Full Text
HIGH COURT OF DELHI
Date of decision 04.01.2024.
NTPC LTD ..... Petitioner
Through: Mr.Adarsh Tripathi, Mr.Vikram Singh Baid and Mr.Ajitesh Garg, advts.
Through:
JUDGMENT
1. The present petition has been filed under Section 34 of the Arbitration and Conciliation (hereinafter “Arbitration Act”) on behalf of the petitioner seeking setting aside of the Arbitral Award dated 30.08.2023 (hereinafter “the Award”) passed by Ld. Sole Arbitrator.
2. The impugned award came to be passed in the context of a dispute having arisen between the parties in respect of the Purchase order dated 23.08.2016 bearing No. 4000171798-062-0125 for a total price of INR 6,41,70,700/- (Rupees Six Crores Forty One Lakhs Seventy Thousand and Severn Hundred Only), wherein the petitioner herein issued a notice inviting tender (NIT) inviting bids for carrying out the works of “Filling of Low - lying areas using pond ash above 10 kms up to 20 Kmslead from ash dyke”and subsequently after the invitation of bids, the Respondent herein was granted the contract for carrying out the works as mentioned above vide Purchase order dated 23.08.2016 followed by a formal contract being executed between the parties on 26.10.2016. The period of completion for the project as stipulated in the contract was 12 calendar months and the date of completion was 22.08.2017. The cause of action between the parties arose when the respondent failed to complete the work within the stipulated time due to the poor mobilisation of workforce and equipment and the respondent was further irregular in complying with the statutory requirements, thereafter, the petitioner had to extend the contract to enable the petitioner to complete the work. The said project was finally completed by the Respondent on 10.10.2018 after a delay of around 13 months.
3. Pursuant to the completion of the work, the petitioner got to know that the respondent had submitted a fake and fabricated Contractor’s All Risk Policy which the respondent was to submit as per the clause 3 of the SCC (Special conditions of Contract) and upon investigation by the petitioner, it came to light that the CAR Policy was not issued by the Insurance Company and therefore, the petitioner issued a show cause notice against the respondents and later the petitioner vide its Banning Order dated 17.07.2021 banned all business dealings with the for a period of 3 years. Aggrieved by the banning order, the Respondent invoked Clause 56 of the GCC vide letter dated 01.09.2021 and the arbitration proceedings began and the arbitral award was passed by the Learned arbitral tribunal on 30.08.2023.
4. Learned counsel submits that the arbitral award dated 30.08.2023 has been challenged primarily on the following grounds:
5. Learned counsel for the petitioner has submitted that the learned arbitral tribunal has fallen into a grave error by partially allowing only one counterclaim of the petitioner herein and further by holding that there was no fraudulent act done by the respondent herein with respect to the CAR Policy, therefore the banning order dated 17.07.2021 passed by the petitioner should not have been passed.
6. Learned counsel for the petitioner submits that the finding of the learned arbitral tribunal is totally erroneous and is liable to be set aside. Learned counsel for the petitioner further submits that as per clause 37 of the GCC, the respondent was obligated not to subcontract any portion of the contract without the prior written approval of the petitioner. However, the respondent blatantly subcontracted the works to third parties without ever seeking approval from the petitioner.
7. Learned counsel has submitted that SOC is a gross abuse of law as the primary dispute referred by the claimant stems from the action of the claimant which is fraudulent in nature and as such does not fall within the purview of the present arbitration and is against public policy. Learned counsel for the petitioner further submitted that banning of business dealing is governed by the internal Banning policy and was done after following due procedure.
8. Learned counsel for the petitioner submits that the present case clearly indicates that there is a submission of forged and fabricated documents on behalf of the respondent through documents on records, emails on behalf of the Insurance Company and the letter of the Claimant for submission of forged CAR Policy and therefore it is clearly established that the respondent has indulged in fraudulent practices and also warrants the Banning of business dealing under the relevant provisions of the Banning policy.
9. Learned counsel for the petitioner submits that as per clause 3 of the SCC and clause 34 of the GCC particularly and specifically require the claimant to submit CAR policy for each separate work. Learned counsel for the petitioner submits that the respondent had submitted a CAR policy vide cover letter dated 03.02.2017. However, upon investigation, it was found that the respondent had submitted a fabricated and forged CAR policy dated 23.08.2016 having validity from 23.08.2016 to 22.08.2018 and furthermore, the parties consented to the provisions of the banning policy by signing the contract documents. Hence, the perusal of the award makes it clear that there is a manifest error.
10. Learned Counsel for the petitioner has also submitted that the respondents were served in advance through email. The email has not bounced back. Considering the aforementioned submissions, the respondents are deemed to be served.
11. The mandate of the legislative procedure while deciding the petition under Section 34 of the Arbitration and Conciliation Act is to provide an expeditious and binding dispute resolution process, with minimal court intervention. The proceedings under Section 34 are summary in nature. The scheme and provisions of the Act disclose two significant aspects, i.e. minimal interference by the courts and expeditious disposal of disputes. The scope of enquiry under Section 34 is restricted to a consideration of whether any of the grounds mentioned in Section 34 (2), 13 (5) or 16 (6) are made for setting aside the award. The grounds mentioned under Section 34 (2) of the Act are as follows:
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.
Explanation 2. —For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] [(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.]
12. The court has to see the procedural irregularities, either in the arbitral proceedings or in the award itself. The scheme of the Act makes it clear that the Arbitral Tribunal is the sole judge of the quality as the quantity of the evidence. Also, the arbitrator is always considered to be the final judge of the facts and the same cannot be interfered with on the ground that the terms of the contract were not correctly interpreted by it. Reference can be placed upon Swan Gold Mining Ltd. vs. Hindustan Copper Ltd. (2015) 5 SCC 739.
13. The court at various instances has held that there should be a minimum intervention while deciding an application under Section 34 of the Arbitration and Conciliation Act, 1996. This view has been taken by the court in UHL Power Company Ltd. vs. State of Himachal Pradesh 2022 SCC OnLine SC 19 wherein it was inter alia held as under:
(ii) the arbitral tribunal takes into account material which is irrelevant or extraneous to the decision; or (iii) it ignores crucial evidence.
16. I do not find any perversity or procedural irregularity in the award of the learned arbitral tribunal. The court is conscious of the fact that the court cannot go into the nitty-gritties and cannot sit as a court of appeal.
17. In view of the facts and circumstances of the petition, this court is of the view that there is no illegality or violation in the collusion arrived at by the arbitral tribunal. I consider that the applicant has failed to make out any case to interfere with the order of the learned arbitrator. Thus, the present petition along with pending application is dismissed accordingly.
DINESH KUMAR SHARMA (JUDGE) JANUARY 4, 2024/rb..