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2018 Supreme(Del) 364
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J.
DELHI METRO RAIL CORPORATION LTD - Petitioner
Versus
VOESTALPINE SCHINE GMBH - Respondent
O.M.P. (COMM) 116 of 2018 & IAs 3509-3510 of 2018
Decided on : 13-03-2018
Advocate Appeared:
For the Appellant : Mr.Tarun Johri, Mr.Ankit Saini, Mr.Ankur Gupta, Advs.
For the Respondent: Ms.Vanita Bhargava, Mr.Ajay Bhargava, Mr.Jeevan Panda, Ms.Shalini Sati Prasad, Advs.
The main legal point established in the judgment is that the interpretation of contract clauses and the application of the Arbitration and Conciliation Act, 1996 should be reasonable and not perverse, and the award of interest and Arbitrator's fee should be justified based on the contract terms and the Act.
Headnote:
Arbitration - Interpretation of Contract - Arbitration and Conciliation Act, 1996 - Clause 9.2 of Special Conditions of Contract, Clause 15.5 of General Condition of Contract, and the Arbitration Clause - [ARBITRATION] - [INTERPRETATION OF CONTRACT] - [Arbitration and Conciliation Act - 1996] - [Clause 9.2, Clause 15.5]
Fact of the Case:
The petitioner challenged the Arbitral Award, claiming that the Arbitrator violated the mandate of Section 28(3) of the Arbitration and Conciliation Act, 1996 by granting interest to the respondent, despite a prohibition in the contract.
Finding of the Court:
The court found that the Arbitral Tribunal's interpretation of the contract, specifically Clause 9.2 of Special Conditions of Contract and Clause 15.5 of General Condition of Contract, was not unreasonable or perverse. The court upheld the award of interest in favor of the respondent.
Issues: Interpretation of contract clauses, violation of Section 28(3) of the Arbitration and Conciliation Act, 1996, and award of Arbitrator's fee.
Ratio Decidendi: The court held that the Arbitral Tribunal's interpretation of the contract was reasonable and not perverse, and the award of interest and Arbitrator's fee was justified.
Final Decision: The petition and pending applications were dismissed with no order as to costs.
NAVIN CHAWLA, J.
IA 3510/2018
Exemption allowed subject to all just exceptions.
O.M.P. (COMM) 116/2018 & IA 3509/2018
1. This petition has been filed by the petitioner challenging the Arbitral Award dated 27th November, 2017 passed by the Arbitral Tribunal by which the Arbitral Tribunal has allowed the claim of the respondent for EURO 6,70,703.14 with interest @13.7% p.a. with effect from 2nd March, 2017 up to the date of the Award and a further sum of EURO 68,793.59 as also the cost of the arbitration to the extent of Arbitrator’s fee.
2. It is contended by the counsel for the petitioner that in view of Clause 9.2 of the Special Conditions of Contract, the Arbitrator had been expressly prohibited from awarding any interest on the amount found due and payable by the petitioner to the respondent. He submits that in spite of this prohibition being brought to the notice of the Arbitral Tribunal, the Arbitral Tribunal has granted interest in favour of the respondent, thereby violating the mandate of Section 28(3) of the Arbitration and Conciliation Act, 1996(hereinafter referred to as the ‘Act’).
3. I am unable to agree with the said submission of the counsel for the petitioner.
4. In the present case, the Arbitral Tribunal has interpreted three distinct provisions of the contract between the parties. These are Clause 9.2 of the Special Conditions of Contract (SCC), which is relied upon by the petitioner, and Clause 15.5 of the General Condition of Contract (GCC) read with Clause 15.5 of the Special Conditions of Contract relied upon by the respondent. These provisions are quoted hereinbelow:-
“SCC 9.2 The rules of procedure for arbitration proceedings pursuant to GCC Clause 9.2 shall be as follows:
The Arbitration and Conciliation Act - 1996 of India shall be applicable. Purchaser and the suppler shall make every necessary effort to resolve amicably by direct and informal negotiation any disagreement or dispute arising between them under or in connection with contract.
Arbitration: If the efforts to resolve all or any of the disputes through conciliation fails, then such disputes or differences, whatsoever arising between the parties, arising out of touching or relating to supply/ manufacture, measuring operation or effect of the Contract or the breach thereof shall be referred to Arbitration in accordance with the following provisions:
(a) Matters to be arbitrated upon shall be referred to a sole Arbitrator where the total value of claims does not exceed Rs. 1.5 million. Beyond the claim limit of Rs.1.5 million, there shall be three Arbitrators. For this purpose the Purchaser will make out a panel of engineers with the requisite qualifications and professional experience. This panel will be of serving or retired engineers of Government Departments or of Public Sector Undertakings;
(b) For the disputes to be decided by a sole Arbitrator, a list of three engineers taken from the aforesaid panel will be sent to the supplier by the Purchaser from which the supplier will choose one;
(c) For the disputes to be decided by three Arbitrators, the Purchaser will make out a list of five engineers from the aforesaid panel. The supplier and Purchaser shall choose one Arbitrator each and the two so chosen shall choose the third Arbitrator from the said list, who shall act as the presiding Arbitrator;
(d) Neither party shall be limited in the proceedings before such Arbitrators(s) to the evidence or the arguments put before the Conciliator;
(e) The Conciliation and Arbitration hearings shall be held in Delhi only. The language of the proceedings that of the document and communications shall be English and the awards shall be made in writing. The Arbitrators shall always give item-wise and reasoned awards in all cases where the total claim exceeds Rs.One million; and
(f) The award of the sole Arbitrator or the award by majority of three Arbitrators as the case may be shall be binding on all parties.
Interest on Arbitration Award: Where the arbitral aw
