The main legal point established in the judgment is that the interpretation of specific contractual provisions and the force majeure clause by the arbitrator was not implausible and did not constitute patent illegality. The court also found that the arbitrator did not ignore vital evidence before him and that the evidence was almost certainly against the petitioner rather than in their favor.

JUDGMENT :

TABLE OF CONTENTS

A. INTRODUCTION

1. I heard counsel on 13th and 14th October 2020 by videoconferencing on this Petition under Section 34 of the Arbitration & Conciliation Act, 1996 challenging an arbitral award dated 8th May 2019 made by a sole arbitrator, Mr Cyrus Ardeshir, an advocate of our Court.

2. Of necessity, and especially in view of the Supreme Court decision in Ssangyong Engineering & Construction Co Ltd v National Highways Authority of India (NHAI), (2019) 15 SCC 131) the scope of the challenge is limited. Conscious of this, Mr Seervai for the Petitioner limited his grounds of challenge to a single ground of ‘patent illegality’; and, specifically, perversity as a dimension of patent illegality. (In saying this, I have adopted my reasoning in Union of India v Recon, Arbitration Petition (L) No 1293 of 2019, decided on 13th February 2020).Following the Ssangyong enunciation, he divides this ground into two components. First, that the learned Sole Arbitrator’s interpretation of specific contractual provisions and, in particular, a force majeure clause, is so thoroughly implausible as to be perverse and therefore constitutes patent illegality. Second, that the arbitrator ignored vital evidence before him and this, too, constitutes perversity and vitiates the Award as being patently illegal. Mr Purandare for the Respondent defended the Award.

3. A summary background may be useful. The Petitioner (“Reliable”) is a lessee from the Maharashtra Industrial Development Corporation (“MIDC”) of some property in Airoli, Navi Mumbai. On this, there stands a building known as Liberty Tower. It has several units. In August 2014 Reliable gave three of these units in Liberty Tower to the Respondent (“Evonik”) on lease. Evonik proposed to use these premises for its specialty chemicals business. It placed an interest-free refundable security deposit of Rs.1,90,01,100 with Reliable. The term was nine years, and the first five of these were a lock-in. Evonik was to pay a little over Rs 30 lakhs a month from 1st January 2015 or completion of fit-out works, whichever was earlier. As is usual, Reliable had to obtain MIDC permission. This is one area of dispute. Equally, Evonik needed a license (“consent to establish”) from the Maharashtra Pollution Control Board (“MPCB”), and that permission depended on MIDC permission. Evonik says Reliable ought to have obtained the MIDC permission before-hand or ‘immediately’ on signing on the contract or, at any rate, before 1st January 2015. Without it, Evonik could not get MPCB permission, and without that permission, the premises were useless to it. Reliable contends that it never knew about MIDC approval being needed urgently or any time-line; that it was informed of this very late; and that there is evidence to show that MIDC approval used to come in well after the event, sometimes even after the lease or leave and license term was over. The Agreement itself had no deadline for obtaining MIDC approval. There is also an issue about Reliable not paying its property tax dues to the Navi Mumbai Municipal Corporation (“NMMC”), and whose no-dues certificate, too, was needed by the MPCB. Evonik says time ran out on it: on the one hand, Reliable neither procured the MIDC permissio