The Court held that the learned Arbitrator had erred in decreeing the award with respect to the rate of interest, and hence, the Award qua issue no. 20 with regards to the rate of interest is liable to be set aside. The Court found that the learned Arbitrator had passed the impugned Award without considering relevant clauses of the Agreement, and in complete contravention of Section 31(a) of the Act, 1996, while adjudicating on the rate of interest to be granted. Therefore, the impugned Award till the extent of the rate of interest granted, is contrary to provisions of the Agreement, suffers from infirmity and patent illegality.

JUDGMENT :

CHANDRA DHARI SINGH, J.

The instant petition under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter “the Act, 199”) has been filed on behalf of the petitioner seeking the following reliefs:

“In the view of aforementioned submissions, it is most respectfully prayed that this Hon'ble Court may be pleased to:

(a) Set aside the impugned Arbitral Award dated 04.08.2020 passed by the Learned Arbitral Tribunal;

Pass such further or other orders as this Hon'ble Court may deem fit in the facts and circumstances of the case in favour of the Petitioner and against the Respondent herein.”

FACTUAL MATRIX

2. The facts necessary for the disposal of this instant petition are that the petitioner is Tehri Hydro Development Corporation India Limited, the employer/respondent in the Arbitration and the respondent is M/S C. E. C. Limited, the contractor/claimant in the Arbitration. The petitioner and the respondent entered into a Contract Agreement No. 1/TDC-1/1981-82 for the construction of four circular head race tunnels having a diameter of 8.5m and approximate lengths 1100, 1200, 1450, and 1500 meters leading to bottoms of four underground surge tanks for the underground powerhouse of Tehri Dam Project, on 23rd November 1981. The respondent was sent a notice of commencement of work on 28th November 1981 as per clause 1.4.05 of the Agreement.

3. The respondent vide letter dated 19th September 1987 submitted a Claim of INR 568.4 Lakhs which was rejected by the Engineer-in-charge vide his letter dated 2nd January 1988 after which the claimant invoked the Arbitration Clause. The dispute thus, existed between the parties only for Rs. 568.4 lakhs and which was made the subject matter of reference by the Claimant.

4. A Statement of Claim was filed by the respondent herein before the learned Arbitral Tribunal comprising of Mr. Justices B. Pandey (Retd.), R.N. Misra (Retd.), and Shri R.K. Agarwal on 11th November 1988 followed by Statement of Defence by the petitioner (respondent in the Arbitration) on 7th March 1989. The rejoinder was filed by the claimant/respondent on 15th April 1989.

5. On 7th July 1992 due to the demise of one of the learned Arbitrators, a new Arbitral Tribunal was constituted consisting of new Arbitrators, followed by the demise of another learned Arbitrator on 14th December 1992, and re-constitution of the Arbitral Tribunal.

6. The composition of the learned Arbitral Tribunal has changed on multiple occasions since the foreclosure of the contract on 15th December 1990. On 4th February 2019, Mr. Ram Dayal Gupta was appointed as the learned Sole Arbitrator in the Arbitration proceedings and the first hearing took place on 8th March 2019 before the current learned Sole Arbitrator.

7. The impugned Award was passed on 4th August 2020 and received by the petitioner on 7th August 2020, aggrieved by which the petitioner has approached this Court with the instant petition seeking the aforesaid reliefs.

SUBMISSIONS

(On behalf of the Petitioner)

8. Learned counsel for the petitioner submitted that the impugned Arbitral Award dated 4th August 2020 is in conflict with the fundamental policy of Indian Law and basic notions of justice, and is completely perverse, both factually and legally. It is further submitted that the Impugned Award suffers from sheer non-applicability of mind and is exfacie fraudulent.

9. It is further submitted by Learned counsel for the petitioner that the impugned Award is arbitrary, and passed in utter disregard to facts, documents, evidence, and material on record.

10. It is submitted by learned counsel for the petitioner that evidence has been disregarded in each issue decided by the Arbitrator and that any extra expenditure on account of any idling and/or underutilization of resources, rise in wages, infructuous overheads, was incurred on account of any breach or otherwise by the claimant/respondent.

11. Learned Counsel for the Petitioner submitted that the Learned Sole Arbitrator violated the procedu