The limited scope of interference under Section 34 of the arbitration and Conciliation act, 1996, and the importance of not reassessing or reappreciating the evidence.

JUDGMENT

Ravi Krishan Kapur, J. - This is an application under Section 34 of the arbitration and Conciliation act, 1996 ('the act').

The facts:

2. In May 2000, the petitioners published a tender inviting bids for 9 tooled up CNC VERT Machines Centre Mounted TaLV 505 (the machines) and the connected spare-parts required for running of the machines. In response to the tender, the respondent submitted its bid which was duly accepted by the petitioners. The aggregate value of the machines was Rs.9,15,82,046/-. The petitioner also issued a Letter of Intent dated 3 December, 2002. Thereafter, the machines were supplied by the respondent to the petitioners and also installed at the factory of the petitioners. The respondent also furnished a bank guarantee which was valid till the expiry of the warranty period. The machines had also been duly inspected and approved by both the parties.

3. admittedly, the petitioners made payment of 90% of the value of the machines after retaining 10% of the total purchase value in terms of Clauses 26.03 and 27 of the purchase order. It is the balance 10% of the purchase price which remains due and payable by petitioners to the respondent and inter-alia forms the subject matter of the disputes between the parties. after continuous and uninterrupted use of the machines, the petitioners raised a dispute in respect of the measurement of the cycle time as recorded in the Minutes between the parties held on 11 May, 2004. Ultimately, it was decided that, the petitioners would achieve the agreed cycle time within a span of 3 months i.e. by august 15, 2004, whereupon the balance payment for the machines would be released. Subsequently, the parties agreed that the cycle time as modified had been achieved. This fact was also recorded in the Minutes of the Meeting held on 11 May, 2004. Thereafter, notwithstanding the fact that the machines had been duly installed and have been continuously and uninterruptedly in running condition, the petitioner has refused to pay the balance 10% of the purchase value of the machines.

The submissions:

4. It is submitted on behalf of the petitioners that, in passing the impugned award the arbitrator did not record the oral evidence of the witnesses nor consider the documents furnished by the parties. It is also alleged that the arbitrator did not consider the correspondence exchanged between the parties and ignored the letters dated June 27, 2005 and July 26, 2006 registering the complaints of the petitioners against failure of commissioning of 7 of 9 machines. It is also alleged that the arbitrator did not take into consideration the letter dated 3 June, 2011 wherein the respondents had allowed the petitioners to make deductions as per the supply order from the outstanding amount due to the respondents. In support of their contentions, the petitioners relies on the decisions reported in ONGC vs. SaW Pipes aIR 2003 SC 2629 and associate Developers vs. Delhi Development authority aIR 2015 SC 620. It is also submitted that the impugned award directs the petitioners to pay interest of 18% from the date of the award which is contrary to the decision Vedanta Limited vs. Shenzhen Shandong Nuclear Power Construction Company Limited (aIR 2018 SC 4773). accordingly, the petitioners pray for setting aside of the award.

5. On behalf of the respondent, it is submitted that, there are no grounds which warrant interference with the impugned award. The award is a reasoned award and has been passed after taking into consideration all the facts and circumstances of the case. The arbitrator has dealt with each of the issues raised by the parties. Moreover, no grounds contemplated under Section 34 or under any other section of the act has been made out which warrant any interference with the award. In support of their contentions, the respondent has relied on the decisions of P R Shah Shares and Stock Brokers Private Limited vs. BHH Securities Private Limited & Others (2012) 1 SCC 594 and associate Builder