Full Text
HIGH COURT OF DELHI
Date of order : 28th March, 2023
AIIMS ..... Petitioner
Through: Mr. Kautilya Birat, Proxy counsel for Mr. Satya Ranjan Swain, Panel
Counsel
Through: Mr. Sanjay Dewan and Mr. Anish Dewan, Advocates
CHANDRA DHARI SINGH, J (Oral)
JUDGMENT
1. The instant petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Arbitration Act”) has been filed on behalf of the petitioner seeking the following reliefs:- "a) Allow the instant objections and set aside the Award dated 30.06.2021 passed in matter of "M/s S.S. Total Construction India Pvt. Ltd. v/s A.I.I.M.S" passed by Sh. Pradeep Kumar Gupta, Sole Arbitrator, Former Special Director General, CPWD, T - 17, Green Park Extension, New Delhi- 110016. b) Award the cost in favour of the Petitioner and against the Respondent."
2. Despite the matter being passed over on the first call at the request of proxy counsel appearing on behalf of petitioner, the same request has been made by proxy counsel again on the second call.
3. This Court has perused the order sheets dated 24th February, 2022, 12th October, 2022, where on the said dates respectively, pass over was sought and an adjournment slip was moved on behalf of the petitioner.
4. The matter is pending since 2022 without issuance of notice to the other party. The counsel who has been engaged by the petitioner has not perused the matter or assisted the Court for even the purpose of issuance of notice to the respondent.
5. Learned counsel for the respondent has appeared on advance notice since the very first date. The written submissions have already been filed on behalf of the parties, which are on record.
6. Since no one is able to assist the Court on behalf of the petitioner and the matter is pending for over a year, that too, without issuance of notice, this Court is left with no option, but to hear the matter on merit with the assistance of learned counsel appearing on behalf of respondent and the material on record.
7. The background of the case reveals that the petitioner invited tender for construction of OPD Block for AIIMS, Ballabgarh, Hayana. The respondent submitted its proposed rates which were subsequently accepted by the petitioner vide Letter of Acceptance dated 12th February 2014/14th February 2014. The date of completion of the work was stipulated to be 26th April 2017 and accordingly, the respondent was handed over the site on 26th February 2014/28th February 2014.
8. The petitioner was aggrieved by the failure to deploy resources on the part of the respondent as well as the delay in execution and completion of the work within the stipulated period. Hence, the arbitration clause was invoked by the parties and a sole arbitrator was appointed to adjudicate the disputes between the parties.
9. Upon completion of the arbitration proceedings, the learned sole arbitrator passed the Award dated 30th June 2021. The petitioner being aggrieved of the findings of the sole arbitrator in relation Claims No. 1, 3, 4, 7, 9 and 10 has filed the instant petition.
10. The grounds raised in the pleadings on behalf of the petitioner are as follows:a. The impugned Award is contrary to the settled law and the learned arbitrator has exceeded its jurisdiction by going beyond what was agreed between the parties in Clause 10C of the Contract and thereby awarding an amount of Rs. 3,52,16,016/- in favour of the respondent. Reliance has been placed upon the judgment passed in Associated Engineering Co. vs. Government of Andhra Pradesh, (1991) 4 SCC 93. b. The learned arbitrator committed an error by ignoring the factual position surrounding the computation of 25 months as the delay period for the purposes of compensation, however, the respondent never raised any notice with respect to the compensation of delay, specifically when time was essence of the Contract. c. It is a settled principle of law that time being the „essence of the Contract‟ no more remains „an essence‟ when the extension of the same is allowed for performance of contractual obligation against a cost or penalty. Therefore, without invoking the extension clause of a Contract it is not only unjustified and unreasonable for the learned arbitrator to calculate an amount in favour of the respondent herein. To support the averment, reliance has been placed upon Hind Construction Contractors vs. the State of Maharashtra, (1979) 2 SCC 70. d. The learned arbitrator wrongly held that time in this case cannot be considered as the essence of the contract. Moreover, the fact is that the work was prolonged for a period of 2 years, one month and 26 days i.e., more than two times the stipulated period of completion of 12 months. The promisee is entitled to compensation from the promisor for any loss occasioned to it by such failure, hence, time was the essence of the contract. e. The learned arbitrator wrongly reached the conclusion and levied compensation under Clause 2 of the agreement and held that “Claimants were not solely responsible for the delay and compensation of Rs. 27,36,331/- levied and recovered by the Respondents from Final Bill needs to be refunded to the Claimants.” f. The delay in the work is attributable to the respondent is evident from the various correspondences between the parties. The respondent failed to perform its obligation as per the agreement provisions and executed the work with defects. However, these facts and circumstances were appreciated by learned arbitrator. g. The learned arbitrator vide the impugned Award failed to appreciate that the respondent miserably failed to refute the claims raised by the petitioner herein, especially in terms of the settled principles of law. h. The Award is contrary to Public Policy as it is contrary to settled principles of law and in case allowed to be sustained shall give rise to an anomalous situation, which would create confusion in the society and shall defeat the very purpose of conducting of the arbitration proceedings.
11. Per Contra, the learned counsel appearing on behalf of the respondent vehemently opposed the instant petition and submitted that the Award passed by the learned arbitrator is a detailed and well-reasoned Award, passed after consideration of all documents and written submissions on behalf of the parties produced before him as well as the provisions of the Contract.
12. It is also submitted on behalf of the respondent that the petitioner filed its counter claims on which the learned arbitrator also gave his findings. While deciding the counter claims, the learned arbitrator awarded a sum of Rs. 2,35,061/- in favour of the petitioner and rejected the other counter claims, however, the petitioner has not challenged any findings of the learned arbitrator qua the counter claims.
13. It is submitted that there is no ground for challenge against the impugned Award and hence, the instant petition is liable to be dismissed for being devoid of merit.
14. Heard the learned counsel for the respondent and perused the record.
15. The petitioner has raised challenge only qua certain claims, i.e., Claims No. 1, 3, 4, 7, 9 and 10, as decided by the learned arbitrator and has not assailed the validity of the entire Award.
16. The petitioner has invoked Section 34 of the Arbitration Act, which is reproduced hereunder:-
17. The contents of the provision clearly show that the intention of legislature while enacting the Arbitration Act, as well as while carrying out amendments to the same, was that there should be limited intervention of the Courts in arbitral proceedings, especially after the proceedings have been concluded and an Award thereto has been made by the concerned Arbitral Tribunal. Any claim brought forth a Court of law under Section 34 of the Arbitration Act has to be in accordance with the principle of the provisions laid down under the Arbitration Act as well as interpreted by the Hon‟ble Supreme Court.
18. On a bare reading of the invoked provision, it becomes evident that the words used therein are that “An arbitral award may be set aside by the Court only if”, which signifies the intent of limiting the scope of interference by Courts in an Arbitral Award, passed after thorough procedure, involvement of parties, and appreciation of facts, evidence and law, “only” in the event of the circumstances delineated in the provision being met. The limited grounds which may invite the intervention and action thereupon by the Courts are explicitly laid down under the provision. What is to be seen by a Court exercising jurisdiction under Section 34 of the Arbitration Act is that an Award passed by an Arbitral Tribunal may only be set aside if it is patently illegal, against the public policy of India, based on no evidence and delineates no reason for passing the Award.
19. While elaborating upon the grounds available under the provision, and that have been invoked by the petitioner vis-à-vis the impugned Award being in conflict with the Public Policy, the Hon‟ble Supreme Court in Ssangyong Engineering & Construction Co. Ltd. vs. NHAI,
27. Secondly, it is also made clear that re-appreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
28. To elucidate, paragraph 42.[1] of Associate Builders (supra), namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Paragraph 42.[2] of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
30. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being a ground for challenge under “public policy of India”, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.”
20. A bare perusal of the above-referred pronouncement makes it evident that the phrases are not to be construed in their plain meaning and have to be given due caution and consideration while being invoked to assail any Arbitral Award. To successfully raise a challenge against an Arbitral Award, the petitioner ought to satisfy this Court that the grounds as provided in the Section 34 of the Arbitration Act are met. It is, therefore, clear that the decisive test is that first, the Arbitrator had to adopt a judicial approach; second, the principles of natural justice have to be upheld; and third, the decision must not have been egregious, or rather, perverse.
21. In the instant petition, the petitioner has raised the grounds of contravention of Public Policy and fundamental policy, however, has not been able to show or establish that the findings of the learned arbitrator are so patently illegal so as to shock the conscience of this Court. The petitioner has also raised the grounds of non-appreciation of material on record and submissions of on behalf of the petitioner, however, a perusal of the impugned Award shows that while deciding Claims No. 1, 3, 4, 7, 9 and 10, the learned arbitrator has given extensive findings and elaborate reasoning for such findings after considering the entire material before him.
22. The petitioner has also raised challenges that are substantially on the merits of the case. However, it is settled position of law that a Court while exercising jurisdiction and powers under Section 34 of the Arbitration Act shall not sit in appeal by examining and re-examining the case on its merits.
23. The decision of the learned arbitrator, passed after thorough consideration of the material on record and the submissions of the parties, is final and this Court is not required to carry out an exercise of readjudicating the disputes. An Arbitral Award may be set aside on the limited grounds and only under the conditions as explained by the Hon‟ble Supreme Court in Delhi Airport Metro Express Pvt Ltd vs. Delhi Metro Rail Corporation, (2022) 1 SCC 131, in the terms as reproduced hereunder:-
24. Therefore, this Court shall also not indulge into the arguments on merits that have been raised by the petitioner, keeping in view the spirit, purpose and essence of the Arbitration Act. To enter into merits of arbitral proceedings and an arbitral award and re-appreciate all arguments while also re-adjudicating the disputes between the parties would mean to defeat the purpose of the legislation itself.
CONCLUSION
25. Upon perusal of the pleadings and upon hearing the counsel for the respondent, it is found that the grounds that have been invoked and the contentions that have been raised on behalf of the petitioner are essentially and substantially on merits of the case and the dispute between the parties. As discussed in the foregoing paragraphs, this Court shall not sit in appeal and re-adjudicate the disputes between the parties while exercising its jurisdiction under Section 34 of the Arbitration Act. Hence, the petition does not stand on this ground.
26. Secondly, the petitioner has raised the grounds of contradiction to the public policy, non-consideration and non-appreciation of claims raised by the petitioner, however, has miserably failed to establish the same since a perusal of the Award shows that the material before the learned arbitrator has been duly considered by him.
27. Therefore, keeping in view the contentions raised in the pleadings, the arguments advanced, the discussion on law in the foregoing paragraphs, this Court is of the considered view that there is no merit in the instant petition since no grounds as provided for under Section 34 of the Arbitration Act have been made out to successfully challenge the Arbitral Award dated 30th June 2021.
28. Accordingly, the instant petition stands dismissed.
29. The order be uploaded on the website forthwith.