The main legal point established in the judgment is that an Arbitrator's decision must be within the terms of the contract and based on evidence. The approval of the final project cost by the Central Government is crucial and cannot be presumed.

JUDGMENT :

The following judgment of the Court is delivered by Goutam Bhaduri, J.

1. The instant appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (henceforth ‘the Act, 1996’) read with Section 13(2) of the Commercial Courts Act, 2015 (henceforth ‘the Act, 2015’) preferred against the order dated 3-11-2018 passed by the Commercial Court, Raipur, in MJC No.7/18 wherein the application filed by the appellant herein under Section 34 of the Act, 1996 was dismissed.

2. The appellant-Municipal Corporation, Bilaspur, incorporated under the provisions of the Chhattisgarh Municipal Corporation Act, 1956 (henceforth ‘the Act, 1956’) issued a NIT/EOI (Notice Inviting Tender/Expression of Interest) to carry out the work of planning and designing for execution of Storm Drainage Water System for Bilaspur City on 15-7-2010 under the UIDSSMT (Urban Infrastructure Development Scheme for Small and Middle Towns), a project of the Government of India, which is a component of JNNURM (Jawaharlal Nehru National Urban Renewal Mission).

3. Pursuant to the said NIT/EOI, the respondent herein submitted its bid, which was accepted by the appellant and contract agreement dated 24-1-2011 was executed between the parties and the work order was issued on 27-1-2011 in favour of the respondent for executing the work. The payment of consultancy fees was 1.18% of the total project cost. Initially the cost of the project was Rs.44.28 lacs and it was agreed that actual fees would be worked out based on the agreed percentage of the total final cost of the project.

4. The respondent submitted the Inspection Report, Preliminary Design Report and Draft Detailed Project Report (DPR) as a part of execution of work and the payment was made by the appellant for above work as per the payment schedule. After approval of final DPR, the respondent claimed Rs.4,07,03,583/- being 1.18% of total cost project of Rs.333.93 crores. The said claim was refused by the appellant and, as such, the dispute was referred to the Sole Arbitrator for adjudication.

5. The respondent raised its claim for consultancy charges at the rate of 1.18% of the total project cost i.e. Rs.333.93 crores as per clause 4(C) of the contract agreement before the Sole Arbitrator. The learned Sole Arbitrator after considering the submission, evidence adduced and documents, allowed the claim of the respondent herein and passed the award to the tune of Rs.4,07,03,583/-. It has also been observed by the Sole Arbitrator that in case the award amount is not paid within a period of three months from 7-2-2018 it would carry interest at the rate of 9% per annum on the awarded amount from the date of expiry of three months.

6. Being aggrieved by the said award, the appellant Corporation challenged the same before the learned Commercial Court under the provisions of Section 34 of the Act, 1996. The same has been dismissed by the Commercial Court by the impugned order. Hence, this appeal.

7. Learned counsel appearing for the appellant would submit that

- the Arbitrator travelled beyond the Terms of Reference (ToR) as was envisaged under the NIT/EOI;

- the Arbitrator only considered the Pre DPR activities, but the Post DPR which contained the Surveys, Investigation, Data Collection and providing Implementation Support Post DPR to BMC, was also part of contract;

- the expertise of the consultant/respondent was not only limited to passing of the project but extended even after the final project is approved while implementation of the project;

- the Arbitrator was required to arbitrate within the terms of the contract and he had no power apart from what the parties have given to him under the contract;

- the post DPR activities which were required to be performed by the respondent was not considered;

- the Arbitration Tribunal has failed to deal with the post DPR part, therefore, misdirected itself to decide the issu