The court established the validity of the appellate award under the Permanent Machinery of Arbitrators and emphasized the limitations on judicial review under the Arbitration and Conciliation Act, 1996.

Vibhu Bakhru, J.

1. M/s Steel Authority of India Ltd. (hereafter ‘SAIL’) impugns an appellate award dated 16.04.2012 passed by the Appellate Authority, whereby the appeal filed by the respondent – Engineers Project India Ltd. (hereafter ‘EPIL’) against an award dated 16.05.2011 passed by the Sole Arbitrator, in terms of the dispute resolution mechanism under the Permanent Machinery of Arbitrators (hereinafter ‘PMA’), was allowed.

2. The parties are Central Public Sector Enterprises of the Government of India and as per the executive orders issued by the Government, had agreed for resolution of their disputes through the mechanism of PMA. The principal controversy in this petition involves the question whether a writ petition would be maintainable against an appellate award made under the PMA.

3. Briefly stated, the facts relevant for considering the controversy in the present petition are that SAIL awarded a contract (No.P/Proj/Modn/4011899105/140062) dated 13.11.1991 to EPIL for commissioning of a new Calcining Plant at its steel plant at Rourkela, Odisha on turnkey basis. In terms of the contract, the said project was required to be completed in 36 months i.e. by 12.11.1994, however, the said project was completed on 22.06.1998 after a delay of around 3 years and 7 months. This inter alia led to certain disputes between SAIL and EPIL in relation to the said contract, which could not be resolved amicably.

4. Since, the parties are Central Public Sector Enterprises, the arbitration clause in the contract dated 13.11.1991 was substituted by an arbitration agreement, as per the draft annexed to the Office Memorandum (hereafter ‘OM’) dated 22.01.2004, for resolution of their disputes through PMA. The said arbitration agreement reads as under:-

“In the event of any dispute or differences relating to the interpretation and application of the provisions of the contracts, such dispute or difference shall be referred by either party for Arbitration to the Sole Arbitrator in the Department of Public. Enterprises to be nominated by the Secretary to the Government of Indian In-Charge of the Department of Public Enterprises. The Arbitration and Conciliation Act, 1996 shall not be applicable to arbitration under this clause. The award of the Arbitrator shall be binding upon the parties to the dispute, provided, however, any party aggrieved by such award may make a future reference for setting aside or revision of the award to the Law Secretary, Department of Legal Affairs, Ministry of Law & Justice, Government of India. Upon such reference the dispute shall be decided by the Law Secretary or the Special Secretary / Additional Secretary, when so authorized by the Law Secretary whose decision shall bind the Parties finally and conclusively. The parties to the dispute will share equally the cost of arbitration as intimated by the Arbitrator. ”

5. Thereafter, SAIL initiated proceedings under PMA and filed its claim before the Sole Arbitrator - Joint Secretary, Ministry of Heavy Industries and Public Enterprises. SAIL in its claim alleged that it was under compulsion to undertake additional burden of finance, services, material and execution to ensure completion of work and had sustained losses due to delay on the part of EPIL, in concluding the project. EPIL also filed its counter claims, essentially, claiming payments/damages for additional works, prolongation of works, sales tax and octroi, extra quantity of steel etc. EPIL also claimed that the delay in completion of works was for reasons beyond its control and the delay and lapses – including delay in release of payments – was on part of SAIL.

6. The Sole Arbitrator passed an award dated 16.05.2011, partly allowing the claims of SAIL and awarded an amount of Rs.14,30,96,779/- with interest at the rate of 18% p.a. from 24.08.1995 to 16.05.2011 (computed at approximately Rs.40.5 Crores). The Sole Arbitrator also partly allowed the counter claims of EPIL and awarded an amount of Rs