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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
Millennium School – Appellant
Versus
Pawan Dawar – Respondent
O.M.P. (Comm) 590 of 2020
Decided on : 10-05-2022
Arbitration and Conciliation Act, 1996- Section 34- Evidence Act, 1872 - Section 65-B (4) - Arbitral award –Agreement - Termination of the Agreement - Awarded pendente lite interest at the rate of 18% per annum on the awarded amounts from the date of presentation of claims till the date of the award and, future interest at the rate of 18% per annum on the awarded amounts from the date of the award till the date of realization, if the amount was not paid within a period of three months from the date of the award - By virtue of Section 1 of the Evidence Act, it does not apply to arbitration. Although, the principles of the Evidence Act are usually applied in arbitral proceedings, sensu stricto, the said Act is not applicable. Section 65-B of the Evidence Act is not applicable to arbitral proceedings. (Para 43)
Finding of the Court :
Petitioner has also impeached the impugned award in regard to the interest awarded by the Arbitral Tribunal. It is pointed out that the Arbitral Tribunal has awarded pre-award interest at the rate of 18% per annum on the amount due to the petitioner from the date when the amount became due to the date of filing the Statement of Claims - Petitioner’s challenge to award of interest is two pronged. First, it is contended that the rate of interest awarded, that is,18% per annum, is excessive and manifestly erroneous. Second, it is contended that Arbitral Tribunal erred in awarding pendente lite interest on the preaward interest.
Result : Petition disposed.
JUDGMENT :
Vibhu Bakhru, J.
1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the ‘A&C Act’) impugning an arbitral award (hereinafter the ‘impugned award’) dated 28.02.2020 delivered by an Arbitral Tribunal comprising of a Sole Arbitrator (hereinafter the ‘Arbitral Tribunal’).
2. The impugned award was rendered in the context of disputes that have arisen between the parties in relation to the Agreement dated 01.04.2012.
Factual Context
3. Mr Pawan Dawar (hereinafter ‘the respondent’) is engaged in the business of providing transport services and carries on his business under the name and style of his proprietorship concern M/s Genesis Enterprises (hereinafter ‘GE’).
4. On 01.04.2012, the parties entered into an Agreement, whereby the respondent agreed to provide transport services to the petitioner. The petitioner owned twenty-two school buses, which the respondent agreed to operate and maintain. The respondent was required to provide conductors, drivers, supervisors, cleaners, full time mechanics and other personnel. In addition, the respondent also agreed to provide additional buses for the purposes of picking up and dropping off the students and the employees of the petitioner.
5. The Agreement was for a term of eight years, that is, from 01.04.2012 till 31.03.2020 with the first five years as a lock in period. Further, the respondent agreed to strictly abide by the obligations stipulated in the Agreement such as, adhering to the timing for transportation of students; regular maintenance of the buses, maintaining motorable conditions of the buses; complying with the safety guidelines issued by the Supreme Court of India; limiting the number of students transported in each bus to the permissible limit; and, in the event of breakdown of buses, providing alternate vehicles etc.
6. Thereafter, by a communication dated 07.06.2015, the respondent requested the Principal of the petitioner school to release the outstanding payments in terms of the Agreement. He further stated that even though, the petitioner was collecting the transportation fee from the students well in advance, however, the petitioner was making payments to him in petty instalments after a delay of a substantial period.
7. The Principal of the petitioner school responded by an e-mail dated 05.08.2015 alleging deficiencies in the services provided by the respondent and further, informed him that the petitioner would be compelled to take strict action if the said deficiencies were not rectified within a period of seven-ten days. Thereafter, by a communication dated 03.09.2015, the petitioner terminated the Agreement.
8. Aggrieved by the termination of the Agreement, the respondent invoked the Agreement to refer the disputes to arbitration, in terms of Clause 36 of the Agreement. This Court, by an order dated 04.04.2018, passed in O.M.P. (T) (COMM) 55 of 2017 captioned Pawan Dawar v. Millennium School directed the Delhi International Arbitration Centre (DIAC) to appoint an arbitrator to adjudicate the disputes between the parties. Thereafter, the Arbitral Tribunal entered upon reference on 07.06.2018.
9. Before the Arbitral Tribunal, the respondent filed its Statement of Claims. A tabular statement stating the claims made by the respondent are summarised below:-
| Claim 1 | Outstanding Contractor Fee | Rs. 1,16,16,950/-
|
| Claim 2
| Interest payable on the delayed and outstanding contractor fee calculated upto 31.03.2016 | Rs. 50,65,242/-
|
| Claim 3
| Loss of Profits from the remaining period out of the lock-in period i.e. 03.09.2015 till 31.03.2017 | Rs. 93,97,202/-
|
| Claim 4 | Contractor fee due and payable with respect to cabs | Rs. 65,13,755/- |
| Claim 5
| Interest payable on the delayed and outstanding contractor fee for cabs calculated upto 31.03.2016. | |
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