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2022 Supreme(Del) 1726

IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Sh. Mahavir Prasad Gupta - Appellant
Versus
Union Of India & Anr. - Respondents
CS(OS) 222/2021 & lA No. 2118/2022
Decided On : 23-02-2022

Advocates appeared:
Mr Vivekanand, Advocate, for the Appellant, Mr Ashok Singh, Advocate, for the Respondent.

The main legal point established in the judgment is that the court has jurisdiction to entertain a petition under the Arbitration Act if the reference to arbitration was made by a competent court.

Headnote:

Arbitration Act - Petition - Sections 14, 17 - Factual Background - Works contract dispute between petitioner and respondent - Arbitration invoked - Award rendered in favor of petitioner - Respondent objects to the petition - Court's Finding and Conclusion - Court has jurisdiction to entertain the petition - Award made the Rule of Court

Fact of the Case:

The petitioner filed a petition under Sections 14 and 17 of the Arbitration Act, 1940, seeking directions to file the original award and render a judgment in terms of the award. The dispute arose from a works contract between the petitioner and the respondent. The petitioner claimed that the works were completed within the stipulated period, but the respondent failed to clear the entire dues, leading to arbitration proceedings.

Finding of the Court:

The Court found that the GCC applicable to the Agreement did not prohibit the Arbitral Tribunal from awarding interest. The Court rejected the respondent's contention that the interest awarded was excessive. The Court also held that it had jurisdiction to entertain the petition, as the reference to arbitration was made by a competent court.

Issues: The issues involved the award of interest and the jurisdiction of the court to entertain the petition.

Ratio Decidendi: The Court held that the GCC did not prohibit the Arbitral Tribunal from awarding interest, and the interest awarded was not excessive. The Court also determined that it had jurisdiction to entertain the petition, as the reference to arbitration was made by a competent court.

Final Decision: The Court allowed the petition and made the award the Rule of Court, with a decree sheet to be drawn in terms of the award.

ORDER

Vibhu Bakhru, J. (Oral). - Introduction

1. The petitioner has filed the present petition under Sections 14 and 17 of the Arbitration Act, 1940 (hereafter 'the Arbitration Act'), inter alia, praying that directions be issued to the learned Arbitrator (respondent no.2) to file the original award dated 02.03.2021 (hereafter 'the Award'). The petitioner further prays that in terms of Section 17 of the Arbitration Act, a judgment be rendered in terms of the Award.

2. By an order dated 19.04.2021, this Court had directed the learned Arbitrator (respondent no.2) to file the Award along with the arbitral record in this Court. Respondent no.2 has since, filed the Award along with the arbitral record.

3. On 17.11.2021, this Court had called upon the parties to file objections to the Award, if any. Respondent no.1 (hereafter 'the Respondent') has not filed any objection to the Award but has filed an application (being IA No.2118/2022) seeking dismissal of the present petition. Mr Ashok Singh, learned counsel appearing for respondent submits that the objections stated in the said application may be treated as objections to the petition as well as the Award.

Factual Background

4. By a notice dated 30.06.1992, Northern Railways (the respondent) had invited tenders for execution of the work of "Leading, Loading and Unloading Railway materials such as cement, stell, P. way and other materials anywhere in Delhi, Haryana, and Uttar Pradesh states for works under Dy.CE/C/GC, N. Rly., Tilak Bridge, New Delhi in c/w gauge conversion between Delhi-Rewari Section " (hereafter 'the Works').

5. The petitioner had submitted its bid for the Works pursuant to the aforesaid Notice Inviting Tender dated 30.06.1992. The petitioner's bid was accepted by a Letter of Acceptance dated 06.08.1992 (hereafter 'the LoA') and the contract for executing the aforesaid Works was awarded to the petitioner.

6. The Works were to be completed within a period of eight months from the date of the LoA (that is, on or before 05.04.1993).

7. The petitioner and the respondent entered into a formal agreement on 10.09.1992 (hereafter 'the Agreement'). It was agreed that the contract would also be governed by the General Conditions of Contract, 1989 (GCC) of the Northern Railways.

8. The petitioner claims that the Works were completed within the stipulated period. However, the respondent failed to clear the entire dues of the petitioner. The petitioner states that the respondent applied incorrect rates for payment of extra items resulting in shortfall in the amount paid.

9. By a letter dated 10.06.1994, the petitioner invoked the arbitration agreement and sought reference of the disputes to arbitration.

10. Thereafter, on 01.12.1994, the petitioner filed a petition under Section 20 of the Arbitration Act seeking reference of the disputes to arbitration and for appointment of an Arbitrator. The said petition -registered as CS(OS) No.2705A/1994 - was allowed by an order dated 27.09.2005 and this Court, directed reference of the disputes to arbitration and appointment of an Arbitrator.

11. The respondent preferred an appeal, being FAO (OS) No.442/2006 captioned Union of India v. Mahavir Prasad Gupta, against the order dated 27.09.2005. The said appeal was dismissed by an order dated 25.05.2009; the order dated 27.09.2005 passed by the Single Judge of this Court directing respondent no. 1 to appoint an Arbitrator in terms of Clause 64 of the GCC was upheld.

12. The arbitral proceedings took an inordinately long time to complete. During the course of several years, the constitution of the Arbitral Tribunal was changed a number of times. Finally, Mr. Ajay Kumar Goyal, the learned Arbitrator appointed by the respondent, delivered the Award. The same was communicated to the petitioner by the General Manager, Northern Railways.

13. In terms of the Award, the Arbitral Tribunal has awarded a sum of ?l,93,011/- to the petitioner against its claim for difference in the rate of additional lead over non s

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