The main legal point established in the judgment is the requirement for a reasoned determination in arbitral awards and the need for compliance with the terms of the arbitration agreement.

VIBHU BAKHRU, J.

1. M/s Shipra Estate Ltd & Jai Krishan Estates Developers Pvt. Ltd. (hereafter “Shipra”) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter “the Act”) assailing the arbitral award dated 03.01.2017 (hereafter “the impugned award”) made by the sole arbitrator. By the impugned award, the arbitrator adjudicated the disputes that had arisen between the parties in respect of a Work Order dated 19.11.2005 (as subsequently amended) issued by Shipra (and accepted by the respondent) for construction of a multi-storeyed residential building at Ghaziabad.

2. The impugned award has been challenged mainly on two grounds: (i) that no arbitration agreement exists between the parties as the letters dated 10.11.2005, 20.02.2006 and 27.03.2006, as relied upon by the respondent are fabricated; and (ii) that the impugned award is contrary to the terms of the agreement between the parties inasmuch as the agreement was for the payment of a lump sum amount and not on item rates as claimed by the respondent.

Factual background

3. Shipra is a partnership concern engaged in the business of real estate development. The respondent is also a firm engaged in the business of construction and maintenance works on contract basis. The respondent was awarded the contract for “Construction of Multistory residential Complex- 3 bedrooms (Blocks B6 & B7) {(B+G+10+Pent House), (B+G+6+Pent House)} at Plot No. 4, Phase IV, Indirapuram, Ghaziabad (Civil, Electrical, Public Health & other Works)” by the letter dated 19.11.2005 (hereafter “the Agreement”) issued pursuant to an offer submitted by it. The consideration as initially agreed was Rs.7,07,66,614/-, however, the Agreement was later amended by letters dated 11.07.2007, 06.09.2008 and 27.04.2009 (which were accepted by the respondent) and the agreed consideration was increased to Rs.8,15,40,250/-. The term of the Agreement was for a period of sixteen months, starting from December 2005. There were also five other contractors engaged by Shipra for the same project.

4. Certain disputes arose between the parties as Shipra alleged that the respondent had failed to mobilize the requisite resources at the site within the stipulated time. Shipra stated that despite there being no contractual stipulation providing for mobilization advance, an amount of Rs.45,00,000/- was given to the respondent at its request. Further, the progress schedule was submitted by the respondent belatedly on 13.03.2007, that is, after 15 months of taking possession of the site. The respondent disputed the said allegations and alleged that Shipra had failed to release full and timely payment of the running bills (RA bills), supply sufficient quantity of cement and steel and give timely drawings and decisions, leading to inordinate delays in the performance of the Agreement.

5. Thereafter, in December 2010, the respondent stopped work. Shipra alleges that the respondent abandoned the site; the respondent alleges that it could not continue with the works as Shipra was not making the necessary payments. Shipra claimed that it incurred additional financial outlay to get the project completed from other contractors.

6. On 28.05.2014, the respondent filed a petition (Arb. P. 302/2014) under Section 11 of the Act in this Court for appointment of an arbitrator. This Court, by order dated 15.01.2015, appointed Justice J M Malik (retired) as the sole arbitrator to adjudicate the disputes that had arisen in connection with the Agreement.

7. The respondent filed a statement of claims before the arbitrator, inter alia, raising the following claims:-