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IN THE HIGH COURT OF DELHI AT NEW DELHI
C. Hari Shankar, J.
Tantia Construction Limited - Appellant
Versus
Ircon International Ltd - Respondent
O.M.P. (Comm) No. 593 of 2020; I.A. No. 12328 of 2020
Decided On : 13-04-2021
Arbitration and Conciliation Act - Section 34 - Reduction of awarded amounts in original award - Supplementary award challenged - Violation of Section 33(1) and principles of natural justice - Set aside
Fact of the Case:
The petition under Section 34 of the Arbitration and Conciliation Act, 1996 was filed against a supplementary award that reduced the amounts awarded in the original award against Claims No. 6 and 12. The respondent's application under Section 33 of the 1996 Act sought condonation of delay in filing the application, citing the spread of COVID-19 as a reason for the delay.
Finding of the Court:
The court found that the impugned supplementary award violated Section 33(1) of the 1996 Act and the principles of natural justice. The delay in filing the application was not condonable, and the arbitrator erred in passing the award without hearing the petitioner. The impugned supplementary award was set aside, and the petition was allowed with no order as to costs.
Issues: Violation of Section 33(1) of the 1996 Act, condonation of delay, and violation of principles of natural justice.
Ratio Decidendi: The court held that the delay in filing the application under Section 33(1) was not condonable, and the arbitrator erred in passing the award without hearing the petitioner. The impugned supplementary award was set aside.
Final Decision: The impugned supplementary award dated 20th August, 2020 was set aside, and the petition was allowed with no order as to costs.
JUDGMENT
C. Hari Shankar, J. - This petition, under Section 34 of the Arbitration and Conciliation Act, 1996 ( the 1996 Act ), is directed against a supplementary award dated 20 th August, 2020, passed by the learned arbitrator. By the supplementary award, the amounts awarded in favour of the petitioner in the original award dated 23rd January, 2020, against Claims No. 6 and 12, were reduced. The amount of Rs. 1,90,86,595/-, awarded in respect of claim no. 6, was reduced to Rs. 97,85,184/- and the amount of Rs. 58,08,475/ -, awarded in respect of claim no. 12, was reduced to Rs. 54,01,882/ -. Side by side, the learned arbitrator also modified the reasons for awarding the aforesaid amounts. The changes effected by the impugned supplementary award stand captured, in the impugned award itself, in a tabular form, thus:
| Claim no. 6 Claim for illegal encashment of performance bank guarantee | Amount claimed (Rs. | Amount awarded in Original award (Rs.) | Award modified (Rs.) |
| 1,90,86,595 | 1,90,86,595 | 97,85,184 | |
| Original reasons of award | Modified reasons of award | ||
| As deliberated in above paras, the termination of the contract was wrongful, illegal and arbitrary due to the occurrence of earthquake in Nepal which also led to declaration of National Emergency, severely affected the citizens. Tender categorically stipulates that in the event of occurrence of a force majeure event, neither party shall be entitled to terminate contract in respect of non-performance or delay in performance. Hence claim amount of Rs. 1,90,86,595/-, is reasonable and payable. | As deliberated in above paras, the termination of the contract was wrongful, illegal and arbitrary due to the occurrence of earthquake in Nepal which also led to declaration of National Emergency, severely affected the citizens. Tender categorically stipulates that in the event of occurrence of a force majeure event, neither party shall be entitled to terminate contract in respect of non[1]performance or delay in performance.
As against claim amount of Rs.1,90,86,595/-,respondent has mentioned they have adjusted the recoveries other than mobilization advance in the final bill for Rs.93,01,410 in the encashed amount of PBB. Hence balance PBG amount of Rs.97,85,184 is reasonable and payable | ||
| Claim no.12 Claim for unbilled quantity of blanketing materials layed | Amount claimed (Rs. | Amount awarded in Original award (Rs.) | Award modified (Rs.) |
| 66,90,000 | 58,08,475 | 54,01,882 | |
| Original reasons of award | Modified reasons of award | ||
| As per 17th & final bill total quantity paid up to 16th running bill was 47485.880 cum of granular blanketing material but in the aforesaid 17th & final bill it has been reduced to 39411.264 cum. Since the 47485.880 cum is a measured and paid quantity, payment of balance quantity 8074.616 cum recovered from the final bill for amounting to amounting to Rs.58,08,475.00 to be refunded to claimant. | As per 17th & final bill total quantityQunning bill was 47485.880 cum of granular blanketing material but in the aforesaid 17th & final bill it has been reduced to 39411.264 cum. Since the 47485.880 cum is a measured and paid quantity, payment of balance quantity 8074.616 cum recovered from the final bill for amounting to amounting to Rs.54,01,882.00, after adjusting the rate quoted by the claimant, to be refunded to claimant. | ||
| Original concluding paras | Modified concluding paras | ||
| In conclusion, the respondent, IRCON INTERNATIONAL LIMITED shall pay to claimant, M/s Tantia Construction Limited. DD-30,7 floor, Sector-1, Salt lake city Kolkata a sum of Rs.4,80,37,967.00 (Rs. four crores eighty lacs thirty seven thousand nine-hundred sixty seven only) in full and final settl | |||
Violation of Section 33(1) of the Arbitration and Conciliation Act, 1996 and the principles of natural justice led to the setting aside of the impugned supplementary award.
The court held that the failure to adhere to the audi alteram partem principle and rectify errors under Section 33 without the appellant's hearing invalidated the supplementary arbitration award.
The main legal point established in the judgment is that the applicants were entitled to the benefit of the amendment made to Section 34 of the Arbitration and Conciliation Act, 1997, and that the de....
The main legal point established in the judgment is that once an arbitral award becomes enforceable after the prescribed time limit, no further application under Section 33 of the Act can be entertai....
Arbitral Award – Limitation – S. 34(3) specifically states that an application for setting aside may not be made after three months have lapsed from date of which party making an application had rece....
An arbitrator must adhere to the contractual terms regarding interest, and if parties explicitly waive interest claims, such claim cannot be awarded under Section 34 of the Arbitration and Conciliati....
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