The main legal point established in the judgment is that the interpretation of contract terms falls within the jurisdiction of the Arbitral Tribunal and can only be challenged if the interpretation is patently unreasonable or perverse. The judgment also emphasizes the distinction between errors in interpretation and errors of jurisdiction.

JUDGMENT :

Vibhu Bakhru, J.

1. The Delhi Development Authority (hereinafter ‘DDA’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the A&C Act’) impugning an Arbitral Award dated 30.10.2014 (hereinafter ‘the impugned award’) delivered by a Sole Arbitrator (hereinafter ‘the Arbitral Tribunal’).

2. The impugned award was rendered in the context of disputes that had arisen between the parties in relation with three agreements dated 20.02.2010, 24.02.2010 and 26.02.2010 respectively (hereinafter collectively referred to as ‘the Agreements’).

Factual Context

3. DDA issued a Notice Inviting Tender (hereinafter ‘NIT’) regarding (i) construction and refurbishment of training venues at Siri Fort Sports Complex (hereinafter ‘Project No. 1’); (ii) refurbishment of training venues at Yamuna Sports Complex (hereinafter ‘Project No. 2’); and, (iii) work of Commonwealth Games Village near Akshardham Temple (hereinafter ‘Project No. 3’) from all eligible contractors. [Project No. 1, Project No. 2 and Project No. 3 are hereinafter collectively referred to as ‘the Projects’].

4. Pursuant to the said NIT, the respondent (hereinafter, ‘WWS’) submitted its bids for executing the Projects on 02.01.2010. WWS’s bid was accepted after negotiations and DDA issued three separate Letters of Award (hereinafter ‘LoA’) dated 09.02.2010, 15.02.2010, 17.02.2010 in respect of Project No. 2, Project No. 3 and Project No. 1 respectively. Thereafter, the Agreements were executed between the parties on 20.02.2010 for Project No. 3; on 24.02.2010 for Project No. 1; and on 26.02.2010 for Project No. 2. These were for the contract value of Rs. 4,79,95,245/-, Rs. 4,03,29,907/- and Rs. 4,07,31,638/- respectively.

5. Under the terms of the Agreements, DDA agreed to reimburse WWS for the service tax payable/applicable. However, the reimbursement was contingent upon the submission of proof of payment to the concerned department. Additionally, DDA was required to pay WWS the charges for airlifting of equipment as provided by WWS in its tender.

6. The stipulated date of completion for Project Nos. 1 and 3 was 24.07.2010 and for Project No. 2 was 20.06.2010. WWS contends that it had completed the work on or before the stipulated dates. However, DDA disputes the same. According to DDA, Project Nos. 1 and 3 were completed on 15.09.2010 and Project No. 2 was completed on 28.09.2010.

7. By a letter dated 29.01.2011, WWS informed DDA that the airfreight charges were billed within the price of the equipment and they were unable to provide separate bills for air lifting charges. WWS explained that this was due to complex taxation issues and no agency was able to provide separate bills for airlifting of goods. Additionally, WWS claimed that the charges for airlifting of goods were a part of the tender and these had already been accepted by DDA, thus, necessitating no further details.

8. WWS claims that DDA, through various correspondence in the month of June, 2011, insisted on separate bills for air freight charges. WWS further claims that, it sent letters to the concerned authorities requesting for release of payments. However, DDA did not take any action in respect of the same.

9. WWS contends that, subsequently, by a letter dated 31.10.2011, addressed to the Member Engineering of DDA, it referred to the Dispute Resolution Clause under the Agreements and requested for the appointment of an arbitrator; however, DDA did not take any further steps pertaining to the requests made by WWS. DDA, disputes the same.

10. WWS approached this Court by way of a petition under Section 11 of the A&C Act and requested for the appointment of a sole arbitrator to adjudicate the disputes between the parties. The said petition was allowed. By an order