Full Text
HIGH COURT OF DELHI
Date of Decision: 07.08.2025
UNION OF INDIA .....Petitioner
Through: Mr. Vivek Goyal, CGSC
Through: Mr. Karan Luthra, Ms. Kavita Vinayak, Advs.
JUDGMENT
1. This is a petition filed under section 34 of the Arbitration and Conciliation Act, 1996 (“1996 Act”) seeking to set aside the Arbitral Award dated 25.07.2005 passed by the learned Sole Arbitrator in Arbitration Case bearing No. IA NOS/8123/2004 in ARB 191/2004 titled as “M/s. Wishwa Mittar Bajaj and Sons and Chief Engineer, Delhi Zone, Delhi Cantt.”
2. The brief facts are that a contract bearing No. CEDZ-01/99-2000 (“Contract Agreement”) for the work titled “Provision of Married Accommodation for 50 majors (Station Pool) at Delhi” was executed between the parties. The IAFW-2249, being the General Conditions of Contract (“GCC”), formed an integral part of the Contract Agreement. The GCC contains the arbitration clause being Clause NO. 70, which is extracted below:-
3. The respondent No.1 before this Court was the claimant in the arbitration proceedings, and the petitioner herein was the respondent there.
4. As certain disputes arose between the parties, and respondent No.1 filed a petition under section 11 of the 1996 Act, being ARB.
P. NO. 191/04. Thereafter, this Court, vide order dated 14.12.2004 appointed the Sole Arbitrator. Consequently, the learned Sole Arbitrator entered reference, and a total of 12 claims were raised by the respondent No.1 for approximately Rs. 80 lakhs and a counter claim for Rs. 50,000/by the petitioner.
5. On 25.07.2005, the learned Sole Arbitrator passed the impugned Award, allowing 8 claims and awarding approximately Rs. 60 lakhs to the respondent No.1, along with pendente lite interest @ 12% p.a. and future interest @ 9% p.a., while rejecting the counterclaim.
6. Hence, the petitioner filed a petition under Section 34 of the 1996 Act before this Court challenging the impugned Award. This Court vide order dated 03.09.2015 held that the impugned Award was without reasons and remanded the matter to the learned Sole Arbitrator for providing additional reasoning. The relevant paragraphs of the said order are extracted below:-
sustains the Award by giving additional reasoning, then, with respect to the fresh reasons which are given, the petitioner will be entitled to file additional objections with respect to additional reasons which will be given by the arbitrator for sustaining the impugned Award.
5. This order will only apply with respect to claims which have been awarded in favour of the respondents and not those claims or the sole counter claim of the petitioner towards costs which have been rejected by the arbitrator. It may also be noted that with respect to claim no.7 there no longer remains any dispute inasmuch as claim no.7 stands satisfied as the petitioner has released the amount to the respondents with respect to claim no.7.
6. In view of the above, this petition is disposed of with liberty to revive the same by either of the parties on the arbitrator giving reasons which will eliminate the grounds as a result of which the Award at present is a non-speaking Award as regards the discussion under the claims which are awarded or any other aspect. This Court may clarify that this Court has not observed on merits of the matter of the parties in one way or the other and fresh reasoning will be given by the arbitrator for passing the fresh Award in terms of the fresh arguments and the evidence which would be available before the arbitrator with respect to the claims.”
7. In pursuance of the order dated 03.09.2015, the parties approached the learned Sole Arbitrator and apprised him of the fact that the matter has been remanded back. The learned Sole Arbitrator informed the parties that he was engaged in a project in Central Asia and would do the needful after his return. However, the learned Sole Arbitrator never reverted, and thereafter in 2021, the parties discovered that the learned Sole Arbitrator has unfortunately passed away. Consequently, the directions given in order dated 03.09.2015 were never complied with.
8. Thereafter, the respondent No.1 filed an application being I.A 13075/2022 seeking recall of the order dated 03.09.2015 and adjudication of the underlying petition in its entirety. Another application, being I.A 39206/2024 was also filed by a partner of respondent No.1 firm, namely Mr. Sunil Mohan Bajaj, seeking liberty to represent the interests of respondent No.1.
9. When the said applications were taken up for hearing, this Court vide order dated 09.04.2025, allowed both the applications and revived the petition to be heard on merits.
10. Mr. Goyal, learned counsel for the petitioner, submits that this Court has already found the impugned Award to be a non-speaking Award, without any discussion on the evidence or reasoning for awarding the claims. He further states that the matter was remanded to the learned Sole Arbitrator to add to the existing reasons in the impugned Award; however, due to the unfortunate demise of the learned Sole Arbitrator, same could not be done. He thus submits that petition be allowed as the impugned Award continues to be without reasons or discussion on the merits, pleadings or the evidence led by the parties.
11. Per contra, Mr. Luthra, learned counsel for respondent No. 1, submits that the impugned Award is a reasoned one, passed after due consideration of the underlying documents produced. He specifically draws this Court‟s attention to the paragraph No. 20 of the Award to show that a finding of delay was recorded against the petitioner, which is extracted as below:- “20.
AND WHEREAS from the correspondence on record and material evidence as produced before me, it is established that the completion of work got delayed mainly due to non handing over of machine room drawings and decisions regarding (a) garbage chute, (b) 32 mm dia CTD bars, (c) change in mix of concrete from M-15 to M-20, (d) colour scheme etc. From the record it was also established that there was abnormal delay in placing add back D.Os against provisional items and regularization of changes ordered during the execution of the work, contrary to the provisions contained in the contract agreement vide conditions 6 and 7 of IAFW-2249.”
12. Further, relying on this above mentioned finding of the learned Sole Arbitrator that the petitioner is solely responsible for the delay in concluding and administering the lift contract, the respondent No.1 contends that, consequently, claim Nos. 3 and 4 were awarded in their favor and the petitioner is therefore liable to reimburse them for loss of profit. It is further stated that claim Nos. 3 and 4 are well reasoned and based on analysis of the expense‟s charts submitted as working details in respect of financial effect of the claims, along with the Statement of Claim (“SOC”) by the respondent No.1.
13. I have heard learned counsels for the parties.
14. The principles with regard to limited scope of interference by a Court under section 34 of 1996 Act against the Arbitral Award have been reiterated time and again by the Hon‟ble Supreme Court and this Court, reliance has been placed on Consolidated Construction Consortium Limited vs. Software Technology Parks of India, 2025 INSC 574, especially paragraph No. 23.
15. It is a well settled law that the Court in a petition under Section 34 of the 1996 Act cannot sit in appeal and is not required to reappreciate or re-evaluate the evidence.[1] The Arbitral Tribunal is the sole judge of the quality and quantity of the evidence. In the absence of any ground under Section 34 of the 1996 Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at.[2]
16. In the present case, the order dated 03.09.2015 has attained finality. It was passed in the presence of both parties, and this Court categorically recorded that the Award is a non-speaking Award, without reasons. The Court also held that there is no discussion with respect to the evidence or reasoning for awarding the claims, including the quantification of amounts. Accordingly, the impugned Award could not sustain the judicial scrutiny.
17. By the same order, the matter was remanded to the learned Sole Arbitrator to give additional reasoning. However, due to the unfortunate demise of the learned Sole Arbitration, this could not be done, and the impugned Award continues to remain the same non- Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corpn. Ltd., (2024) 2 SCC 375. Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1. speaking and non-reasoned Award as it was on 03.09.2015. Hence, the petition is to be allowed on this ground alone.
18. However, I am also proceeding to further analyse the submissions of the learned counsel for the respondent No.1 with regards to claim Nos. 3 and 4.
19. Claim No. 3 was for an amount of Rs. 24,48,155/- towards “reimbursement of extra expenditure incurred by the Claimant on additional monthly overhead charges during prolongation of contract period” and the learned Sole Arbitrator, while allowing the said claim gave his findings in a single paragraph, which reads as under:- “After hearing both the parties and going into details of documents and contract provisions, I conclude that these was a considerable delay on the part of the Respondents in concluding the lift contract and its administration. Therefore the onus of responsibility for prolongation of the contract period lies with the Respondent. I am also convinced that if the duration of the work is prolonged the expenses on the overhead charges will increases. I have gone through the various case laws produced before me in favour of this claim and conclude that this claim is partly sustainable. In view of HUDSON’S farmula the claim were out of Rs. 32,56,638.00. I therefore give my final award against Claim No.3: Rs. 24,48,155.00”
20. Further, claim No. 4 was for an amount of Rs. 32,15,900/- towards “reimbursement of compensation for loss of profit suffered by the Claimant on account of depreciation of substantial portion of execution of works due to default and „Breach of Contract‟ by the Department” and same was also allowed to the tune of Rs.16,00,000/-. The learned Sole Arbitrator gave his findings on claim No. 4 in a single paragraph, which reads as under:- “After hearing both the parties and going into details of documents, contract provisions I conclude that due to the delay on the part of Respondents in concluding the lift contract and its administration, and as established above, the onus of responsibility for prolongation of the contract period lies with the Respondent. I am also convinced that due to prolongation of contract period the Claimant has sustained loss of profit on turn over. I have gone through the various case laws produced before me in favour of this claim and conclude that this claim is partly sustainable. I therefore give my final award against Claim No.6: Rs. 16,00,00.00”
21. A perusal of the above paragraphs shows that claim Nos. 3 and 4 have been awarded without any discussions on the merits, pleadings or the evidence led by the parties. In paragraph No. 20 of the Award, the learned Sole Arbitrator merely records a finding that the petitioner is solely responsible for the delay in concluding and administering the lift contract, and on the basis of that finding alone, holds the petitioner responsible for the expenses on the overhead charges under claim NO. 3 and loss of profit on turn over under claim No. 4. However, the learned Sole Arbitrator has failed to provide under which contractual provision, or on the basis of which case law produced before him, did he reach such a conclusion. In absence of such discussion and reasoning, the impugned Award remains a non-speaking Award, which cannot be sustained.
22. Further, Mr. Luthra, learned counsel, has drawn this Court‟s attention to the chart detailing all expenses incurred by respondent No.1, such as wages of permanent staff, depreciation/ hire charges on T&P, transport, temporary accommodation, and office expenditure. This chart was submitted as working details in respect of financial effect of the claims, along with the SOC by the respondent No.1. He submits that the HUDSON formula was applied using this chart by the learned Sole Arbitrator to arrive at the amount awarded under claim No. 3.
23. For allowing the claim No. 4, the learned Sole Arbitrator relied on the chart submitted with SOC, which is reproduced hereunder: -
24. The impugned Award contains no discussion as to how, and on what basis, these figures have been arrived at by the learned Sole Arbitrator, except for the reliance on the charts provided by the respondent No.1. Even while allowing claim No. 3 and 4, there is no finding that the charts given by the respondent No.1 have been accepted by the learned Sole Arbitrator or that the same forms the basis for allowing claim No. 3 and 4.
25. It is settled law that an Award rendered without giving any reasoning for the adjudication of the disputes is unintelligible and cannot be sustained. Reliance is placed on the judgment in Dyna Technologies Pvt. Ltd. (supra), wherein the Hon‟ble Supreme Court observed as under: - “37. In case of absence of reasoning the utility has been provided under of 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 utilized 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. …” (Emphasis added)
26. In light of the above discussion, the impugned Award cannot be sustained. The claim No. 3 and 4 have been granted without reasoning as to how the learned Sole Arbitrator reached the amounts awarded in these claims. There is no discussion, foundational facts, basis given by the learned Arbitrator as to how the claim No. 3 and 4 has been awarded. Further, although Mr. Luthra, learned counsel for respondent No.1 contends that claim No. 3 and 4 were awarded based on the charts provided by the respondent No.1 with the SOC, the same is not recorded in the findings for claim Nos. 3 and 4 by the learned Sole Arbitrator. Additionally, the impugned Award has already been set aside as a non-speaking Award via order of this Court dated 03.09.2015.
27. For the said reasons, the impugned Award is set aside qua all the claims except claim No. 7, as the petitioner has released the amount to the respondent No.1 with respect to claim No.7. The same has duly been recorded in paragraph No. 5 of the order dated 03.09.2015 of this Court.
28. The amount lying deposited by the petitioner with the Registrar General, Delhi High Court, with up-to-date accrued interest shall be released to the petitioner/nominee after a period of 8 weeks from today.
29. The petition is disposed of along with pending applications, if any.