Errors in the reasoning and conclusion of an arbitral tribunal can lead to the setting aside of an arbitral award.

VIBHU BAKHRU, J.

1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the “the Act”) impugning the arbitral award dated 26.08.2016 (hereafter “the impugned award”) delivered by the Arbitral Tribunal constituted by a Sole Arbitrator, Justice B. A. Khan, former Judge of this Court (hereafter “the Arbitral Tribunal”). The impugned award was rendered in the context of disputes that had arisen between the parties in respect of the “Service Agreement” dated 30.03.2006 (hereafter “the Agreement”), which was entered into between the parties, whereby the respondent was appointed to render architectural and other allied services.

2. The petitioner alleged that there was deficiency in the services and the respondent had failed to submit complete drawings and design in respect of various components. The petitioner also alleged that the respondent had abandoned the work and consequently, the petitioner was constrained to avail services of another consultant for execution of the balance work. The petitioner also submitted that the drawings furnished by the respondent were defective and the roof constructed based on the said drawings had sagged. Consequently, the petitioner also claimed damages on that count. The respondent also raised counter claims aggregating Rs.6,36,95,517/-. The said counter claims included a claim of Rs.1 crore for non declaration of the respondent as the official architect of the project in question; Rs.25,49,634/- as the balance contractual fee; and interest of Rs.7,45,536/- thereon.

3. The Arbitral Tribunal rejected the claims made by the petitioner and also most of the counter claims made by the respondent. However, the Arbitral Tribunal directed that the respondent be declared as an official architect of the project and further awarded a sum of Rs.7,66,000/- in favour of the respondent as balance fee due under the Agreement. In addition, the Arbitral Tribunal also awarded interests at the rate of 9% on the aforesaid fee from the date of termination of the Agreement (that is, 08.03.2007) till the date of actual payment.

4. Although, Mr Sibal, the learned Senior Counsel appearing for the petitioner had initially advanced arguments with respect to the rejection of certain claims made by the petitioner; however, subsequently, he restricted the challenge to the impugned award only in respect of two aspects, namely: (i) the Arbitral Tribunal’s direction to declare the respondent as an official architect of the project; and (ii) the award of Rs.7,66,000/- in favour of the respondent along with interest thereon.

5. Briefly stated, the relevant facts necessary to address the aforesaid controversy are as under:-

5.1 The petitioner (then known as Canton Marketing Private Limited) in terms of the Lease Agreement dated 14.04.2006 took on lease two bare shell buildings (Block A & B) comprising of a basement and ground to 6th floor on a piece of land measuring 2.5 acres from Haryana Industrial Development Corporation (HIDC). The object was to develop a Software Development Centre (SDC), which was to be leased to Tata Consultancy Services Limited (TCSL).

5.2 The petitioner, thereafter, appointed the respondent for rendering services relating to the internal fitment, designing and supervision of the project. A Letter of Intent (LOI) dated 04.01.2016 was issued by the petitioner to the respondent. Thereafter, on 30.03.2006, the parties entered into the Agreement (Service Agreement).

5.3 It was agreed between the parties that the petitioner will be paid professional fee of Rs.69,50,000/-, in stages, for rendering the services as agreed under the Agreement.

5.4 The scope of the work was enhanced and the petitioner agreed to pay a further fee of Rs.9 lakhs in respect of such enhanced work. Although, there is no dispute that the petitioner had agreed to pay the sai