M/S. A.G. ENVIRO INFRA PROJECTS PVT. LTD. v. M/S. J.S. ENVIRO SERVICES PVT. LTD.

12. The petitioner has also relied upon the judgment of the Supreme Court in the case of PSA SICAL Terminals (P) Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin, 2021 SCC OnLine SC 508, wherein it was observed that:

13. The learned senior counsel on behalf of the petitioner submitted that the respondent did not bring on record any evidence to prove that they had in fact collected primary garbage or had the necessary infrastructure to execute the work of primary garbage collection. The learned Arbitral Tribunal on the sole ground that the respondent had issued certain work orders for primary garbage collection and corresponding sales invoices were raised proceeded to hold that the respondent was entitled to payment for primary garbage collection, without once looking into the scope of the Agreement. Furthermore, they have submitted that the payment of invoices for April 2016 to January 2017 or deduction of TDS for invoices till March 2017 cannot be held against the petitioner.

14. Hence, the learned senior counsel submitted that the Impugned Award is liable to be set aside under section 34 of the Act. (Submissions on behalf of the respondent)

15. Per contra, it is submitted by the learned counsel on behalf of the respondent that the respondent has entered into an Agreement dated 1st May, 2015 with the petitioner for transportation and disposal of Municipal Solid Waste in Karol Bagh and Sadar Paharganj zones of the National Capital Region of Delhi. The said Agreement has also been signed by Sh. Tito Varghese, one of the Directors and shareholder of the petitioner company (now only shareholder of the company as per crossexamination of Sh. Gaurav Kapur-RW[1]). The petitioner had discussed the work awarded to the respondent vide emails exchanged between the top management of the petitioner company consisting of Mr. Tito Varghese (Director and shareholder), Mr. Jose Jacob (MD and shareholder), Mr. Tarjinder Singh (COO), Mr. Kalpesh Shah (DGM Finance and Commercial) and Mr. N.G. Subramaniyam (Financial Advisor from investor side).

16. The petitioner, thereafter, issued work orders to the respondent company for the period May, 2015 to April, 2017 duly approved by Sh. Tarjinder Singh, COO of the petitioner company. Moreover, based on the work orders issued by the petitioner company, the respondent company had issued sales invoices to the petitioner company, after getting work done, which had been accepted and not disputed by the petitioner. The respondent submitted that the petitioner was making the payment after verifying the same and bills had been fully cleared till the month of January, 2017.

17. The respondent had also raised the bills for the month of February 2017, March 2017 and April 2017 for Rs.3,58,32,470/- and out of the said amount only Rs.89,34,716/- had been paid by the petitioner on 3rd April, 2017 and the balance amount of Rs.2,49,79,751/- had not been paid by the petitioner, however, they had deducted and deposited TDS also on the total amount of Rs.3,58,32,470/-. The said amount is also reflected in the list of creditors of the petitioner company. They had submitted that as far as the issue relating to validity and enforceability of the agreement in question is concerned which has been decided by the learned Arbitral Tribunal in favour of the respondent, the petitioner had not argued the same during the course of arguments before this Court.

18. They have submitted that on the one hand despite alleged fraud played by Sh. Jiban Kumar, the petitioner wanted to take help from Sh. Jiban till the audit of the accounts. It is pertinent to note that, if a person has played fraud, then the company should not ask for the person‟s to help to audit the account. This clearly shows that no fraud has been played by Sh. Jiban Kumar. It is further submitted that the petitioner got to know about the alleged fraud in January, 2017 of the respondent, still the payments have been remitted of approx. Rs.4.[5] crore and for the balance amount TDS has been deducted and deposited (TDS returns have also been filed) and in the list of creditors, the payment of Rs.2.49 crore is mentioned. It is submitted that the argument of the petitioner that Sh. Jiban Kumar asked the petitioner not to take any criminal action against him is frivolous and wrong inasmuch as the same is not supported by any evidence.

19. The learned counsel on behalf of the respondent submitted that it is well-settled law that the scope of section 34 is narrow and very limited. They placed a reliance on the judgment passed by this Court in the case of Hughes Communications India Pvt. Ltd. v. Imaging Solutions Pvt. Ltd. in O.M.P. (Comm) No. 28 of 2019, dated 26th April, 2023 which has placed reliance upon the judgment passed by the Hon‟ble Supreme Court of India in the case of UHL Power Co. Ltd. Vs State of Himachal Pradesh, (2022) 4 SCC 116 and Delhi Airport Metro Express Pvt. Ltd. v. DMRC, (2022) 1 SCC 131.

20. Hence, the learned counsel submitted that the Impugned Award is not liable to be set aside under section 34 of the Act.

ANALYSIS AND FINDINGS

21. The matter was heard at length with arguments being advanced by learned counsels on both sides. This Court has also perused the entire material on record. This Court has duly considered the factual scenario of the matter, judicial pronouncements relied by the parties, pleadings presented and arguments advanced by the learned counsel of the parties. After carefully analysing the materials relied by the parties, this court has framed the following two broad issues for our consideration:

1. Whether the impugned award in question dated 30th October, 2019 suffers from patent illegality as well as is in conflict with the public policy of India and thus suffers from infirmities enshrined in S. 34 of the Arbitration and Conciliation Act?

2. Whether the Learned arbitrator appreciated and evaluated the material evidence placed on record and gave the reasons for awarding compensation? The bonafide spirit and intent of the Arbitration Act

22. Before embarking on the technical paraphernalia of the case, it is pertinent to understand the context and legislative intent behind the passing of the Act. The Arbitration and Conciliation Act, 1996 has been enacted to consolidate and amend the law relating to domestic arbitration as well as international commercial arbitration in India after taking into account the United Nations Commission On International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration,

1985.

23. The Hon‟ble Supreme Court in Union of India v. Varindera Constructions Ltd., (2018) 7 SCC 794, while discussing the object of arbitration held as under:

24. Arbitration is a private dispute resolution process or a procedure and part of an alternative dispute resolution mechanism, where a dispute in respect of any agreement between the parties is proposed for a solution to one or more arbitrators, who after going through the facts and evidence, makes binding decisions in relation to such dispute. The alternative dispute mechanism is not only advantageous for the people involved in disputes but also aides in the effective disposal and release of the burden on the courts of the country. Therefore, expeditious and effective disposal of matters is most certainly considered the primary objective of the enactment of the Arbitration Act. To fulfill the objectives of introducing the Act, it has been deemed necessary by the legislature as well as the Hon‟ble Supreme Court to limit interference by the courts in the process of arbitration, whether before, during or after the conclusion of the proceedings.

ISSUE 1: WHETHER THE IMPUGNED AWARD IN QUESTION DATED 30TH OCTOBER, 2019 SUFFERS FROM PATENT ILLEGALITY AS WELL AS IS IN CONFLICT WITH THE PUBLIC POLICY OF INDIA AND THUS SUFFERS FROM INFIRMITIES ENSHRINED IN S. 34 OF THE ARBITRATION AND CONCILIATION ACT?

25. Considering the factual matrix of the case, this Court has framed certain issues for consideration. In this issue, this Court shall test the Impugned Award dated 30th October, 2019 read with the order dated 17th January, 2020 on tenets of the tests laid down by the constitutional courts with respect to the patent illegality and public policy. This court shall look into the spirit of section 34 of the Act and the scope of powers of interference by courts in the mandate of the Arbitral Tribunal. This Court shall also look into the fetters imposed on the powers of the courts under Section 34 of the Arbitration Act in light of the legislative mandate of the Act. Legislative Mandate, Scope and Spirit of S. 34 of the Act

26. The statutory scheme under Section 34 of the Arbitration Act, 1996 is in line with the UNCITRAL Model Law and the legislative policy of minimal judicial interference in arbitral awards. It is important to remember that Section 34 is modeled on the UNCITRAL Model Law on International Commercial Arbitration, 1985, under which no power to modify an award is given to a Court hearing a challenge to an Award. The relevant portion of the Model Law reads as follows: “Article 34. Application for setting aside as exclusive recourse against the arbitral award (1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (2) of this article. xxx xxx xxx (4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal‟s opinion will eliminate the grounds for setting aside.”

27. Redfern and Hunter on International Arbitration (6th edition), states that the Model Law does not permit modification of an award by the reviewing court (at page 570) as follows: “10.06 The purpose of challenging an award before a national court at the seat of arbitration is to have that court declare all, or part, of the award null and void. If an award is set aside or annulled by the relevant court, it will usually be treated as invalid, and accordingly unenforceable, not only by the courts of the seat of arbitration, but also by national courts elsewhere. This is because, under both the New York Convention and the Model Law, a competent court may refuse to grant recognition and enforcement of an award that has been set aside by a court of the seat of arbitration. It is important to note that, following a complete annulment, the claimant can recommence proceedings because the award simply does not exist-that is, the status quo ante is restored. The reviewing court cannot alter the terms of an award nor can it decide the dispute based on its own vision of the merits. Unless the reviewing court has the power to remit the fault to the original tribunal, any new submission of the dispute to arbitration after annulment has to be undertaken by the commencement of a new arbitration with a new arbitral tribunal.”

28. It is to be noted that the underlying philosophy of Section 34 of the Act strives to bring a balance between the party autonomy and judicial interference into an arbitral proceedings. Thus, the section envisages a position whereby an Arbitral Award can be challenged for the purpose of setting aside the same at the first instance without much delay.[1] The Hon‟ble Supreme Court enunciating the nature of section 34, in the judgment of Indu Engg & Textiles Ltd v. D.D.A. (2001) 5 SCC 691: 2001 SCC OnLine SC 800 at page 698 held as under:

29. The parties have more hands-on involvement in an Arbitration process and play an active role in the adjudication process. Due to the party autonomy and efficacious dispute resolution process envisaged under the Act, there is a limited canvass where the courts can interfere with the mandate of the Arbitral Tribunal and supplant its reasoning. The legislative mandate and spirit of Section 34 of the Act clearly elucidate that there is a limited scope of interference by the courts inside the field of the Arbitrator. Exploring the Ambit of constitutional courts under Section 34 of the Arbitration Act

30. After looking into the legislative mandate of Section 34 of the Act, this Court shall look into the ambit of constitutional courts under Section 34 of the Act. This Court has looked into the observations made by the Hon‟ble Supreme Court in the case of U.P. Hotels v. U.P. SEB, (1989) 1 SCC 359, it was observed as follows:

31. The conclusion of an Arbitrator on facts, even if erroneous in the opinion of the Court cannot be interfered with. Where the view of the arbitrator is a plausible view and cannot be ruled as one which is impossible to accept, the court should not substitute its own view in place of that of the arbitrator.[2] After following the discussion mentioned above, it is evident that there are certain fetters imposed on the powers of the courts under Section 34 of the Act in light to the legislative mandate of the Arbitration Act. Delineating the “Laxman Rekha” for constitutional courts under the Section 34 of the Act

32. Extrapolating the discussion followed above, it is pertinent to note that a bare perusal of Section 34 clearly elucidates that it is not in nature of an appellate provision, it provides only for setting aside awards on very limited grounds, such grounds being contained in sub-sections (2) and (3) of Section 34 of the Act, 1996. Secondly, as the marginal note of Section 34 indicates, “recourse” to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-sections (2) and (3). “Recourse” is defined by P Ramanatha Aiyar’s Advanced Law Lexicon (3rd Edition) as the enforcement or method of enforcing a right. Where the right is itself truncated, enforcement of such truncated right can also be only limited in nature. It is clear from a reading of the said provisions is that, given the limited grounds of challenge under sub-sections (2) and (3), an application can only be made to set aside an award. This becomes even clearer when we see sub-section (4) under which, on receipt of an application under sub-section (1) of Section 34, the court may adjourn the Section 34 proceedings and allow the arbitral tribunal to resume the Vikram Sopan Yadav, Recourse against arbitral award U/S 34 of the arbitration and conciliation act, 1996: An analytical appraisal, International Journal of Law, ISSN: 2455-2194, Vol 2 Issue 2. arbitral proceedings or take such action as will eliminate the grounds for setting aside the arbitral award.

33. It is a settled law that under Section 34 of the Act, 1996, the Award cannot be challenged on the merits. This position of law has been crucified in the Hon‟ble Supreme Court‟s judgment of MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163, at 167 as follows: “14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.”

34. Likewise, in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, the Hon‟ble Supreme Court under the caption “Section 34(2)(a) does not entail a challenge to an arbitral award on merits” referred to Hon‟ble Supreme Court‟s judgment in Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC644, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 [the “New York Convention”] and various other authorities to conclude that there could be no challenge on merits under the grounds mentioned in Section 34. The Hon‟ble Supreme Court also held, in Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2018) 3 SCC 133 at 170, that the court hearing a Section 34 petition does not sit in an appeal.

35. As a matter of fact, it is to be noted that the point raised in the appeals stands concluded in McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, wherein the Hon‟ble Supreme Court held as under: “51. After the 1996 Act came into force, under Section 16 of the Act the party questioning the jurisdiction of the arbitrator has an obligation to raise the said question before the arbitrator. Such a question of jurisdiction could be raised if it is beyond the scope of his authority. It was required to be raised during arbitration proceedings or soon after initiation thereof. The jurisdictional question is required to be determined as a preliminary ground. A decision taken thereupon by the arbitrator would be the subject-matter of challenge under Section 34 of the Act. In the event the arbitrator opined that he had no jurisdiction in relation thereto an appeal there against was provided for under Section 37 of the Act.

52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct the errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at a minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.”

36. Considering the embargo imposed on the constitutional courts under the ambit of Section 34 of the Act, the decision of the Hon‟ble Supreme Court in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, is of utmost relevance. The Hon‟ble Supreme Court held as under: “36. At this juncture, it must be noted that the legislative intent of providing Section 34(4) in the Arbitration Act was to make the award enforceable, after giving an opportunity to the Tribunal to undo the curable defects. This provision cannot be brushed aside and the High Court could not have proceeded further to determine the issue on merits.

37. In case of absence of reasoning the utility has been provided under Section 34(4) of the Arbitration Act to cure such defects. When there is complete perversity in the reasoning then only it can be challenged under the provisions of Section 34 of the Arbitration Act. The power vested under Section 34(4) of the Arbitration Act to cure defects can be utilised in cases where the arbitral award does not provide any reasoning or if the award has some gap in the reasoning or otherwise and that can be cured so as to avoid a challenge based on the aforesaid curable defects under Section 34 of the Arbitration Act. However, in this case, such remand to the Tribunal would not be beneficial as this case has taken more than 25 years for its adjudication. It is in this state of affairs that we lament that the purpose of arbitration as an effective and expeditious forum itself stands effaced.”

37. A Coordinate Bench of this Court, while considering the pertinent issue under Section 34 of the Act, held in Cybernetics Network Pvt. Ltd. v. Bisquare Technologies Pvt. Ltd., 2012 SCC OnLine Del 1155, as under: “47. The next question that arises is whether the above claims as mentioned in para 44 that have been erroneously rejected by the learned Arbitrator can be allowed by this Court in the exercise of its powers under Section 34(4) of the Act?

48. Under Section 34(4) of the Act, the Court while deciding a challenge to an arbitral award, can either “adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award”. This necessarily envisages the Court having to remit the matter to the Arbitral Tribunal. This is subject to the Court finding it appropriate to do so and a party requesting it to do so.

49. In Union of India v. Arctic India, 2007 (4) Arb LR 524 (Bom), a learned Single Judge of the Bombay High Court opined that the Court can modify the Award even if there is no express provision in the Act permitting it. The Court followed the decision of the Supreme Court in Krishna Bhagya Jala Nigam Ltd. v. Harischandra Reddy, (2007) 2 SCC 720. A similar view has been taken by a learned Single Judge of this Court in Union of India v. Modern Laminators, 2008 (3) Arb LR 489 (Del). There the question was whether in light of the arbitrator having failed to decide the counter claim of the respondent in that case the Court could itself decide the counter claim. After discussing the case law, the Court concluded that it could modify the award but only to a limited extent. It held (Arb LR p. 496): “Such modification of award will be a species of „setting aside‟ only and would be„ setting aside to a limited extent‟. However, if the courts were to find that they cannot within the confines of interference permissible or on the material before the arbitrator are unable to modify and if the same would include further fact-finding or adjudication of intricate questions of law the parties ought to be left to the forum of their choice i.e.to be relegated under Section 34(4)of the Act to further arbitration or other civil remedies.”

50. However, none of the above decisions categorically hold that where certain claims have been erroneously rejected by the Arbitrator, the Court can in the exercise of its powers under Section 34(4)of the Act itself decide those claims. The Allahabad High Court has in Managing Director v. Asha Talwar 2009 (5) ALJ 397,held that while exercising the powers to set aside an Award under Section 34 of the Act the Court does not have the jurisdiction to grant the original relief which was prayed for before the Arbitrator. The Allahabad High Court referred to the decision of the Supreme Court in McDermott International Inc. v. Burn Standard Co. Ltd. (2006 ) 11 SCC 181,and ruled.

51. The view of the Allahabad High Court in Managing Director v. Asha Talwar 2009 (5) ALJ 397, appears to be consistent with the scheme of the Act, and in particular Section 34 thereof which is a departure from the scheme of Section 16 of the 1940 Act which perhaps gave the Court a wider amplitude of powers. Under Section 34(2) of the Act, the Court is empowered to set aside an arbitral award on the grounds specified therein. The remand to the Arbitrator under Section 34(4) is to a limited extent of requiring the Arbitral Tribunal “to eliminate the grounds for setting aside the arbitral award”. There is no specific power granted to the Court to itself allow the claims originally made before the Arbitral Tribunal where it finds the Arbitral Tribunal erred in rejecting such claims. If such a power is recognised as falling within the ambit of Section 34(4) of the Act, then the Court will be acting no different from an appellate court which would be contrary to the legislative intent behind Section 34 of the Act. Accordingly, this Court declines to itself decide the claims of CNPL that have been wrongly rejected by the learned Arbitrator.”

38. Following the discussion mentioned above, the dictum laid by the Hon‟ble Supreme Court in the case of NHAI v. M. Hakeem, (2021) 9 SCC 1 is of utmost relevance. In the said case as well, the Hon‟ble Supreme Court reiterated the embargo imposed on the Constitutional Courts under the ambit of Section 34 of the Act, 1996. The Hon‟ble Court held as follows: “46. Quite obviously if one were to include the power to modify an award in Section 34, one would be crossing the Lakshman Rekha and doing what, according to the justice of a case, ought to be done. In interpreting a statutory provision, a Judge must put himself in the shoes of Parliament and then ask whether Parliament intended this result Parliament very clearly intended that no power of modification of an award exists in Section 34 of the Arbitration Act, 1996. It is only for Parliament to amend the aforesaid provision in the light of the experience of the courts in the working of the Arbitration Act, 1996, and bring it in line with other legislations the world over.”

39. The legislative mandate behind the advent of the Arbitration Act, the Spirit & Scope of Section 34 of the Act and the categorical judicial pronouncements on the ambit of Section 34 of the Act, clearly elucidate that the constitutional courts do not possess the unbridled power to interfere unnecessarily with the award. The embargo imposed on constitutional courts under the Section 34 of the Act is in tune with the legislative intent of the Act. Keeping in view the legislative history of the Act and the bonafide objective that the Act seeks to achieve, certain fetters are imposed on the powers of the constitutional courts. It is the intention of the legislature that the powers of the courts to entertain the challenge to the Award under Section 34 of the Act should not be unbridled. Construing the ambit of “Patent Illegality” and “Public Policy” ground under Section 34 of the Arbitration Act

40. The Hon‟ble Supreme Court in the landmark case of Patel Engg. Ltd. v. North Eastern Electric Power Corpn. Ltd., (2020) 7 SCC 167 construed the ambit of “Patent Illegality” as a ground for setting aside the Arbitral Award under Section 34 of the Arbitration Act. The court ruled that:

41. This Court has looked into the discussion of patent illegality ground in the case of Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, wherein the Hon‟ble Supreme Court relied upon the decision of Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49, 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 possible view to take. The Hon‟ble Supreme Court held in Ssangyong Engg. & Construction Co. Ltd. v. NHAI (Supra) that: “39. To elucidate, para 42.[1] of 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. However, 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. DDA (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).”

42. The aspect of patent illegality has also been discussed in the case of Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd., 2021 SCC Online SC 695, wherein the Hon‟ble Supreme Court held that: “26. 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 reappreciate 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 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.”

43. It is clear from the discussion above that there is limited ground for patent illegality enshrined in the tenets of Section 34 of the Act. It shall be applicable only when the arbitrator shall construe the terms of the contract which cannot be construed in accordance with the eyes of the reasonable person. The error should be so apparent that it should shock the conscience of the court.

44. After looking into the “patent illegality” ground, this court has also embarked on the journey of traversing the genesis of the public policy ground. With respect to the "public policy of India" in the context of arbitration cases are concerned, the Hon‟ble Supreme Court examined the meaning, scope and ambit of this expression for the first time in the case of Renusagar Power Co. Ltd. v. General Electric Co., 1994 Suppl (1) SCC 644, in the context of Foreign Awards (Recognition & Enforcement) Act, 1961. It was then examined in the case of Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705 [ONGC(I)] and then again in another case of Oil & Natural Gas Corporation Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263 [ONGC (II)]. It was recently examined in Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49 in the context of Section 34 of the Act.

45. However, in Associate Builders‟s case (supra), the Hon‟ble Supreme Court held that the juristic principle of the “judicial approach” demands that a decision be fair, reasonable and objective. In other words, a decision which is wholly arbitrary and whimsical would not be termed as fair, reasonable or objective determination of the questions involved in the case. It was also held that observance of audi alteram partem principle is also a part of the juristic principle which needs to be followed. It was held that if the award is against justice or morality, it is against public policy. It was held that if there is a patent illegality noticed in the Award, it is also against public policy.

46. Considering the factual scenario of the case, the learned Arbitrator has been appointed by this very court and passed the Award on 30th October, 2019. The Tribunal has framed the following broad issues for consideration as mentioned on Page 9 of the Impugned Award: “1. Whether the claimant is entitled. to claim Rs.2,49,79,751/- as per para No. 17(a) of the Statement of Claim? OPC

2. Whether the claimant is entitled to claim Rs.2,50,00,000/as per para No. 17(b) of the Statement of Claim? OPC

3. Whether the claimant is entitled to the award of pendente lite and future interest? If so, at what rate? OPC

4. Whether the agreement dated 1.05.15 is not legally executed and binding upon the respondent? OPR

5. Whether the respondent is entitled to recover from the claimant Rs.4,14,42,192/- towards excess amount charged contrary to the escalation clause? OPR

6. Whether the respondent is entitled to recover Rs. 2,00,00,000/- from the claimant towards loss of goodwill? OPR

7. Whether the respondent is entitled to interest? If so, at what rate and for what period? OPR

8. Relief”

47. While dealing with the abovementioned Issue No. 1 and 4, the Tribunal considered the claims of both the parties and also recorded its reasoning for checking the legality of the Agreement dated 1st May,

2015. The relevant portion of the Impugned Award is reproduced herein:

48. The Tribunal considered the validity of the Agreement dated 1st May, 2015 entered between the parties. While dealing with the validity of the Agreement, the Tribunal considered the documents relied on by the parties, testimonies and cross-examination of witnesses namely CW[1] Sh. Jiban Upadhayay, RW 1 Sh. Gaurav Kapoor, RW 2 Sh. Subash Yadav etc. The Tribunal has also dealt with the allegation of fraud committed by Sh. Jiban Upadhyaya as contended by the petitioner that he colluded with the respondent company with the intention to defraud the petitioner company.

49. The learned Arbitrator also gave the reasoning while ruling on the validity of the agreement dated 1st May, 2015 that the petitioner had not divulged as to on which exact grounds the contract with the respondent had been terminated/stopped from April 2017. The Tribunal also noted that nothing was found on record to show if Sh. Upadhayay being Director in the respondent company was the only cause to terminate the contract. The Tribunal has also perused that the petitioner did not examine any Director including Sh. Tito Verghese who was well aware of the functioning of the petitioner company to reveal if he was ignorant that Sh. Jiban Upadhayay was not a Director in the respondent company. The Tribunal considered the e-mails exchanged among Sh. Jose Jacob, Sh. Tito Verghese, Sh. Tarjinder, Sh. Kalpesh Shah and Sh. Jiban which demonstrate that all the relevant officers of the respondent were aware of the negotiations of the contract with the claimant company. The learned Arbitrator had also analysed the evidence placed on record namely the agreement, email exchanges, documents relied upon and other material evidence placed by the parties.

50. As followed from the discussion mentioned above, it is manifestly clear that the Courts have a very limited scope of interference under Section 34 of the Act. The grounds for patent illegality and public policy have been carefully crystallized by the judicial pronouncements of various courts. In these circumstances, this Court is of the opinion that the petitioner had neither been able to point out any error apparent on the face of the record, nor otherwise been able to make out a case for interference with the Award by the learned Arbitrator with respect to this issue. Thus, this Court comes to the conclusion that the Award passed by the learned Arbitrator passed the muster of patent illegality and public policy enshrined in Section 34 of the Arbitration Act. Moreover, the Impugned Award is also not in conflict with the public policy of India and thus does not suffer from any infirmities enshrined under Section 34 of the Arbitration Act.

ISSUE 2: WHETHER THE LEARNED ARBITRATOR APPRECIATED AND EVALUATED THE MATERIAL EVIDENCE PLACED ON RECORD AND GAVE THE REASONS FOR AWARDING COMPENSATION?

51. The learned counsel appearing on behalf of the petitioner has also contested that the learned Tribunal has not appreciated the evidence led by the parties. In this issue, this Court shall now analyse the scope of powers of constitutional courts to look into the evidence placed before the learned Arbitrator and the ambit of the abovementioned powers.

52. It is to be noted that the courts must keep in mind while deciding objections under this section that the intention of the legislature in repealing the 1940 Act and substituting it with the 1996 Act was primarily to attach finality to arbitration proceedings and interference by the courts were intended to be curtailed drastically.[3] This Court has relied upon the observations made by the Hon‟ble Supreme Court in the judgment of NTPC Ltd. v. M/s Deconar Services Pvt. Ltd., 2021 SCC OnLine SC498, wherein the Court observed that it is clear that for the objector/appellant in order to succeed in their challenge against an arbitral award, they must show that the award of the arbitrator suffered from perversity or an error of law or that the arbitrator has otherwise misconducted himself. Merely showing that there is another reasonable interpretation or possible view on the basis of the material on the record P.C. Markanda, Law relating to Arbitration And Conciliation: Commentary on the Arbitration And Conciliation Act, 1996, 7th Edition, (LexisNexis Butterworths publications, Nagpur,) at 2009, 651. is insufficient to allow for interference by the Court. A similar rationale has also been observed in the judicial pronouncements of State of U.P. v. Allied Constructions, (2003) 7 SCC 396; Ravindra Kumar Gupta and Company v. Union of India, (2010) 1 SCC 409; Oswal Woollen Mills Limited v. Oswal Agro Mills Limited, (2018) 16 SCC 219.

53. The observations made by the Hon‟ble Supreme Court in the case of Associate Builders v. Delhi Development Authority (Supra) are of pertinent relevance. For the sake of clarification, the ratio of the Hon‟ble Supreme Court is reproduced herein, whereby the court held that:

54. The Hon‟ble Supreme Court in the case of Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2018) 3 SCC 133 observed and held that the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of the evidence on record are not to be scrutinized as if the Court was sitting in an appeal. In para 51 of the judgment, it was observed and held as under:

55. This Court while deciding on the question whether the constitutional courts have the power to reappreciate the evidence placed on the Arbitral Tribunal in the case of Scholastic India (P) Ltd. v. Kanta Batra, 2022 SCC OnLine Del 2351, held that:

56. It is also pertinent to note the observations made by this very Court in the case of Delhi Development Authority v. Uppal Engineering Construction Co. 1982 SCC OnLine Del 67, wherein this Court held as follows:

57. After embarking on the fetters of the constitutional courts and limited power of the courts to interfere with the mandate of the Arbitral Tribunal, this Court shall look into the findings of the Arbitral Tribunal. The findings of the Tribunal are reproduced herein, whereby the Arbitrator while passing the Award dated 30th October, 2019 noted that:

58. Apart from the reasoning mentioned above by the learned Arbitrator, the Arbitral Tribunal has also dealt with the issue of escalation of the tipping fee price from Rs.475/- per tonne to Rs.775/per tonne and the scope of the primary garbage collection under the contours of the agreement dated 1st May 2015 entered between the petitioner and the respondent company. While dealing with the contention of escalation of the tipping fee price from Rs.475/- per tonne to Rs.775/- per tonne, the learned Arbitrator has recorded the contentions raised by the parties as well as examined the material evidence produced by the parties. The operative portion of the Award is reproduced herein, wherein the learned Arbitrator ruled that:

59. The Tribunal has duly considered the issue of escalation of the tipping fee price from Rs.475/- per tonne to Rs.775/- per tone and the statements made by Sh. Tito Verghese, Sh. Rajesh Pujari and other witnesses produced by the parties were also placed on record. The learned Arbitrator has also considered the work orders issued by the petitioner giving details of the quantity of the garbage collection and the rate at which the gross amount was calculated. The learned Arbitrator has also considered the sale invoices issued by the respondent to the petitioner during the relevant period for the primary and secondary garbage collection and analysed that the petitioner company has never raised any iota of doubt over the invoices raised.

60. Similarly, while deciding the application filed by the petitioner under Section 33(1) of the Act to clarify the computation errors in the Impugned Award dated 30th October, 2019. The contention/application of the petitioner before the Tribunal was that: “Applicant‟s contention is that the amount for March, 2017 has been wrongly calculated and exact amount is Rs.1,40,89,619/- as per the sale invoice (Page 117). The figure/amount of Rs.1,48,89,619/- needs to be corrected.” While adjudicating on this application under Section 33(2) of the Act, 1996 filed by the petitioner, the learned Tribunal ruled on the merits of the Argument.

61. The learned Tribunal passed the decision on the abovementioned application under Section 33(2) of the Act in the Award dated 17th January, 2020 and held as under that:

2017. Before coming to the conclusion, the Tribunal has also considered the TDS deposited by the petitioner amounting to Rs.6,09,261/-. The Tribunal has also considered the list of creditors as well as the ledger details.

62. Thus, it is clear from the above-mentioned extracts of the Arbitral Award passed by the learned Arbitrator that the he has duly appreciated the evidence placed on record. In the Arbitral award dated 30th October, 2019, the learned Arbitrator has considered all the evidence adduced by the parties. The learned Arbitrator has passed the order after considering the evidence placed by the petitioner regarding the validity of the agreement. Considering the factual scenario of the matter and looking at the prima facie view of the Award, this court comes to the conclusion that the learned Arbitrator has considered all the evidence adduced by the parties and meticulously drafted the Award. The Award is not devoid of reasoning and thus muster the challenges imposed under Section 34 of the Act. Moreover, following the catena of the abovementioned judicial pronouncements, the spirit of the Act is very clear that Arbitration is the alternate dispute resolution process, and the entire ballgame is between the parties and the Arbitrator.

63. The Arbitrator is the sole umpire of that game and the legislative mandate clearly propounds that the constitutional courts cannot unnecessarily interfere in the reasoning and decision of the Arbitrator. Additionally, the embargo is also imposed on the constitutional courts by the catena of judgments that it is outside the purview of the powers of the court to reappreciate and re-access the evidence produced before the Arbitral Tribunal. Once the Award is passed by the Arbitral Tribunal, it can only be challenged on the basis of the very limited grounds enshrined under Section 34 of the Act. Therefore, this Court comes to the conclusion that the learned Arbitrator while passing the Impugned Award dated 30th October, 2019 and the decision on the application filed by petitioner under Section 33(2) of the Act considered the material evidence placed on record and is not devoid of any reasoning.

CONCLUSION

64. In recent times as a result of the dynamic growth of industrialization and globalization the excessive burden of the judiciary that has been the consequence of a large number of pending cases due to lengthy court procedures has resulted in making arbitration a timeefficient and dependable way for dispute resolution not only in India but throughout the globe.

65. Moreover, arbitration by providing flexibility to the procedure of dispute resolution also establishes a much extensive and wider room for negotiation between the parties having a dispute. The main focus behind introducing arbitration as a dispute redressal mechanism was to provide a fast and speedy dispute-resolving process as well as make it cost-effective as compared to general court proceedings.

66. Thus, it is high time that constitutional should keep in mind the „Lakshman Rekha‟ imposed on the powers of the courts while addressing the challenge to the Arbitral Award under Section 34 of the Act. This check on the powers of the constitutional courts is in light of the legislative mandate of the Arbitration Act.

67. It is also a cardinal duty of the constitutional courts to adhere to this check on the powers of the court and always keep in mind that the Arbitral Award which has been passed by respecting the mandate of the disputing parties, should not be set aside unless and until it suffers from a grave error that shocks the entire conscience of the court.

68. Considering the factual matrix of the case, authorities cited, pleadings presented and arguments advanced, this court comes to the conclusion that the Arbitral Award dated 30th October, 2019 passed by the learned Arbitral Tribunal in the matter titled as M/s J.S. Enviro Infra Projects Ltd. v. M/s. A.G. Enviro Services Pvt. Ltd. does not suffer from any infirmities enshrined in Section 34 of the Arbitration Act. The Impugned Award is not patently illegal and is not in conflict with the public policy of India.

69. The petition is thus dismissed along with pending applications, if any.

70. The judgment be uploaded on the website forthwith.

JUDGE JUNE 12, 2023 SV/AS