Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. Patel, Gauri Godse, JJ.
Arabian Jacking Enterprises for Contracting & Trading Company (AJECT), C/o Aegis Management & Financial Consulting (India) Private Limited - Appellant
Versus
Municipal Corporation Of Greater Bombay, Constituted Under the provisions of Mumbai Municipal Corporation Act, 1888 - Respondent
Commercial Appeal No. 49 Of 2019 In Arbitration Petition No. 925 Of 2012
Decided On : 03-08-2022
The Court allowed the appeal and reversed the order of the learned Single Judge on the AJECT Award. The Court held that the learned Single Judge erred in holding that the AJECT tribunal had failed to exercise jurisdiction in interpreting the contract and had abdicated its statutory duty. The Court found that the AJECT tribunal had in fact interpreted the contract and that its interpretation was a possible view. The Court also held that the learned Single Judge erred in relying on the principle of issue estoppel to uphold the Angerlehner arbitral award, as the AJECT tribunal had taken a different view of the contract. The Court further held that the argument of unjust enrichment was not available to the MCGM as a ground to set aside the AJECT award, as unjust enrichment is not a ground of public policy under the Arbitration and Conciliation Act, 1996.
Fact of the Case:
The dispute arose out of a micro-tunnelling and pipe jacking method for a MCGM sewerage project. AJECT won the tender and MCGM placed a work order on 19th January 1999. The date of commencement of work under the contract was 15th March 1999, and the contract period was 24 months including the monsoon. As additional work was added to the scope of work, the contract period stood extended by a further 15 months. The initial contract value was Rs. 34.88 crores. This included an Indian Rupee component of Rs. 4,18,12,500/-and a foreign currency component in USD of 72,50,000. The additional work cost was similarly split into an INR and USD component. The additional work INR component was Rs.10,77,96,012/-and USD component for additional work was USD 18,71,920. The total cost of work was thus Rs. 43.89 crores. The final completion date was 15th June 2002. There is no dispute that the work was indeed completed on time.
Finding of the Court:
The Court found that the AJECT tribunal had interpreted the contract and that its interpretation was a possible view. The Court also held that the learned Single Judge erred in relying on the principle of issue estoppel to uphold the Angerlehner arbitral award, as the AJECT tribunal had taken a different view of the contract. The Court further held that the argument of unjust enrichment was not available to the MCGM as a ground to set aside the AJECT award, as unjust enrichment is not a ground of public policy under the Arbitration and Conciliation Act, 1996.
Issues: 1. Whether the AJECT tribunal had failed to exercise jurisdiction in interpreting the contract and had abdicated its statutory duty? 2. Whether the learned Single Judge erred in relying on the principle of issue estoppel to uphold the Angerlehner arbitral award? 3. Whether the argument of unjust enrichment was available to the MCGM as a ground to set aside the AJECT award?
Ratio Decidendi: 1. The Court held that the AJECT tribunal had interpreted the contract and that its interpretation was a possible view. The Court found that the AJECT tribunal had specifically noted and considered the MCGM’s submission on interpretation. The Court also found that the AJECT tribunal had given elaborate reasons for its interpretation of the contract. 2. The Court held that the learned Single Judge erred in relying on the principle of issue estoppel to uphold the Angerlehner arbitral award, as the AJECT tribunal had taken a different view of the contract. The Court found that the Angerlehner arbitral award was not binding on the AJECT tribunal, as the two tribunals were interpreting different contracts. 3. The Court held that the argument of unjust enrichment was not available to the MCGM as a ground to set aside the AJECT award, as unjust enrichment is not a ground of public policy under the Arbitration and Conciliation Act, 1996. The Court found that the MCGM’s argument of unjust enrichment was based on a misinterpretation of the contract.
Final Decision: The Court allowed the appeal and reversed the order of the learned Single Judge on the AJECT Award. The Court held that the learned Single Judge erred in holding that the AJECT tribunal had failed to exercise jurisdiction in interpreting the contract and had abdicated its statutory duty. The Court found that the AJECT tribunal had in fact interpreted the contract and that its interpretation was a possible view. The Court also held that the learned Single Judge erred in relying on the principle of issue estoppel to uphold the Angerlehner arbitral award, as the AJECT tribunal had taken a different view of the contract. The Court further held that the argument of unjust enrichment was not available to the MCGM as a ground to set aside the AJECT award, as unjust enrichment is not a ground of public policy under the Arbitration and Conciliation Act, 1996.
JUDGMENT :
(G.S. Patel, J.) -
1. The challenge is to a judgment dated 31st March 2017 under Section 34 of the Arbitration & Conciliation Act, 1996 (“the Arbitration Act”). The Appeal is under Section 37 of the Arbitration Act. The judgment in question was a common judgment in two arbitration petitions under Section 34. The Appeal is only in one of these. To explain: Arbitration Petition No. 162 of 2009 was filed by one Angerlehner Structural and Civil Engineering Company (“Angerlehner”) against the MCGM. The second Arbitration Petition No. 925 of 2012 was by the Municipal Corporation of Greater Mumbai against the present Appellant, Arabian Jacking Enterprises for Contracting and Trading Company (“AJECT”). The contracts in both cases were different. The Awards in both cases were different. But both contracts had an identical price escalation clause and a formula for its application. On an identically worded price escalation clause in two separate contracts, two different three-member tribunals took diametrically opposite views.
2. Both petitions were heard together. The learned Single Judge dismissed the Angerlehner petition and allowed the MCGM petition against AJECT. The result was an acceptance of the Angerlehner Award and its interpretation of the price escalation clause with its formula, and a rejection of the AJECT Award, which took the opposite view.
3. In the AJECT case, the learned single Judge held that the AJECT Tribunal side-stepped the question of interpretation of the formula in the price escalation clause arbitration, abdicated its decision-making responsibility, did not consciously apply its mind and created an artificial barrier against its interpretive mandate. There was, thus, the learned single Judge held, a failure by the arbitrators to exercise their jurisdiction to interpret the terms of the contract.
4. We have heard Mr Gaya for the Appellants, AJECT, and Mr Setalvad for MCGM. We have carefully considered the impugned order as also the arbitral Award in question. Regrettably, we are unable to endorse or approve the view of the learned Single Judge. For the reasons that follow, we have allowed the Appeal and reversed the order of the learned Single Judge on the AJECT Award.
5. Before we proceed to outline the rival submissions, consider the contractual provisions and, the award and the impugned judgment, we must once again note that in this Appeal we are only concerned with the AJECT final award of 18th April 2012. This is important because the impugned judgment was common to both Petitions. The entire decision turns on an interpretation of one clause and the formula that it invokes. There is no appeal in the Angerlehner matter, and we are therefore not required to decide whether the impugned order is or is not correct as regards the Angerlehner Award. Of necessity, we will be required to refer to some of the observations and findings returned by a learned Single Judge in the Angerlehner Petition for a clearer understanding.
6. The AJECT contract was a micro-tunnelling and pipe jacking method for a MCGM sewerage project. It is said to have been the first micro-tunnelling project of its kind. AJECT won the tender and MCGM placed a work order on 19th January 1999. The date of commencement of work under the contract was 15th March 1999, and the contract period was 24 months including the monsoon. As additional work was added to the scope of work, the contract period stood extended by a further 15 months. The initial contract value was Rs. 34.88 crores. This included an Indian Rupee component of Rs. 4,18,12,500/-and a foreign currency component in USD of 72,50,000. The additional work cost was similarly split into an INR and USD component. The additional work INR component was Rs.10,77,96,012/-and USD component for additional work was USD 18,71,920. The total cost of work was thus Rs. 43.89 crores. The final com
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
