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SUPREME COURT OF INDIA
ARUN MISHRA, M.R. SHAH, JJ.
The State of Jharkhand and Others – Petitioners
Versus
M/s HSS Integrated SDN and Another – Respondents
Special Leave to Appeal (C) No. 13117 of 2019
Decided On : 18-10-2019
Arbitration and Conciliation Act, 1996 – Sections 34 and 37 – Appeal against arbitral award – Contractual dispute between parties – Award passed by Arbitral Tribunal can be interfered with in proceedings under Sections 34 and 37 of Arbitration Act only in a case where finding is perverse and/or contrary to evidence and/or same is against public policy – Claim of original claimants primarily involved unpaid amount in respect of work executed under contract, loss of profit and overhead charges, apart from other consequential claims arising out of termination – Counter-claim filed by petitioners-State was for reimbursement on account of unsatisfactory performance by respondents – Categorical findings arrived at by Arbitral Tribunal are to the effect that termination of contract was illegal and without following due procedure of provisions of contract – Findings are on appreciation of evidence considering relevant provisions and material on record as well as on interpretation of relevant provisions of contract which are neither perverse nor contrary to evidence in record – First Appellate Court and High Court have rightly not interfered with such findings of fact recorded by Arbitral Tribunal – There is proper application of mind by Arbitral Tribunal on respective claims and same is not required to be interfered with, more particularly, when in proceedings under Sections 34 and 37 of Arbitration Act, petitioners have failed – Special Leave dismissed. (Paras 2.1, 2.2, 2.4, 6.2, 6.3, 6.4, 7 and 8)
Facts of the case:
Present special leave petition arises out of the contractual dispute between the petitioners-State and respondents in relation to a consultancy agreement over construction of six lane Divided Carriage Way of certain parts of Ranchi Ring Road. Aggrieved by impugned judgment and order dated 30.01.2019 passed by High Court of Jharkhand at Ranchi in Commercial Appeal No. 01 of 2018, by which High Court has dismissed the said appeal preferred by petitioners herein under Section 37 of the Arbitration and Conciliation Act, 1996 and has confirmed award declared by Arbitral Tribunal, confirmed by First Appellate Court, original appellants have preferred present special leave petition.
Findings of Court:
Once it is held that termination was illegal and thereafter when Arbitral Tribunal has considered claims on merits, which basically were with respect to the unpaid amount in respect of the work executed under the contract and loss of profit. Cogent reasons have been given by Arbitral Tribunal while allowing/partly allowing respective claims.
Result : Special Leave Petition dismissed.
JUDGMENT :
M.R. SHAH, J.
1. Aggrieved by the impugned judgment and order dated 30.01.2019 passed by the High Court of Jharkhand at Ranchi in Commercial Appeal No. 01 of 2018, by which the High Court has dismissed the said appeal preferred by the petitioners herein under Section 37 of the Arbitration and Conciliation Act, 1996 (for short ‘the Arbitration Act’) and has confirmed the award declared by the learned Arbitral Tribunal, confirmed by the First Appellate Court, the original appellants have preferred the present special leave petition.
2. This special leave petition arises out of the contractual dispute between the petitioners- State and the respondents in relation to a consultancy agreement over construction of six-lane Divided Carriage Way of certain parts of Ranchi Ring Road. Respondent Nos. 1 and 2 acted as a consortium for providing such consultancy and supervisory services. An agreement was entered into between the parties on 28.08.2007. The original work period under the said agreement was for 36 months, i.e. from 01.10.2007 to 30.09.2010. There was a dispute with respect to the nonperformance and unsatisfactory work done by the respondents. However, the respondents were granted extension of contract twice. Thereafter, a letter dated 25.11.2011 was issued by the Executive Engineer to the respondents and other contractors entrusted with the task of construction, granting a second extension of time of contract for construction work. The respondents were called upon to make compliances with the issues pointed out, at the earliest. In the said communication dated 25.11.2011, it was stated that if the deficiencies are not removed and/or complied with, in that case, there shall be suspension of payment under Clause 2.8 of the General Conditions of Contract (for short ‘the GCC’). On 05.12.2011, a review meeting was held between the parties, followed by a letter dated 07.12.2011 issued by the respondents- original claimants in reply/compliance of the aforesaid letter dated 25.11.2011. It was the case on behalf of the respondents-original claimants that without properly considering the said letter of the respondents-original claimants dated 07.12.2011, petitioners herein issued letter dated 12.12.2011 invoking Clause 2.8 of the GCC for suspension of payment, alleging certain deficiencies. It was the case on behalf of the respondents-original claimants that by letter dated 27.12.2011, they replied to the suspension notice and complied with the deficiencies. In reply to the aforesaid letters, the petitioners issued letters dated 23.12.2011 and 28.12.2011 asking the claimants to ensure compliance of the pending issues. That by letter/communication dated 09.02.2012, the petitioners served a notice upon the respondents terminating the contract with effect from 12.03.2012. The said termination notice was issued under Clause 2.9.1(a) and (d) of the GCC. The respondents- original claimants replied to the said termination notice by letters dated 16.02.2012 and 24.02.2012 and requested the petitioners to reconsider the matter. However, the dispute between the parties was not resolved. The respondents-original claimants served a legal notice dated 10.03.2012 and invoked the arbitration clause 2.9.1(a). Pursuant to the order passed by the High Court, the Arbitral Tribunal was constituted.
2.1 The Arbitral Tribunal comprised of nominees of the rival parties and a retired Judge of the Jharkhand High Court as the Presiding Arbitrator. The respondents-original claimants claimed a total sum of Rs. 5,17,88,418/- under 13 different heads, excluding interest. The petitioners also filed a counterclaim for Rs. 6,00,78,736/- under five heads. The claim of the original claimants primarily involved the unpaid amount in respect of the work executed under the contract, loss of profit and overhead charges, apart from other consequential claims arisin
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