Full Text
HIGH COURT OF DELHI
JUDGMENT
DELHI TRANSCO LTD .....Appellant
Through: Ms. Avnish Ahlawat, Standing Counsel with Mr. N.K. Singh, Ms.Laavanya Kaushik, Ms. Aliza Alam, Mr. Mohnish Sehrawat and
Mr.Amitoj Chadha, Advocates.
Through: Ms. Payal Chandra, Mr. Rhythm Buaria and Mr. Yashraj Samant, Advocates.
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN SHANKAR
1. The present appeal under Section 37 of the Arbitration & Conciliation Act, 1996[1], has been preferred by the Appellant challenging the judgment of the learned Single Judge dated 24.05.2023[2], whereby the Learned Single Judge has upheld the Award dated 29.01.2015 passed by the learned Arbitral Tribunal[3].
2. The Appellant herein lays challenge to the impugned judgment on the ground that same upholds the “perverse reasoning” given by the Ld. AT while making the Impugned Award. It is further contended by A & C Act Impugned Judgment Ld. AT the Appellant that the Impugned Award is also liable to be set aside on the ground that it suffers from patent illegality due to lack of any evidence to substantiate the claims of the Respondent/claimant. To buttress this argument, the Appellant would contend the following: a. While the Ld. AT has placed reliance on the Chartered Accountant’s Certificates[4] for the claims with respect to the „Basic Idling Claim‟ and „interest on claim of basic idling of work‟, no evidence was led by the Respondent to prove the legal sanctity of the CA Certificates. Additionally, neither the Chartered Accountant was examined, nor were any audited statements of accounts/documents produced before the Ld. AT to corroborate the respective claim of the Respondent. The Appellant would further contend that the claims that have been awarded on the basis of the CA Certificates, are perverse and are liable to be set aside on the sole ground that the same has been awarded based on no evidence at all. b. Secondly, the claim regarding the Interest on Profit-loss on delayed payment awarded by the Ld. AT is also perverse as the same is also based on no evidence at all. The Appellant would further contend that there is nothing on record, either in the Statement of Claim or in the Affidavit of Evidence filed by the Respondent/Claimant to demonstrate as to what is the amount of delayed payment, what is the period and on what amount the interest has been calculated, how and at what rate.
3. In the award dated 29.01.2015, the total amount of the claims allowed by the Ld. AT is as follows: CA Certificate Claim Award (In Rs.) Basic Idling of work along with interest on the same 3,72,43,618.00/- Interest on loss of Profits on account of delay of delayed performance of the Contract 1,58,55,051.00/- Pre-reference interest @12% 65,50,795.00/- Pendente lite interest for the period, 10th January, 2005 to 29th January, 2015 7,15,79,357.00/- Arbitration Costs 1,35,59,000.00/- Total Amount- Rs. 14,47,87,821.00
5. The primary challenge is with respect to the amounts awarded as compensation for the delay caused by the Appellant, relying on the CA Certificates and the Pre-reference Interest @ 12% per annum from 24.07.2003 till 10.01.2005 as enumerated in paras 175(i) and 175(iii). The ground for challenge to the same is that the Award was based on no evidence at all. Para 175 of the award reads as under: “175.The total amount of the claims allowed by us in the foregoing paragraphs, as on the date of award, i.e. 29th January, 2015, works out to:
(i) Para 168...... „C‟, Page 113........ Rs. 3,72,43,618.00
(ii) Para 169....... „D‟, Page 117........ Rs. 1,58,55,051.00
(iii) Para 171........ „E‟, Page 126........ Rs. 65,50,795.00
(iv) Para 173......... „F‟, Page 128........ Rs. 7,15,79,357.00
(v) Para 174.......... „G‟ Page 128......... Rs. 1,35,59,000.00
6. Ms. Ahlawat, learned counsel for the Appellant, would contend that the said amounts were awarded purely on the basis of CA Certificates which were unauthenticated and with absolutely no supporting documents whatsoever. We propose to deal with this aspect at the very outset.
7. The said CA Certificates are reproduced herein below for ready reference:
8. The Certificates claim to be based on the “Audited Books of Accounts”, “Contract Ledger” and “related documents in respect of the contract” entered into between the parties. The said CA Certificates thereafter tabulate what is under various heads and arrive at a figure. No breakup of details as to the various amounts mentioned as against each expense head has been provided in the certificates and it is these certificate upon which complete reliance has been placed by the Respondent and on which the Ld. AT in its Award has dealt with in the following manner: - “168. The Claimants, on demand by the Respondents for reasonable and demonstrable compensation for the delays caused by the owner, submitted their Chartered Accountants certificates as per the books of Accounts (for the project) as below, vide their letter TEN/RD/C-1264 dated July 24, 2003 (pages 45-50 of statement of claims) Break-up of expenditure claimed for the period August, 1993 to December 1999:
┌───────────────────────────────────────────────────────────────────────────────────────────────────────────┐ │ Sl. No. Expense Amount (in │ │ Head Rs.) │ ├───────────────────────────────────────────────────────────────────────────────────────────────────────────┤ │ 1. Staff salary and 46,43,718.00 │ │ related costs │ │ 2. Wages and related 58,66,424.00 │ │ costs │ │ 3. Stores consumed 15,05,565.00 │ │ and storage │ │ charges │ │ 4. Bank guarantee 10,17,826.00 │ │ commission │ │ 5. Insurance 37,98,590.00 │ │ 6. Office maintenance 2,39,591.00 │ │ 7. Travelling and 4,62,630.00 │ │ conveyance │ │ 8. Repair and 3,89,179.00 │ │ maintenance │ │ 9. Vehicle running 14,79,779.00 │ │ and maintenance │ │ 10. Miscellaneous 1,99,243.00 │ │ expenses │ │ Signature Not Verified │ │ Digitally Signed │ │ By:HARVINDER KAUR │ │ FAO(OS) (COMM) 162/2023 Page 5 of 13 │ │ BHATIA │ │ Total:- 1,96,01,545.00 │ │ Break-up of expenditure claimed for the period November, 2000 to │ │ October, 2001 (12 months): │ │ 1. Staff salary and 10,34,110.00 │ │ related costs │ │ 2. Wages and related 10,92,672.00 │ │ costs │ │ 3. Stores consumed 01,92,134.00 │ │ and storage │ │ charges │ │ 4. Bank guarantee 02,05,324.00 │ │ commission │ │ 5. Insurance 03,37,984.00 │ │ 6. Office maintenance 01,73,024.00 │ │ 7. Travelling and 56,911.00 │ │ conveyance │ │ 8. Repair and 71,447.00 │ │ maintenance │ │ 9. Vehicle running 01,08,053.00 │ │ and maintenance │ │ 10. Miscellaneous 9,069.00 │ │ expenses │ │ Total:- 32,80,728.00 │ │ The Respondent‟s counsel questioned the admissibility of the CA‟s │ │ Certificate and its authenticity. There were a lot of submissions and │ │ counter submissions by the learned counsels appearing for both the │ │ parties which were heard by us. │ │ In our considered opinion we do not find any cogent reasons to │ │ question the figures and certificates given by the Chartered │ │ Accountants, M/s S.S. Kothari and Co. dated 19.07.2003 particularly │ │ in view of their categorical statement that “they have verified the │ │ audited books of accounts, contract ledger and related documents in │ │ respect of contact No. 0031 (LOA No. XEN 400 KV/TL-1/424 dated │ │ 21.08.1991) maintained by RPG Transmission Ltd. (formerely SAE │ │ India Ltd. and now KEC) and certify that under the following heads │ │ the company has incurred ......” │ │ The Chartered Accountant‟s certificate and the figures contained │ │ there-in are accepted and we allow the above said claimed amount │ │ of Rs.2,28,72,264.00 (Rs.1,96,01,545 + Rs.32,70,719) under this │ │ head as furnished in the two tabular statements. │ │ ..... (A) │ └───────────────────────────────────────────────────────────────────────────────────────────────────────────┘
22. The learned counsel for the Respondent also sought to rely upon the judgment of this Court in Intex Technologies (India) Ltd. vs. Union of India[8]. However, in our considered opinion the said judgment is also not applicable to the present case as it relates to a
2016 SCC OnLine Del 6620 CENVAT issue in which a CA had, in support of the refund claims, certified/ clarified that the benefits sought had not been passed on to customers, which is quite distinct from an arbitration claim, which has to necessarily be based on relevant documents and specific facts and figures.
23. In any event, admittedly, the authors of the various documents mentioned therein (accounts, contract ledger and, related documents), based on which the said certificates were drawn and which form the foundation of the said certificate have not been examined and the Respondent has, therefore, failed to provide any basis for the claims made by it.
24. The Award of a sum of Rs.65,50,795/-, which is set out in paragraph 175(iii) is the interest awarded on the amount which has been awarded under paragraph 175(i). The said amount is completely based on the alleged CA Certificates and consequently, would also stand disallowed.
25. To wit, any sums awarded, based on the CA certificates, would necessarily have to be disallowed.
26. As regards the remaining challenge to the award, one of which is with respect to the interest on profit and loss on delayed payment, we have gone through both the majority and minority opinions of the Ld. AT and believe that no interference is required in the exercise of our jurisdiction under Section 37 of the A&C Act.
27. This Court is also of the opinion that the arbitration costs, as awarded, do not require any interference by this Court in the exercise of its jurisdiction under Section 37 of the A&C Act.
28. The present appeal, along with the pending application, stands allowed in the above terms.
29. No order as to costs.
SUBRAMONIUM PRASAD, J. HARISH VAIDYANATHAN SHANKAR, J. MAY 21, 2025 AK/va