Mahanagar Telephone Nigam Ltd. v. M/S Ralhan Construction Company

1. By way of present appeal filed under Section 37(1)(b) of the Arbitration & Conciliation Act, 1996 (hereinafter, referred to as ‘the Arbitration Act’), the appellant has assailed order dated 16.04.2019 passed by the learned ADJ-07, South-East, Saket Courts, New Delhi in Arb. NO. 212/2018, whereby its objections under Section 34 of the Arbitration Act to Award dated 09.05.2018 (and subsequent amendments thereto) were dismissed.

2. Though the present appeal was filed by the appellant seeking setting aside of the order dated 16.04.2019, the Award dated 09.05.2018, and the subsequent amendments thereto, learned counsel for the appellant, on instructions, restricted her challenge during the course of submissions only to respondent’s claim Nos. 2 and 3, which were in relation to release of balance payment of security deposit lying with the Department, directed to be released to the respondent vide the Award.

3. Facts of the case, pithily put, are that the appellant had floated a tender dated 20.11.2007 for the civil and electrical portion of construction of Automobile Workshop-cum-Administrative building at Rohini, Sector-VI, Delhi. The said work was awarded to the respondent for a consideration amount of Rs. 18,68,11,252/-. The time stipulated for completion of the work was 18 months from the date of issuance of letter of award. Purportedly, the civil component of the work was completed on 31.12.2011 and the electrical part was completed on 07.06.2013. A dispute arose between the parties relating to payments under the agreement, which led the respondent to initiate arbitration proceedings in terms of Clause 53 thereof. The matter was adjudicated by a Sole Arbitrator, who passed an Award dated 09.05.2018, allowing all claims of the respondent either partially or fully, except claim Nos. 18 and 20. Subsequently, two amendments dated 11.05.2018 and 12.05.2018 were made to the Award by the Arbitrator. The appellant filed its objections under Section 34 of the Arbitration Act before the learned District and Sessions Judge, West, Saket Courts, praying that the Award dated 09.05.2018 (and the subsequent amendments thereto) be set aside. However, the objections were dismissed vide the order impugned herein, i.e. order dated 16.04.2019.

4. Learned counsel for the appellant contended that the Arbitrator erred in interpreting Clause H, Special Conditions of Contract in the Agreement between the parties to conclude that it was the appellant’s responsibility to file application for obtaining completion/occupancy certificate from local authorities. It was further contended that in reaching the above conclusion, the Arbitrator also erred in relying upon the ‘Hand Book of Building Permit Procedure 2006, Delhi Development Authority’, as the same was not executed between the parties and was an extraneous document filed by the respondent. On strength of the aforesaid, it was argued that the impugned Award was arbitrary, capricious and beyond the scope of mutually agreed terms in the contract entered between the parties. Learned counsel also contended that the concerned Arbitrator misconducted himself by carrying out the proceedings in a biased and hasty manner. In support of her contentions, she relied on the decision in M/s L.G. Electronics India (P) Ltd. v. Dinesh Kalra reported as 2018 SCC OnLine Delhi 8367.

5. On the other hand, Ms. Salwan, learned counsel for the respondent, defended the arbitral Award as well as the impugned order by submitting that it was the duty of the architect engaged by the appellant to apply for the completion certificate. In this regard, reference was made to an agreement executed between the appellant and the architect namely M/s. R.K. & Associates. It was also submitted that the said agreement was executed in relation to the subject work order and the respondent’s obligation was to make efforts and co-ordinate after the appellant had filed the application for obtaining the completion certificate. Learned counsel further submitted that the work under the contract was completed in the year 2011 and even during the pendency of the arbitral proceedings, a suggestion was given that if the appellant files the requisite application, the respondent would also make the necessary efforts, but the appellant did not agree. Lastly, it was contended that the dispute raised herein does not fall under the scope of interference as outlined in Section 37 of the Arbitration Act. In support of the contentions, learned counsel placed reliance on the following decisions: i) Food Corporation of India v. A.M. Ahmed & Co. and Another reported as (2006) 13 SCC 779; ii) K.N. Sathyapalan (Dead) by Lrs v. State of Kerala and Another reported as (2007) 13 SCC 43. iii) NTPC Ltd. v. Deconar Services Pvt. Ltd. reported as 2021 SCC OnLine SC 498; and iv) Reliance Industries Ltd. v. Gail (India) Ltd. reported as 2020 SCC OnLine Del 2041; v) UBV Infrastructure Ltd. v. National Highways Authority of India reported as 2020 SCC OnLine Del 60; vi) Manikaran Power Limited v. Valuehunt Advisors LLP reported as

6. I have heard learned counsels for the parties and perused the entire material placed on record.

7. The present appeal having been filed under Section 37 of the Arbitration Act, challenging dismissal of the appellant’s objections under Section 34, it is deemed apposite to recapitulate the law surrounding these provisions. In this regard, reference may profitably be made to Manikaran Power Limited (Supra), where a Division Bench of this Court, while declining to interfere in exercise of powers under Section 37 of the Arbitration Act, noted as follows:

8. The scope of interference in an appeal under Section 37 of the Arbitration Act stands well-defined by a catena of decisions, which include UBV Infrastructure Ltd. (Supra), where this Court held as follows: