s SIFY Data Center
to Reliance; Rs.30,76,625/- for failure of the system on various
days between March 2013 to January 2015 and February 2015
to July 2016; and Rs.4,96,71,676/- for the delay in making
AWATAR 2.0 operational.
5. The claimant filed the rejoinder reiterating its claim and
denying the defence put forth by the respondent and also the
counter claim.
6. Based on the above, the Arbitral Tribunal framed the
following terms of reference/ issues:
1) Whether Claimant company proves that
as a successful bidder along with its
Consortium member M/s Bharath
Electronics Limited (BEL) it was lawfully
awarded the contract on 19.04.2006 by the
Respondent Karnataka Road Transport
Corporation (KSRTC) to execute the work of
designing, developing, operation and
maintenance of its web based "Passenger
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Com.A.S.No.17 & 24 of 2019
Reservation System" (PRS) naming it as
"Anywhere Anytime Advance Reservation"
abbreviated as "AWATAR", and that this
contract was executed by the Claimant in
terms of thereof?
2) Whether Claimant proves that it was
also awarded by the respondent its further
contract work for the design, development,
setting up, implementation and
comprehensive maintenance of the
"Disaster Recovery Site"(DRS) and the
related "Data Center" (DC) for its "AWATAR"
System as per purchase order dated
11.04.2007 as pleaded at para No.3.7 in its
claim petition and that the same was
executed by the Claimant in terms thereof?
3) Whether Claimant proves that it was
duly awarded by the respondent another
valid contract under Ex.P1 Agreement
dated 20.04.2011, to be effective from
March 31. 2013, to undertake and execute
for it (Respondent) the work of designing,
developing, operating and maintaining the
new upgraded PRS "AWATAR-2.0" on "Build,
Own, Operate and Transfer" (BOOT) model
entirely at the Claimant's cost and
expenses for a period of 5 years enhancing
the functional capacity of "AWATAR-2.0"
from the limit of 500 concurrent users
stipulated under its (Respondent's) earlier
'AWATAR' contract of 19.04.2005 (referred
to in issue No.1), to 3000 concurrent users
scalable to 5000 concurrent users with the
exclusive right to own and run this PRS til
l28.02.2018 guaranteeing it the revenue
therefrom at Rs.5.50 per seat for the first 3
years and at Rs.4.95 per seat for the
subsequent 4th and 5th years for the seats
reserved through "AWATAR-2.0"?
4) Does the Claimant prove :
(a) That the Contract Project work of
Respondent's 'AWATAR-2.0' under Ex.P1
Agreement 20.04.2011 was duly executed
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Com.A.S.No.17 & 24 of 2019
by it fulfilling at its (Agreement's) terms
and conditions by investing the total
amount of RS.29,00,00,000/- (Rupees
Twenty Nine Crore only) for developing new
software AWATAR-2.0 and also setting up
the hardware infrastructure of not only the
new Data Center (DC) but also of a new
Disaster Recovery Center (DRC)?
(b) That this new 'AWATAR-2.0' PRS was
commenced and made fully operational by
it (the Claimant) from March 31, 2013 on
the agreed BOOT model, and that this
system was though ready to be deployed
early but it was delayed on request of
Respondent?
(c) That the Claimant was paid the revenue
amount from April 2013 by the respondent
as agreed under Ex.P1 Agreement dated
20.04.2011?
5) Whether Claimant proves that Ex.P1
"AWATAR-2.0" Agreement dated 20.04.2011
by its very nature was not terminable and
its termination by respondent by its Ex.P8
notice dated 14.01.2016 (Ex.R13) is illegal?
6) Whether Claimant proves that the
source code of its "AWATAR-2.0" PRS and
Data generated in "AWATAR-2.0" was
illegally handed over by respondent to the
Claimant's competitor M/s AbhiBus and got
M/s AbhiBus to host the PRS software on
respondent's website and that the later has
been running the software on its websites?
7) Whether claimant proves the sum of
Rs.3,99,48,770/- (Rupees Three Crores
Ninety Nine Lakh Forty Eight Thousand
Seven Hundred and seventy only) payable
to it by the respondent under Ex.P1
Agreement dated 20.04.2011 towards the
transaction fee on the tickets booked as
per claimant bills presented for the months
from November 2015 to July 2016, and the
contract booking of bus under 'AWATAR-
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Com.A.S.No.17 & 24 of 2019
2.0' system, has been wrongly withheld by
it, and, therefore, the latter is liable to pay
up the same to the claimant?
8) Whether the claimant proves that it is
entitled to recover from the respondent the
total amount of Rs.12,30,08,213/- (Rupees
Twelve Crore Thirty Lakh Eight Thousand
Two Hundred and Thirteen Only) towards
the loss of its revenue claimed as under:
(i) Rs.4,24,58,625/- on account of loss of
revenue from the sale of tickets during the
period from August 1, 2016 to August 1,
2017 at the rate of Rs.4.95 per ticket, as
claimed in para 3.32.1 of the claim petition;
(ii) Rs.3,13,49,588/- being the commission
at Rs.4.95 per ticket for the total number of
tickets sold through respondent's PRS
under 'AWATAR-2.0' during the period from
01.08.2017 to 28.02.2018 on the basis of
10% increase in tickets sale for this period
as claimant in para 3.32.2 of the claim
petition; and
(iii) Rs.4,92,00,000/- by way of commission
at Rs.80/- per bus of respondent booked by
claimant on casual contract basis through
'AWATAR-2.0' from 123 bus stations for a
period of 20 months, as claimed in para
3.32.3 of the claim petition?
9) Whether claimant proves that
respondent is liable to pay it the amount of
Rs.100,00,00,000/- (Rupees Hundred Crore
only) for the illegal termination of Ex.P1
Agreement dated 20.04.2011 by its
termination notice 14.01.2016 at Ex.P8 on
account of:
(a) the loss of its reputation and goodwill:
(b) the respondent siphoning away and
providing to the claimant's successful
competitor M/s AbhiBus services India Lts.,
Hyderbad, in bid for respondent's AWATAR
2.1 software system the software and
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Com.A.S.No.17 & 24 of 2019
intellectual property fully developed by the
claimant with its unique technical expertise
for its contractual transactions under
'AWATAR 2.0' system thereby causing it the
irreparable loss of its competitive edge on
the software
and
(c) tarnishing its image and credibility
resulting in loss of 4 (four) fresh contracts?
10) Whether the respondent proves that
the M/s BEL and M/s ITI were the only two
bidders for its 'AWATAR' PRS software
system in 2005 and that their technical bid
and pre qualifications of these bidders
submitted to respondent were evaluated by
it and the BEL was found qualified and
competent for the contract work, the same
was awarded to it?
11) Whether respondent proves that the
contract to build, operate and maintain its
software project of 'AWATAR' PRS was
awarded by it exclusively to M/s Bharath
Electronics Limited (BEL) under the
agreement dated 14.11.2005 at Ex.R3, and
that it was executed by the BEL only,
entirely at the respondent's cost, as
pleaded in the para No.2 of the Statement
of Objections?
12) Whether respondent proves that its
another contract work under Ex.R4
Agreement dated 27.12.2007 to establish
the Disaster Recovery Center (DRC) at
Hyderabad, related to its 'AWATAR' under
Ex.R3 Agreement dated 14.11.2005 was
also awarded by it exclusively to and
executed by the M/s BEL only, as pleaded
in the para No.3 of the Statement of
Objections?
13) Does the respondent prove that its
'AWATAR 2.0' was a new project wholly
independent of its earlier 'AWATAR' project
under Ex.R3 Agreement dated 14.11.2005,
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Com.A.S.No.17 & 24 of 2019
as pleaded in para No.4(b) of the
Statement of Objections?
14) Does respondent prove that the
claimant deliberately delayed the
commencement and operation of 'AWATAR-
2.0' system with the oblique motive of
making wrongful monetary gain for itself of
certain lump-sum payments made to it by
respondent during the interregnum?
15) Whether respondent proves that Ex.R9
Agreement dated 20.04.2011 (Ex.P1)
executed by its Chief Systems Manager, I.T.
Dept in favour of the Claimant to establish
its (Respondent's) "AWATAR 2.0" Passenger
Reservation System (PSR) project is void
and unenforceable Agreement in law
because of the following alleged illegalities:
(a) That before execution, the Agreement
and its project were compulsorily required
to be processed and approved by the
'Central Purchase Committee' of the
respondent Corporation which was not got
done by it in normal course of its
functioning, as pleaded in para No.4(b) of
Statement of Objections;
(b) That the respondent's officer who
executed the Agreement Ex.P1 as on its
behalf was not duly authorized to do so by
the competent authority of the respondent
corporation i.e., its Board;
(c) That the Agreement to procure the
services under "AWATAR-2.0" software
system was made in violation of the
mandatory procedure prescribed under the
relevant provisions of the law contained in
Section 4(c) and 5 of the Karnataka
Transparency public procurement Act,
1999;
and
(d) That the Agreement stood vitiated by
the misrepresentation of the material fact
made by the Claimant that for acquisition
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Com.A.S.No.17 & 24 of 2019
of and to own the necessary software and
hardware infrastructure to develop,
integrate and operate the "AWATAR-2.0"
system it has to and it will invest an
amount of Rs.21.42 Crore, whereby it
fraudulently got fixed the revenue for itself
of Rs.5.50 per ticket for the first 3 years
and at Rs.4.95 per ticket for 4 th and 5th
years of the contract period, when in fact
no any such infrastructure materials were
acquired and owned by it by investing the
said amount, since 'AWATAR-2.0' system
was run and operated by it on hired
infrastructure of some 3rd party?
16) Does Respondent prove that the
Claimant was guilty of the breach of the
various material conditions of the
Agreement dated 20.04.2011 at Ex.P1 as
alleged in paragraph 41 and 44 to 50 of its
Statement of Objections and that Claimant
failed to develop and operate 'AWATAR-2.0'
system on BOOT model as envisaged under
the Agreement?
17) Does Respondent prove that it was
legally justified in termination the
Agreement Ex.P1 dated 20.04.2011 in
Claimant's favour by its termination
letter/notice dated 14.01.2016 at Ex.P.8
(Ex.R13)?
18) Whether Respondent proves that it is
entitled to recover from the Claimant the
total amount of Rs.18,66,83,449/- (Rupees
Eighteen Crore Sixty Six Lakh Eighty Three
Thousand Four Hundred and Forty Nine
Only) as claimed by it on the following
counts:
(i) Rs.10,86,02,548/- only, out of the sum of
Rs.13,73,45,441/- received by the Claimant
from Respondent as pleaded in para 51 of
the Statement of Objections;
(ii) Rs.2,53,32,600/- only, on account of
non-functioning of online system of
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Com.A.S.No.17 & 24 of 2019
'AWATAR-2.0' due to down time on 17-12-
2014, 18-12-2014, 23-12-2014 and 03-01-
2015 resulting in non-availability to the
general public of the facility of advance
booking of seats in its buses on these
dates, as claimed in para No.52 of the
Statement of Objections;
(iii) Rs.30,76,625/- only, on account of
various lapses and failures on the part of
Claimant highlighted in para 53 of the
Statement of Objections;
(iv) Rs.4,96,71,676/- only, being 75% of the
amount of Rs.6,62,28,900/- unjustly
received by the Claimant from Respondent
at the rate of Rs.21,25,000/- per month
over a period of 28 months by intentionally
causing unreasonable delay of 25 months
beyond the stipulated period of 3 months
within which the Claimant was bound to
make "AWATAR-2.0" project functional, for
the reasons pleaded in paragraphs 51 to 54
of the Statement of Objections?
19) What Order as to:
(a) Costs and
(b) Interest?
20) What Order?
7. On behalf of the claimant, their Senior Manager and I.T.
Manager were examined as Cw1 and Cw2 before the Tribunal
and they were subjected to cross examination by the
respondent. Ex.P1 to P64 were marked through Cw1 and
during Rw1's cross examination.
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Com.A.S.No.17 & 24 of 2019
8. On behalf of the respondent, Stores Superintendent,
Chief Systems Manager and Assistant Traffic Manager were
examined as Rw1 to Rw3; and Ex.R1 to R79 were marked
through them.
9. After hearing parties and considering the evidence on
record, the Arbitral Tribunal partly allowed the claim without
cost and the counter claim, with full cost. The claimant was
awarded Rs.3,99,48,770/-. The respondent was awarded
Rs.2,48,28,600/-; and this was ordered to be set off against
the amount awarded in favour of the claimant. Thus, the
respondent was directed to pay the balance amount of
RS.1,51,20,170/- with interest at 15% p.a., from the date of
award till the date of full payment and permitted to recover
the hardware and software infrastructure along with
networking components of AWATAR 2.0 version, 2005 online
PRS and its DRC projects. The claimant was directed to return
the same within one month failing which, to pay damages of
Rs.5 lakhs per month for unlawful detention etc., till the date
of delivery.
10. Aggrieved by the same the claimant has filed
Com.A.S.24/2019 on the ground that the Arbitral Tribunal, on
account of conflict with their counsel, was biased and cherry-
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Com.A.S.No.17 & 24 of 2019
picked each and every action to hold the same against them,
found fault with filing Writ Petitions challenging the orders
passed during the proceedings, commented unreasonably on
the conduct stating that they made a false claim in respect of
the matter covered by issues 1 and 3, as such the award
suffers from arbitrariness. The oral and documentary evidence
adduced by them as well as the contractual obligations
binding on the parties, is ignored and the documents were
interpreted intentionally in an obtuse manner. The findings
that AWATAR project was exclusively granted to M/s BEL is
contrary to law and documentary evidence. The finding that
AWATAR 2.0 was a new project is a result of erroneous reliance
placed on various communications and not considering the
agreement Ex.P1. The tribunal ignored the final report of third
party auditor which recorded that the formula suggested to
calculate penalty could not be used for calculation of penalty,
though their interim report was relied to examine whether the
project was implemented on BOOT/ OPEX model. While
answering issues 6 and 9b, the defendant's contention in the
A.A.No.25006/2016 that if there was any loss due to illegal
transfer of software and hardware they will only be entitled to
damages and not injunction is ignored. There is double
standard of appreciation of evidence while considering issue
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Com.A.S.No.17 & 24 of 2019
No.18(ii); and the correspondence at Ex.P59 is ignored as the
defendant did not admit the same. Grant of damages in favour
of the defendants is in clear violation of the provisions of
contract Act. The finding that AWATAR 2.0 agreement was void
ab initio and therefore the question of its termination does not
arise is against the terms of the agreement, The project was
executed on BOOT model and the same is not considered for
awarding damages for the remaining contractual period.
Section 73 & 74 of the Contract Act are disregarded while
computing damages. The invoices provided for payment
within 10th of next month but, the amount thereunder was
long due. In spite of the same, the Tribunal has awarded
interest from the date of award. Though there is a finding that
they are entitled for Rs.1,51,20,170/-, the entire cost of
arbitration is saddled on them out of sheer spite towards the
counsel. Section 28(3) of the Act is violated and the Arbitral
Tribunal has neither considered the substantive law nor the
provisions of the agreement while passing the award, and
therefore acted beyond jurisdiction and the impugned award is
patently illegal.
11. The respondent has filed statement of objections
contending that they had issued notice of termination dated
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Com.A.S.No.17 & 24 of 2019
14.01.2016. Even otherwise there was no need for notice as
the contract itself was void. There was no conflict between the
Arbitral Tribunal and the claimant's counsel and such a
statement is misleading. The Tribunal only desired that the
proceedings should be conducted on a day to day basis as per
the mandate of the rules governing arbitration proceedings.
The claimant's advocate threatened to retire if adjournment
was not granted, challenged the interim order despite being
aware that the same is not permissible and thereby delayed
the proceedings. Filing statement of admission and denials of
documents is a procedure followed in arbitration proceedings
and certain documents produced by them were denied by the
claimant's advocate unreasonable. A memo was also filed
attributing bias and stating that the Tribunal should not
proceed with the case without any basis and just because
adjournment was refused. Referring to these instances in the
award cannot be interpreted as acts of bias. The Tribunal has
considered entire evidence on record and the arguments
advanced by the parties and the award does not call for any
interference to the extent of rejecting the claimant's claim.
There was no document to show that AWATAR 2005 and 2007
were granted to the consortium as contended by the claimant.
The word up gradation mentioned in AWATAR 2.0 is to develop
20
Com.A.S.No.17 & 24 of 2019
by adopting methodology of earlier projects. The plaintiff
failed to implement AWATAR 2.0 in BOOT model. There was no
illegality in awarding AWATAR 2.1 to M/s AbhiBus and the
claim at 2,48,28,600/- is awarded by the Tribunal on the basis
of sufficient evidence. No documents are overlooked by the
Tribunal with regard to 2005 and 2007 projects. The finding
that the plaintiff is not entitled for interest is in accordance
with law as there was no amount due from them. The claimant
cannot claim any rights under a void agreement.
12. In Com.A.S.No.17/2019 the respondent has challenged
the award on the ground that directing them to pay
Rs.3,99,48,770/- towards transaction fee is opposed to public
policy and Section 65 of the Contract Act, that too when Ex.P1
is held to be void. Exorbitant fee of Rs.5.50 per ticket was
fixed on the basis of misrepresented cost analysis supplied by
the defendant at Ex.P61(a) and therefore the amount claimed
ought not to have been granted. Considering that the project
was not implemented on BOOT model, there were no assets
available for being transferred to the claimant, specially when
it was proved that AWATAR 2.0 was commissioned on OPRS
model and not BOOT model. The defendant implemented the
project on hired infrastructure and therefore ought to have
21
Com.A.S.No.17 & 24 of 2019
disclosed the actual amount incurred towards the same for
calculating the transaction fee. AWATAR 2.0 was required to go
live within three months from the date of signing system
requirement specification (SRS) on 11.08.2011. but there was
delay in commissioning the project. In the meeting held on
26.06.2012 as per Ex.R21 the payment was withheld on
account of delay. The claimant did not come forward to take
UAT within the agreed time and therefore, the observation of
the Tribunal that the claimant cannot be blamed for not
making the system go live within three months cannot be
sustained. When Ex.P1 is held to be void the question of
holding that the claimant was awarded AWATAR 2.0 contract
cannot be sustained. The person who entered into the
contract from its side had no authority and granting the claim
as per issue No.7 and rejecting the counter claim covered
under issues 18(i), (iii) & (iv) is not sustainable.
13. The claimant has filed the written statement contending
that the suit is liable to be dismissed; the tender and
subsequent DRC was awarded to the consortium and
numerous correspondence were placed on record in this
behalf. They were involved in AWATAR project since 2005.
AWATAR 2.0 was up gradation of existing project and it did not
22
Com.A.S.No.17 & 24 of 2019
require inviting tender U/s 5 of KTPP Act. To defraud them, the
respondent raised such a contention. Examination of the
grounds challenging the findings on issues 14, 15(a) and (b),
18(i) (iii) and (iv) involve reappreciation of evidence and the
same is not permissible in a petition U/s 34 of the Act.
14. The claimant and the respondent have common written
arguments.
15. Heard arguments of both sides and perused the records.
16. The claimant has relied on the following decisions in the
context of:
(i) the test of real likelihood of bias is whether a
reasonable person, in possession of relevant
information, would have thought that bias was
likely and whether the authority concerned was
likely to be disposed to decide the matter only in a
particular way. The reasonableness of the
apprehension in the mind of the party is relevant.
(a) Ranjit Thakur Vs Union of India &
Ors. reported in (1987) 4 SCC 611
(b) Union of India & Ors. Vs Sanjay Jethi
& Anr. reported in (2013) 16 SCC 116
(ii) Where the grounds U/s 34 of the Act are made
out, the court cannot modify the award to grant
interest or the compensation, but has to set aside
the same -
23
Com.A.S.No.17 & 24 of 2019
(a) McDermott International Inc. Vs Burn
Standard Company Ltd. & Ors. reported in
(2006) 11 SCC 181
(b) Angel Broking Ltd. Vs Sharada Kapoor
reported in 2017 SCC online Delhi 8211
(iii) Where both the parties are not accepting the
award it can be set aside and remanded for fresh
consideration.
(a) Tamil Nadu Water Supply and
Drainage Board Vs Sathyanarayana
Brothers Pvt. Ltd. reported in (2010) 1 SCC
171
17. The respondent, in support of its argument that the
claimant is bound to restore the advantage received under the
void contract in view of Section 65 of the Contract Act, relies
upon the judgment in:
(a) State of Rajasthan Vs Associated
Stone Industries (Kotah) Ltd. reported in
AIR 1985 Supreme Court 446; and
(b) Govind Ram Seksaria (a Firm) & Anr.
Vs Edward Radbone reported in 1947 IA
295 (AIR 1948 PC 56)
18. While dealing with a petition U/Sec.34 of the Act, the
court is required to advert to the grounds, examine whether
the same are available U/Ss. 32(2) and 34(2A) of the Act. If it
is available, then the court should consider the grounds
separately to see whether the same is established. [Union of
24
Com.A.S.No.17 & 24 of 2019
India Vs M/s Warsaw Engineers & Anr. (COMAP
No.25/2021 dated 17.04.2021) (DB)]
19. In the light of the rival contentions of the parties,
following are the points that arise for the consideration of the
court in these two petitions:
1. Whether the claimant establishes on the
basis of the record, that the Arbitral Tribunal
was biased against them?
2. Whether the Claimant establishes that the
impugned award is a result of ignoring the
terms of Ex.P1 and the evidence as claimed?
3. Whether the respondent establishes that
the Arbitral Tribunal has ignored Section 65
of the Contract Act while directing it to pay
Rs.3,99,48,770/- towards transaction fee,
that too when Ex.P1 is held to be void?
4. Whether the grounds urged by the
claimant in respect of the findings on issues
5, 6, 9(b), 15(c), 17, 18(ii) fall under the
grounds under Section 34 of the Act?
5. Whether the grounds urged by the
respondent in respect of issues 7, 14, 15(a)
& (b), 18(i), (iii) & (iv) fall under the grounds
U/s 34 of the Arbitration & Conciliation Act?
6. What Order?
20. My findings on the above points are
Point No.1 to 5: In the Negative
Point No.6 : As per the final order for following
25
Com.A.S.No.17 & 24 of 2019
REASONS
21. Point No.1: The learned counsel for the claimant,
referring to the observations made by the Arbitral Tribunal in
Paras 19.5, 21 and 28 argues that the expressions used would
indicate that there is reasonable scope for inferring bias. The
tribunal found fault with the claimant's counsel even for filing
writ petitions. Having refused permission to retire from the
case, the tribunal made a caustic observation about the
counsel's performance calling it dismal. The bias and anger
towards the counsel has permeated through the proceedings
and at every stage of appreciation of the evidence. Therefore
the award should be set aside U/s 34(2A) of the Act.
22. Per contra, the learned counsel for the respondent
argues that the claimant and their counsel's approach at the
stage of admission and denial of documents was not proper.
Having denied the respondent's documents at Ex.R1(a), (b),
R2, R3, R5, R48, R48(a), R48(b) and R50, the claimant relied
upon them to prove their case and copies of these documents
were even marked for them. The counsel's insistence for
adjournments after the schedule was fixed as per rules and
not addressing arguments on issues 1 and 2 is commented
upon by the tribunal only to deprecate such practice and it
26
Com.A.S.No.17 & 24 of 2019
cannot amount to bias.
23. The question whether the Arbitral Tribunal was biased
against the claimant needs to be examined in the light of the
principles laid down by the Hon'ble Apex court in the case of
Union of India & Ors. Vs Sanjay Jethi & Anr. , reported in
(2013) 16 SCC 116 while dealing with the test of real
likelihood of bias in a matter arising out of the proceedings of
Court of Inquiry of the Armed Forces. While cautioning that
the principle of bias cannot be attracted in vacuum, it is held
that -
"While dealing with plea of bias, the court is
required to adopt a rational approach
keeping in view basic concept of legitimacy
of interdiction in such matters, since
challenge of bias, when sustained, makes the
whole proceeding or order in question a
nullity, same being quoram non judice. The
court must adopt deliberative and logical
thinking based on acceptable touchstone and
parameters and should not be guided by
emotions or by one's individual perception or
misguided intuition."
24. A plain reading of the paras in the impugned award
referred to by the claimant as instances of bias would indicate
that the claimant's counsel had used the card of retiring from
27
Com.A.S.No.17 & 24 of 2019
the case whenever an adjournment was refused and only to
derail the schedule of hearing already fixed. Further, while
referring to all that transpired during the arbitral proceedings
the Arbitral Tribunal has listed several events that delayed the
same including the claimant's challenge to the order rejecting
the counsel's memo for rescheduling the hearing.
25. As per procedure, the parties are required to file
statement of admission and denial of documents before the
Arbitral Tribunal, so that the tribunal can avoid adjudicating on
the admitted aspects and concentrate only on the real
dispute. If the parties conduct is reasonable and fair at this
stage, the same narrows down the dispute and aids in
reducing the litigation span. The tribunal could then frame
issues only with regard to the facts which are actually in
dispute.
26. The claimant admittedly denied all the documents of the
respondent including the purchase orders issued to M/s BEL,
report of M/s KPMG a third party auditor and minutes of
meetings dated 22.06.2012 despite attending the said
meeting. As a result, these documents came to be marked in
evidence for the respondents as Ex.R2, R12(a) and R21. The
claimant too produced them as Ex.P3, P38(a) and P43. It is in
28
Com.A.S.No.17 & 24 of 2019
this context that the tribunal has observed that even a lay
man would not do so.
27. When the burden of proving some issues is on a party
but he does not address them in the arguments, it would only
mean that the party has given up on them. It is not the
claimant's case that issues 1, 2, 10 to 12 were addressed in
the written arguments filed on their behalf, though the burden
was on them to prove the same. The language of the tribunal
in expressing the view with respect to such callous approach,
though a bit acidic, in my opinion, cannot lead to an inference
of bias by any stretch of imagination.
28. There can be no second word about the proposition that,
proper approach of the judge is not look at his own mind and
ask himself, however honestly, "Am I biased?"; but, to look at
the mind of the party before him or that the reasons cannot
control subconscious influence of feelings and when there is
ground for believing that such feelings unconsciously operate
in the ultimate judgment, or unfairly lead others to believe
that such feelings are operating, judges recuse and do not sit
in judgment as enunciated in Ranjit Thakur Vs Union of
India & Ors. reported in (1987) 4 SCC 611, relied upon by
the claimant and this was also a matter arising out of court
29
Com.A.S.No.17 & 24 of 2019
martial proceedings.
29. It is not the claimant's case that the Arbitral Tribunal did
not meet the requirements of principles of natural justice
during the proceedings or that it was having an interest in the
proceedings and its outcome. The claimant never even
alleged during the arbitral proceedings that the tribunal was
biased against them or made a request that it should recuse
on such ground. In the circumstances, I am of the considered
opinion that neither is there any substance in the argument
that the tribunal was biased against the claimant and the
award is vitiated for such reason, nor are the principles laid
down in the afore cited decisions are applicable to them.
Accordingly, the point for consideration is answered in the
Negative.
30. Points 2 and 4: Since inter-related, these points are
taken up together for discussion for the sake of convenience.
31. It is well established that an application for setting aside
the arbitral award can be entertained only if the grounds U/s
34 of the Act are made out; and every contravention of law
cannot be branded as patent illegality. The courts are
prohibited from reappreciating the evidence to conclude that
the award suffers from patent illegality. The position of law is
30
Com.A.S.No.17 & 24 of 2019
made clear by the Hon'ble Apex Court in the case of
(i) Delhi Airport Metro Express Pvt.
Ltd. Vs Delhi Metro Rail Corporation
Ltd. (Civil Appeal No.5627/2021
dt.09.09.2021)(SC);
(ii) Ssangyong Engineering and
construction Company Ltd. Vs
National Highways Authority of India
reported in (2019)15 SCC 131; and
(iii) Associate Builders Vs Delhi
Development Authority reported in
(2015) 3 SCC 49.
32. The claimant is aggrieved by the findings of the Arbitral
Tribunal on the terms of reference/issues 5, 6, 9(b), 15(c), 17
and 18(ii).
33. Issues 5, 15(c) and 17 relate to validity of the agreement
at Ex.P1/R9 dated 20.04.2011 and its termination. The
claimant was required to prove that it was not terminable. On
the other hand the respondent had to establish that it was a
void agreement and it is legally justified in terminating the
same.
34. The main argument of the claimant is that the AWATAR
2.0 was only an up gradation of AWATAR PRS and therefore the
provisions of the KTPP Act was not attracted and the
respondent could not have terminated the agreement when
AWATAR 2.0 was working successfully. Whereas the
31
Com.A.S.No.17 & 24 of 2019
respondent's contention is that it had issued the notice at
Ex.R31 dated 14.01.2016 terminating the agreement. AWATAR
2.0 being a new project the agreement was hit by the
provisions of The KTPP Act and void ab initio; and therefore its
termination was legally justified.
35. Clause 10 of Ex.P1 provides for termination in the event
of material breach / unsatisfactory service / repeated penalties
for data loss leading to loss of business, failure to switch to DR
beyond the stipulated period, bugs relating to business
logistics remaining not fixed, failure to maintain security
issues. It contemplates issue of six months notice to the
claimant. If they failed to rectify the breach within six months,
the respondent could terminate the agreement at depreciated
value. The consortium could also withdraw from the
agreement, they could do so only after completion of three
years and by giving six month notice.
36. The provisions of the KTPP Act, 1999 govern the
procedure for public procurement by procurement entities viz.,
government department, state government undertakings or
corporation established by or under any law and owned and
controlled by the government. The respondent is admittedly a
public sector undertaking of the government, and
32
Com.A.S.No.17 & 24 of 2019
procurement of goods and services by it are to be done only
by calling tenders as mandated U/s 5 of the KTPP Act.
37. Section 4(a) to (h) of the KTPP Act lists exceptions to the
applicability of Section 5. In order to establish that AWATAR
2.0 was only an additional service for standardizing and to
make it compatible with the existing service or technology to
claim the benefit of the exception U/s 4(c) of the KTPP Act, the
claimant had to prove issues 1 and 2. But as seen from the
arbitral award, the claimant did not even address arguments
on these two issues.
38. Clause 3 of Ex.P1 makes it clear that the claimant had to
upgrade and maintain the existing hardware, software and
networking infrastructure at AWATAR data Center and DRC,
application development from the current 1.0 version to new
2.0 version; and up gradation of existing bandwidth at both
DC and DR on BOOT/OPEX model. Thus, up gradation was only
in respect of existing bandwidth, hard/software, networking
infrastructure at data center. AWATAR 2.0 was altogether a
new version.
39. From para 64.1 of the award it appears that the Arbitral
Tribunal came to the conclusion that Ex.P1 is wholly a new
project and does not come within the purview of Sec.4(c) of
33
Com.A.S.No.17 & 24 of 2019
the KTPP Act, based on appreciation of the evidence on issues
1, 2, 10 to 13. This court cannot reappreciate the evidence or
substitute its views for that of the tribunal if two views are
possible based on the evidence and interpretation of the
terms of Ex.P1. Therefore, I am of the opinion that there is no
merit in the challenge to the findings of the Arbitral Tribunal in
this behalf.
40. Issues 6 and 9(b) relate to the respondent allegedly
handing over the source code of AWATAR 2.0 and the data
generated in that behalf to M/s AbhiBus illegally, resulting in
loss. The claimant argues that the respondent illegally parted
with the source code as also the data in favour of M/s AbhiBus
and thereby caused loss to them. But, the tribunal failed to
appreciate the same in the light of abrupt termination of Ex.P1
and that they were entitled for transaction fee for the
remaining contractual period.
41. Clause 4 of Ex.P1 requires the claimant to handover two
sets of source code of AWATAR application software along with
soft copies of complete documentation and flow diagrams to
the Chief Systems Manger for the use of the respondent, not
later than 15 days from the date of installation and integration
with hardware. Clause 3 (d) (VII) clarifies that the respondent
34
Com.A.S.No.17 & 24 of 2019
was entitled to proprietary rights of the source code of
AWATAR application.
42. It is not the claimant's case that they had let in evidence
to establish that M/s AbhiBus made use of the data generated
using AWATAR 2.0 to run the software on its website or the
loss suffered on account of it. The Arbitral Tribunal's finding
on issues 6 and 9(b) is based on the terms of agreement and
failure of the claimant to lead evidence with regard to loss
occasioned by alleged transfer of the source code. This
finding, in my considered opinion cannot be interfered with in
an application U/s 34 of the Act.
43. The claimant is also aggrieved by the findings on issue
No.18(ii), which relates to the respondent's claim for
Rs.2,53,32,600/- due to non functioning of AWATAR 2.0 on
17.12.2014, 18.12.2014, 23.12.2014 and 03.01.2015 due to
downtime error as a result, online advance booking seats
could not be done by the traveling public. In the written
arguments it is urged that Ex.P59 is disbelieved because the
respondent did not admit the same; and this is the bias in
appreciation of evidence.
44. As already discussed, the claimant has failed to establish
bias on the part of the Arbitral Tribunal. The claim that it was a
35
Com.A.S.No.17 & 24 of 2019
mutually agreed and planned downtime pursuant and Ex.P59
and P36 relied upon to prove the same is disbelieved by the
Tribunal considering that Ex.59 was not proved and Ex.P36
was not confronted to Rw1; that even Cw1 had not spoken
about the relevancy of Ex.P36 in relation to downtime and
Ex.P31 confirmed about low booking of seats during December
2014. Such finding of fact based on appreciation of evidence
cannot be interfered with by reappreciating the evidence.
45. The claimant has challenged the award also on the
ground that the claim is partly allowed but without cost and
the interest awarded on the amount payable towards the
claim under issue No.7 is contrary to Section 28(3) of the Act.
In so far as awarding of interest is concerned the Arbitral
Tribunal has the substantial discretion U/s 31(7) of the Act to
award the same.
46. Section 31A(1) of the Act provides that in relation to any
arbitration proceeding, the Arbitral Tribunal has the discretion
to determine whether costs are payable by one party to
another; the amount of such costs; and when such costs are to
be paid. Section 31A(2) provides that if the tribunal decides to
make an order as to the payment of costs, the general rule is
that the unsuccessful party will be ordered to pay the
36
Com.A.S.No.17 & 24 of 2019
successful party's costs. Alternatively, the tribunal may make
a different order for reasons which must be recorded in
writing.
47. Factors guiding the exercise of discretionary power of the
Arbitral Tribunal in awarding the cost as provided under
Section Section 31(A)(3) are - the conduct of all parties;
whether a party has partly succeeded in the case; whether a
party made a frivolous counterclaim which delayed the
disposal of the arbitral proceedings; and whether any
reasonable offer to settle the dispute has been made by one
party and refused by another.
48. The discussion on issue No.20 amply demonstrates that
the Tribunal has kept the same in mind and passed the award
considering the manner and the circumstances in which the
case of each party is conducted. Therefore, the points for
consideration are answered in the negative holding that the
claimant has failed to make out grounds U/s 34 of the Act; and
the grounds urged do not fall under any of the grounds U/s
34(2) of 34(2A) of the Act.
49. Points 3 and 5: These points are also inter related and
as such taken up together for discussion for the sake of
convenience.
37
Com.A.S.No.17 & 24 of 2019
50. The respondent is aggrieved by the findings of the
Arbitral Tribunal on terms of reference/issue No.7, 14, 15(a),
15(b), 18(i), 18(iii) and 18(iv).
51. The respondent's contention is that the agreement at
Ex.R9/Ex.P1 was void; it was executed by the Chief Systems
Manager, I.T. Department, without authority and there was no
approval for the project from the Central Purchase Committee.
Having concluded that the agreement is void for violation of
the mandatory provisions of the KTPP Act, the Tribunal ought
not to have awarded Rs.3,99,48,770/- in favour of the claimant
towards transaction.
52. The learned counsel for the respondent vehemently
argued that the claimant has received benefit of
Rs.10,86,02,548/- towards seat booking charges from 01-03-
2013 to 30-07-2016 at Rs.5.50/- per seat and Rs.4,96,71,676/-
for causing the delay of 25 months in making AWATAR 2.0
project functional, @ Rs.21,25,000/- per month, that too under
a void agreement and therefore is bound to restore the same.
The Arbitral Tribunal has declined to grant these reliefs by
wrongly interpreting Section 65 of the Indian Contract Act and
therefore, the award should be set aside only to that extent as
being contrary to the substantive provision of law and patently
38
Com.A.S.No.17 & 24 of 2019
illegality; and it is also against public policy.
53. Per contra, the learned counsel for the claimant argues
that what constitutes public policy is a matter that purely
depends on the nature of transaction and nature of the
statute. The respondent is benefited by AWATAR 2.0 and
therefore he was directed to pay Rs.3,99,48,770/- towards the
transaction fee for the ticket booking @ Rs.5.50/- per ticket as
agreed. The claimant cannot be made to suffer loss for the
lapses on the part of respondent and its officers for not
placing the mater for obtaining approval from the central
purchase committee or for one of its officers executing the
agreement even though there was no authority. Obtaining
permission from the central purchase committee or
authorization to execute the agreement was not their concern.
54. It was argued for the claimant that this court cannot
modify the award under Section 34 of the Act to grant the
reliefs not granted by the Arbitral Tribunal placing reliance on
the decision in McDermott International Inc. Vs Burn
Standard Co. Ltd. and Angel Broking Ltd. Vs Sharda
Kapur cited above. The learned counsel also urges that since
both parties are not accepting the award it may set aside
relying on the judgment in Tamilnadu Water Supply &
39
Com.A.S.No.17 & 24 of 2019
Drainage Board Vs Sathyanarayana Brothers Pvt. Ltd.
reported in (2010) 1 SCC 171.
55. In so far as the counter claim covered under issue
No.18(iii) is concerned, the law is well settled. The
quantification of damages or compensation depends on the
facts and circumstances of each case. Sections 55 and 73 of
the Contract Act do not provide as to the mode and the
manner in which the computation of damages is to be made.
The court or the Tribunal has to consider only strict legal
obligations and not expectations, however reasonable and if
the actual damages are proved.
56. Ex.R46 and R47 are the documents relied upon by the
respondent to prove its counter claim for RS.30,76,625/- for
lapses and failures on the claimant's part. It is not the case of
the respondent that the Tribunal has ignored other evidence
brought in to prove the issue. As seen from the award, the
tribunal has held this issue against the respondent after
considering that Ex.R46 was an internal correspondence of the
respondent and in Ex.R45 series, letters were addressed to
claimant the loss due to downtime error was not quantified in
terms of money terms.
40
Com.A.S.No.17 & 24 of 2019
57. There is no dispute that the respondent paid
Rs.13,73,45,441/- to the claimant towards reservation of
2,87,42,893 done by using AWATAR 2.0 online ticket booking
system between 01.03.2013 to 30.07.2016 at the agreed rate.
In relation to the counter claim covered under issue No.18(i),
the respondent has put forth the contention that, for AWATAR
2.1 project the claimant submitted pre qualification bid as per
Ex.R77 quoting 0.71 paise per seat reserved and it has
suffered monetary loss because of difference of rate in Ex.P1
and R77. Finding that AWATAR 2.0 and AWATAR 2.1 are wholly
incomparable due to material differences in their structural
features, the Arbitral Tribunal has rejected this counter claim.
58. According to the respondent the claimant had to make
AWATAR 2.0 by 11.11.2011 but went on receiving annual
maintenance contract amount of RS.21,25,000/- for 25 months
in respect of AWATAR PRS of 2005, by deliberately delaying
the project and therefore it is entitled for the amount covered
under issue No.18(iv). It is not in dispute that Ex.P1/R9 dated
20-04-2011 contemplated 3 months time to make AWATAR 2.0
operational from the date of signing the SRS and it was signed
on 11-08-2011.
41
Com.A.S.No.17 & 24 of 2019
59. From the impugned award it is seen that the Arbitral
Tribunal has rejected the contention of the respondent that
though only 25% of the annual maintenance contract amount
was required to maintain AWATAR PRS of 2005 and
Rs.21,25,000/- was fixed arbitrarily, based on the record. It
has concluded that the respondent who was fully aware of the
technical and functional features, cost and expenditure of the
project consciously agreed on the AMC charges of
Rs.21,25,000/-per month; that there was no delay in AWATAR
2.0 going live as the same depended on User Acceptance Test
(UAT for short), which was done in March 2013. It may be
relevant to note here that the findings of the tribunal on issue
No.3 relating to UAT is not under challenge.
60. Further, questioning the findings of the Arbitral Tribunal
on issue No.7, 15(a) and (b) it is argued by the learned
counsel for the respondent that when AWATAR 2.0 was not
established on BOOT/OPEX model and issue No.15(d) was
answered in the affirmative holding that the claimant
misrepresented that it would invest Rs.21.42 crores in the
purchase and acquisition of infrastructure to the respondent to
fix an exorbitant transaction fee per ticket and the agreement
Ex.P1 being void, the Arbitral Tribunal ought not to have
42
Com.A.S.No.17 & 24 of 2019
awarded the claim covered under issue No.7 amounting to
Rs.3,99,48,770/-. The same is contrary to Sec.65 of the
Contract Act.
61. According to the learned counsel for the respondent
Rs.5.50/- per ticket fixed as transaction fee under the
agreement has two components, viz., service component and
price of the goods transferred. The project was developed and
implemented on hired infrastructure and therefore the
claimant was entitled only for the service component. At the
same time he fairly concedes that for breaking up the
component, evidence needs to appreciated and the same is
not permissible in an application U/s 34 of the Act.
62. The award discloses that relying on undisputed
documentary evidence adduced by the claimant as per
Ex.P2(j) to (s) for 10 months from November 2015 to July 2016
with charts indicating the number of seats booked and that
the respondent had not paid the same, answered the same in
favour of the claimant subject to the counter claim.
63. Ex.P1 is held be void because the project was awarded
to the claimant without following the procedure mandated
under the KTPP Act and not for other reasons. If the
respondent was not diligent in obtaining approval from the
43
Com.A.S.No.17 & 24 of 2019
Central purchase committee and if an officer executed the
agreement representing it, though not having authority, the
claimant cannot be blamed for the same. It is not the
respondent's case that they took steps to rectify the mistake
soon after Ex.P1 came to be entered into.
64. Further, having enjoyed the benefit of AWATAR 2.0
project from March 2013 till terminating the same, the
respondent is rightly directed pay the transaction fee at the
agreed rate. This cannot be termed as unjust enrichment or
being against public policy as sought to be canvassed. On the
other hand this is in principle Sec.65 of the Contract Act
contemplates.
65. In fact the following judgments relied upon by the
respondent enunciate the principle underlying Section 65 of
the contract Act:
(a) State of Rajasthan Vs Stone Industries
(Kotah) Ltd., wherein it is held that "It is not
as if Section 65 of the contract Act works
in one direction only. If one party to the
contract is asked to disgorge the
advantage received by him under a void
contract, so too the other party to the
void contract may ask him to restore the
44
Com.A.S.No.17 & 24 of 2019
advantage received by him. The
restoration of advantage and the
payment of compensation has necessarily
to be mutual."
(b) Govindram Seksaria (A Firm) Vs
Edward Radbone (1947 IA 295) wherein it
is held that "The result of Section 65 of
the Indian contract was tha, as from
September 3, 1939, each of the parties
became bound to restore to the other any
advantage which the restoring party had
received under the contract of sale."
66. The judgment in the case of Tamilnadu Water Supply
and Drainage Board, relied upon by the claimant's learned
counsel is of no avail because, it was a case were the common
ground was that the learned arbitrator legally misconducted
himself thereby attracting Section 30(a) of the Act and the
same was apparent on the face of the record. Even at the cost
of repetition it is to be noted that, unless the grounds under
Section 34 of the Act are made out, the award of the Arbitral
Tribunal cannot be set aside merely because both parties have
not accepted it.
45
Com.A.S.No.17 & 24 of 2019
67. For the forgoing reasons, I am of the considered opinion
that the grounds urged by the parties fall within the realm of
appreciation of evidence and fact. The proviso to Section
34(2A) of the Act prohibits such an exercise by the court in an
application U/s 34 of the Act. The impugned award is neither
patently illegal nor contrary to the terms of the contract or the
substantive law or the evidence on record. The same cannot
be interfered with either U/s Sec.34(2A) or 34(2) of the Act.
Therefore, the points for consideration are answered in the
negative.
68. Point No.6: In the result, I pass the following
ORDER
Com.A.S.No24/2019 filed by the claimant and Com.A.S.No.17/2019 filed by the respondent U/Sec.34 of the Arbitration and Conciliation Act challenging the award dated 20.11.2018 passed by the Sole Arbitrator in A.C.No.128/2017, are hereby dismissed.
Keep a copy of judgment in Com.A.S.No.24/2019.
46
Com.A.S.No.17 & 24 of 2019 Issue a copy of the judgment to the parties through e-mail as provided U/o XX Rule 1 of CPC, if mail ID is furnished. (Dictated to the stenographer, transcribed and typed by her, corrected and then pronounced by me in the open court on this the 27th day of November 2021) (H.R.Radha) LXXXIV Addl. City Civil and Sessions Judge, (CCH-85 Commercial Court) Bengaluru