Full Text
Date of Decision: 29.10.2021
M/S TANEJA VIDYUT CONTROL PVT. LTD. ..... Appellant
Through: Mr.Abhay Singh, Adv.
Through: Ms.Biji Rajesh, Adv.
HON'BLE MR. JUSTICE NAVIN CHAWLA NAVIN CHAWLA, J. (Oral)
JUDGMENT
1. This appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the „Act‟) challenging the Order dated 27.09.2021 passed by the learned District Judge (Commercial-02) South District, Saket Court, Delhi, dismissing the petition filed by the petitioner appellant under Section 34 of the Act, being OMP (COMM) 30 of 2020.
2. By way of the above petition filed under Section 34 of the Act, the appellant had challenged the Arbitral Award dated 16.07.2020 passed by the learned sole Arbitrator, allowing the claim preferred by the respondent, directing payment of ₹20 lakhs alongwith interest at the rate of 18% per annum from the date of filing of the Claim Petition, that is, 21.10.2011, till the date of realisation of the payment. 2021:DHC:3477-DB The learned Sole Arbitrator further directed that in case the appellant fails to pay the said amount within a period of three months from the date of pronouncement of the Award, it will bear interest at the rate of 24% per annum (pendente lite and future interest). The learned Sole Arbitrator also awarded a cost of ₹ 05 lakhs in favour of the respondent.
3. The dispute between the parties arose out of a Work Order dated 11.07.2011, by which the respondent had awarded the work of execution of electrical work at its Housing Project Kapashera, New Delhi for 27 blocks with basement, stilt, four-storeys and lift machine room to the appellant. The respondent had, in terms of the said Work Order, released an advance of ₹ 20 lakhs towards mobilization advance to the appellant.
4. The respondent terminated the Work Order vide its letter dated 28.05.2012 alleging that despite receiving the mobilization advance, the appellant had failed to mobilize the resources in terms of men and material at the site and thus failed to commence and execute the entrusted work.
5. The appellant resisted the claim by contending that since the civil construction of only four units at basement and stilt parking with the ground floor in two units/blocks were constructed by the respondent till January 2012, there was no occasion for the appellant to carry out electrical work. The appellant further contended that it had carried out conduiting electrical pipes in the constructed basement, stilt and ground floor portion for the only constructed ten units in four blocks and was ready and willing to perform its part of the contract, however, the stage of electrical work was not reached. The appellant further contended that the respondent was carrying out unauthorized construction without any sanctioned building plan and hence, the appellant had to stop the work intermittently due to the fault of the respondent.
6. The learned Sole Arbitrator vide the Award dated 16.07.2020, allowed the claim of the respondent as mentioned hereinabove. The learned Sole Arbitrator in his Award has held as under:
7. The challenge to the said Arbitral Award has been dismissed by the Impugned Order, which is in challenge before us in the present appeal.
8. The learned counsel for the appellant submits that the Impugned Award was liable to be set aside as having been induced/affected by fraud. He submits that even prior to the award of work in favour of the appellant, the building for which the respondent had issued the Work Order was booked for unauthorized construction by the Municipal Corporation of Delhi on 14.02.2011. The Work Order was, therefore, issued to the appellant for carrying out illegal work and could not be enforced. He submits that the respondent has intentionally supressed the above fact from the appellant and the arbitrator, thereby procuring the Award by Fraud. In support of his submission, he places reliance on the judgment of the Supreme Court in Venture Global Engineering v. Satyam Computer Services Ltd. & Anr., (2010) 8 SCC 660, to contend that even though the fraud has been unearthed after the passing of the Award, the Award is liable to be set aside on the said ground.
9. The learned counsel for the appellant further submits that the Award of Interest granted in favour of the respondent is unreasonable and unjustified. He submits that not only the rate of interest awarded is exorbitant, but also the Award of Interest pendente lite is unreasonable inasmuch as there is a huge delay in concluding the Arbitral proceedings. He submits that such delay was not attributable to the appellant and, in fact, the appellant had been making complaints to the Arbitrator of such delay being caused by the respondent.
10. We have considered the submissions made by the learned counsel for the appellant, however, we find no force in the same.
11. Admittedly, the plea of construction not being carried out due to the same being stopped by the Municipal Corporation of Delhi was pleaded by the appellant before the Arbitral Tribunal. Arbitral Tribunal, however, on consideration of the evidence led before it found that it was the appellant who had failed to mobilize resources even after taking the mobilization advance from the respondent. It is indeed surprising that the appellant was at the site of construction, however, it did not plead the illegality of the contract itself before the learned Sole Arbitrator. The same clearly came as an afterthought to the appellant once the Arbitral Award was pronounced against it. The judgment of the Supreme Court in Venture Global Engineering (supra) is, therefore, clearly is of no avail to the appellant.
12. It is also to be kept in mind that the jurisdiction of a Court hearing challenge to an Arbitral Award under Section 34 of the Act is extremely limited and the Court does not sit in appeal over the Arbitral Award. The power of the Court under Section 37 of the Act is even more restricted as the Court is only to ascertain that in the exercise of powers by the Court under Section 34 of the Act, it has not exceeded the scope of the provision of the Act. Where the Award has been confirmed by the Court under Section 34 of the Act, the Court in the exercise of its power under Section 37 of the Act should be even more restrained. [MMTC Limited v. Vedanta Limited, (2019) 4 SCC 163]
13. Insofar as the plea of the rate of interest being unreasonable or that the learned Sole Arbitrator should not have awarded pendente lite interest where the arbitral proceedings have been delayed is concerned, it may only be noted that Section 31(7) of the Act confers a discretion on the Arbitrator to award interest at such a rate and for such a period as he may determine. The interest, in the present case, is on account of damages for wrongful retention of money by the appellant. It is also to be noted that though the appellant has addressed a few communications to the learned Sole Arbitrator complaining of delay of arbitral proceedings by the respondent, no action was taken by it in terms of the Act to seek redressal against its grievance. It is also admitted that the record of the Award had also been misplaced and had to be re-constructed. We, therefore, do not find the award of Interest in the present case to be unreasonable so as to warrant any interference from the Court in the exercise of its power under Section 37 of the Act.
14. In view of the above, we find no merit in the present appeal. The same is dismissed.
NAVIN CHAWLA, J MANMOHAN, J OCTOBER 29, 2021/rv/P