The Court's decision highlights the limited scope of judicial review of arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996. The Court held that it lacked the authority to modify the arbitral award, as such power is not granted under the Act. This decision reinforces the principle of minimal judicial interference in arbitral proceedings and upholds the finality and binding nature of arbitral awards.

JUDGMENT :

CHANDRA DHARI SINGH, J.

1. The instant petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter “The Act, 1996”) has been filed on behalf of the petitioner seeking the following reliefs: -

“(A) Set aside the impugned award dated 29.06.2022 passed by the Ld. Arbitral Tribunal, Comprising of Hon'ble Mr. Justice (Retd.) Sudhanshu Jyotimukhopadhyaya (Presiding Arbitrator), Hon'ble Mr. Justice (Retd.) S. N. Jha (Co- Arbitrator) and Hon'ble Mr. Justice (Retd.) S. P. Garg (Co- Arbitrator) on the grounds mention above, in the larger interest of justice…”

FACTUAL MATRIX

2. The petitioner is a public sector, general insurance company of India, having its head quarters at A-25/27, Asaf Ali Road, New Delhi-110002 (hereinafter referred to as “Insurance Company”). The Respondent is a company incorporated under the laws of India, and is involved in the business of providing Information Technology (“IT”) solutions, hardware, software, as well as ancillary solutions across the country, having its registered office at 806 Siddharth, 96, Nehru Place, New Delhi-110019 (hereinafter referred to as “HCL”).

3. The petitioner floated a 'Request for Proposal' (hereinafter referred as "RFP") on 5th August, 2016 for the procurement, implementation, customization, deployment, maintenance, training and support qua an Enterprise Content Management (EMC) solution. The Respondent was declared a successful bidder and the Notification of Award (“NOA”) dated 10th February, 2017 for a total project value of Rs. 15,98,57,533/- was issued to the Respondent. The project value included Annual Maintenance (“AMC”) for a period of five years after the implementation of the work. Consequently, an agreement dated 23rd February, 2017 was executed between the parties.

4. The Clause 7.13 of the RFP provides for Liquidated Damages in case the Respondent fails to meet the Milestone No. 3 specified in Clause 3.8 of RFP. As per the Clause 3.8, the Respondent was obliged to ensure (i) Delivery of Application, Database Licenses; and (ii) Delivery, Installation and Acceptance of DC-DR Hardware and Scanners at respective locations within twelve weeks from the date of issuance of the Purchase Order, which was originally by 5th May, 2017. Clause 10.8 of the RFP provides the list of offices of the petitioner where the deliveries under the aforesaid Clause 3.8 were to be made and the work was to be completed.

5. Some portion of work was not completed within the stipulated period. The petitioner, while holding that the Respondent was solely responsible for the entire delay, imposed penalty and deducted Liquidated Damages at the rate of 10% of the entire project value i.e. Rs. 1,59,85,753/-. The Respondent objected to the said deduction of Liquidated Damages. According to the Respondent, any imposition of Liquidated Damages by the Respondent was not only against the terms of the contract but also, against the law. Both the parties tried to settle the dispute amicably, however, they could not arrive at an amicable settlement and the matter remains unresolved.

6. The Respondent has given the notice under Section 21 of the Act, 1996 on 4th June, 2020 to the petitioner for invocation of the arbitration clause and for appointment of an Arbitrator to adjudicate the arbitral disputes between the parties. In reply to the said notice, the petitioner justified the deduction of Liquidated Damages on the ground that the same was made in terms of the RFP. It is also contended in the said reply that since the Respondent exceeded more than twenty weeks to complete the Milestone 3, therefore, Liquidated Damages upto maximum deduction of 10% were levied. Thereafter, the dispute was referred to the Arbitration Tribunal.

7. On 6th January, 2021, the Respondent filed its Statement of Claim (“SOC”) before the learned Arbitral Tribunal. On 5th February, 2021, the Petitioner fi