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2015 Supreme(Del) 275
High Court of Delhi
BADAR DURREZ AHMED & SANJEEV SACHDEVA, JJ.
Mahanagar Telephone Nigam Limited – Appellant
Versus
Fujitshu India Private Limited – Respondent
FAO(OS). No. 63 of 2015 & CM No. 2069 of 2015
Decided On : 20-02-2015
For the Appellant:Krinshendu Datta with Vivek Malik, Mukul Thakur, Nayan Aggarwal, Advocates.
For the Respondent:Sandeep Sethi, Senior Advocate with Khalid Arshad, Pradeep Nayak, Abhishek Bansal, Ishwer Upneja, Advocates.
The main legal principle established in the judgment is the limited scope of judicial scrutiny and interference provided by the Arbitration & Conciliation Act, emphasizing that the court's role is not to re-assess the evidence or substitute its view with that of the Arbitrator.
Headnote:
Arbitration & Conciliation Act - Dispute over payments and deductions - Sections 34, 37 - The court upheld the Arbitrator's award, rejecting the appellant's objections under Section 34 of the Act. The appellant's contentions regarding deductions from purchase orders and annual maintenance charges were dismissed, as the Arbitrator's findings were deemed plausible and not open to interference under the limited scope of judicial scrutiny provided by the Act.
Fact of the Case:
The dispute arose between Mahanagar Telephone Nigam Limited (MTNL) and Fujitshu India Private Limited (FTPL) over payments due to the respondent. Despite a settlement, arbitration was invoked, and the Arbitrator awarded the respondent various sums of money, including outstanding balances, customs duty, maintenance charges, and expenses.
Finding of the Court:
The court upheld the Arbitrator's award, dismissing the appellant's objections under Section 34 of the Act. The court found the Arbitrator's findings to be plausible and not open to interference.
Issues: The issues raised by the appellant included contentions regarding deductions from purchase orders and annual maintenance charges.
Ratio Decidendi: The court emphasized the limited scope of judicial scrutiny and interference provided by the Arbitration & Conciliation Act, stating that the court's role is not to re-assess the evidence or substitute its view with that of the Arbitrator. The court highlighted the principle that an error in the interpretation of the contract by an Arbitrator is not amenable to correction by courts, as long as it is a plausible view of the matter.
Final Decision: The court dismissed the appeal, upholding the Arbitrator's award and emphasizing the narrow scope of judicial scrutiny and interference under the Act.
Sanjeev Sachdeva, J.
1. This appeal under Section 37 of the Arbitration & Conciliation Act, 1996, (hereinafter referred to as the Act), impugns the judgment dated 25.11.2014 passed by a learned Single Judge of this Court whereby the learned Single Judge had dismissed the objections filed by the appellant under Section 34 of the Act.
2. On 30.06.1998, the appellant-Mahanagar Telephone Nigam Limited (MTNL for short) issued the Notice Inviting Tender (NIT) for supply of CDMA IS-95A WLL technology. The respondent Fujitshu India Private Limited (FTPL for short) was the successful bidder and Letter of Intent (LOI) dated 01.06.99 was issued in its favour. Three Purchase Orders (hereinafter referred to as PO-I, PO-II and PO-III), over a period of time, were issued in favour of the respondent pursuant to the said tender.
3. Certain disputes arose between the parties with regard to the payments due to the respondents. The appellant-MTNL formed a Committee to deal with the issues that were pending between the parties. The Committee made recommendations to the Board of Directors of the appellant and also directed release of payment in respect of PO-I, II & III subject to certain deductions and concession being given by the respondent. An affidavit was submitted by the respondent FTPL enlisting the terms of the settlement and acceding to the deductions and concession proposed by the appellant.
4. The respondent by its affidavit accepted the following:
“(i) that it would receive 69.4% of the amount payable against PO-I and PO-II, as full and final settlement.
(ii) MTNL, would issue a TOC for PO-I and PO-II, with retrospective effect i.e. 10.10.2002.
(iii) MTNL, would release the PBGs in issue, after release of payments.
(iv) In respect of PO-lIl, Fujitsu Group would accept for the moment70%of the amount due, and that, the balance 30% would become payable within six months after resolution of balance AT points.
(v) Neither party would take recourse to legal proceedings in respect of POs.
(vi) Fujitsu Group would continue to provide maintenance support in terms of the PO.
(vii) Importantly, the affidavit shall not be construed as admission of any liability by the Fujitsu Group.”
5. Pursuant to the affidavit being filed by the respondent, the Board of Directors of the MTNL took the following decision:
“1. The TOC for year 1 PO be issued w.e.f 10.10.2002 and the payments of Year 1 PO (i.e. PO I and II) be deducted by 30.6% of the respective PO value (on account of deficiency in Coverage and capacity etc.) as full and final settlement and the balance payment may be released immediately. 2. 70% of Year 2 and 3 PO value (i.e. PO III) be released immediately and the balance payment is to be made after rectification of pending acceptance testing issues for "Year 1PO" (Except for coverage and capacity for which deductions have already been agreed in terms of full and final settlement) and "Year 2 and Year 3 PO" within six months.
3. The TOC for "Year 2 and Year 3 PO" may be issued after the pending A/T issues are rectified for Year 1 PO" (except for coverage and capacity) and "Year 2 and Year 3PO…”
6. Despite the settlement, the disputes did not end between the parties and, accordingly, arbitration was invoked. The parties filed their respective claims and led evidence by way of affidavits and the deponents of the affidavits were subjected to cross-examination. The respondent produced four witnesses while the appellant produced three witnesses. The appellant-MTNL also preferred a counter claim.
7. The Arbitrator rejected the counter claim and held the respondent-claimant entitled to the following award:
Description of Claims
Description of Claims
INR
USD
Outstanding balance out of 69.4% of the value of PO-I & PO-II
1,78,048/-
19,52,508.42
Outstanding balance out of 70% of the value of PO-III
1,27,12,991/-
5,43,129
