IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Roshan Real Estate Pvt Ltd. – Appellant
Versus
Union of India – Respondent
O.M.P. (COMM.) 335 of 2022, CAV 231 of 2022 & I.A. No. 2711 of 2022
Decided On : 22-02-2023
Arbitration Act - Challenge to Arbitral Award - Claim No. 6 - [Construction of Office Building for ASI at 24 Tilak Marg, New Delhi including Electrical Installation] - [Section 34 of the Arbitration Act, 1996] - The court discussed the provisions of Section 34 of the Arbitration Act and emphasized the significance of passing a reasoned award. The court found that the Arbitrator failed to provide adequate reasons for holding that the petitioner was not entitled to the bonus/incentives, and therefore set aside the Arbitral Award to the extent of the finding of the Arbitrator regarding Claim No. 6.
Fact of the Case:
The petitioner, a private limited company engaged in civil engineering infrastructure projects, filed a petition under Section 34 of the Arbitration Act, challenging the Arbitral Award dated 12th March 2022. The petitioner sought to set aside the findings and decision of the Arbitrator regarding Claim No. 6, which pertained to the entitlement of bonus/incentive under the Agreement for a construction project. The petitioner contended that the delay in completion of the work was attributable to the respondent and that the Arbitrator's findings were erroneous and contrary to the evidence on record.
Finding of the Court:
The court found merit in the petition and set aside the Arbitral Award to the extent of the finding of the Arbitrator regarding Claim No. 6. The court emphasized the importance of passing a reasoned award and held that the Arbitrator failed to provide adequate reasons for the decision, thereby favoring the case of the petitioner.
Issues: The issues involved in the case included the entitlement of the petitioner to bonus/incentive under the Agreement for a construction project, the attribution of delay in completion of work, and the adequacy of reasons provided by the Arbitrator in the Award.
Ratio Decidendi: The court's decision was influenced by the requirement of passing a reasoned award as per Section 31(3) of the Arbitration Act. The court emphasized that the Arbitrator's failure to provide adequate reasons for the decision regarding Claim No. 6 led to the setting aside of the Arbitral Award to the extent of the finding of the Arbitrator.
Final Decision: The court allowed the petition and set aside the Arbitral Award dated 12th March 2022 to the extent of the finding of the Arbitrator regarding Claim No. 6. Pending applications were disposed of accordingly.
ORDER
Chandra Dhari Singh, J. (Oral)
1. The present petition under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as `the Arbitration Act') has been filed on behalf of the petitioner assailing the Arbitral Award dated 12th March 2022 and seeking the following reliefs:
"a. To set aside the impugned Award dated 12.03.2022 passed by the Arbitral Tribunal with respect to the Claim No. 6.
b. Award costs of the proceedings in favor of the Petitioner and against the Respondent;
c. Pass such further order(s) which this Hon'ble Court may deem fit and proper in the facts and circumstances of this case."
2. The facts delineated hereunder have led to the filing of the instant petition before this Court:
a. The petitioner is a private limited company engaged in the business of civil engineering infrastructure projects. The respondent invited tenders for the work of `Construction of Office Building for ASI at 24 Tilak Marg, New Delhi including Electrical Installation' for an estimated cost of Rs. 24,85,51,972/-. The petitioner was declared the successful bidder for the said work vide letter No. 3983 dated 27th September 2012 and accordingly, the parties also executed an Agreement dated 18th October 2012.
b. The stipulated date for the completion of work was 17th April 2014, however, the work was delayed and completed on 30th January 2017, i.e. after a delay of 2 year and 9 months.
c. The final bill was raised by the petitioner on 18th October 2018, however, the respondent failed to clear the dues. Hence, disputes arose between the parties. For the resolution of such disputes, the respondent vide its letter dated 31st December 2019 appointed a Sole Arbitrator.
d. Arbitration proceedings were initiated amongst the parties and the Sole Arbitrator, after conclusion of the proceedings passed the Arbitral Award on 12th March 2022.
e. The said Award was decided partially in favour of the petitioner, and hence, the petitioner is before this Court seeking setting aside of the findings and decision of the Arbitrator qua Claim No. 6, whereby the provision under Clause 2A of the Agreement for bonus/incentive @5% amounting to Rs. 1,09,38,144/- which was requested to be extended, was disallowed by the Arbitrator.
3. Ms. Anusuya Salwan, learned counsel appearing on behalf of the petitioner submitted that the findings of the Arbitrator regarding Claim No. 6 are patently erroneous, contrary to the evidence on record and in ignorance of the documents, including the Contract between the parties. It is submitted that the Arbitrator assumed that the petitioner was not entitled for the bonus/incentive in Claim No. 6 without considering the evidence on record.
4. It is submitted that the documents on record clearly showed that the delay caused in completion of the work was due to the respondent. It is submitted that work was delayed time and again as the respondent and the agencies employed by them such as HVAC work, fire-fighting work, lift, cable laying etc. lacked coordination and efficiency. Further, the petitioner requested for the electricity connection installed as it required technical staff and further requested for issue of drawings because the petitioner was eager to complete the work at the earliest but it was found that not a single drawing was available with the respondent. The petitioner on their part went on reminding the respondent about non- issuance of drawings but no action was taken. It is, hence, submitted that the delay caused in the completion of work was attributable to the respondent and there was no delay on the part of the petitioner.
5. It is submitted that the Arbitrator has after consideration of the documents and evidence on record under Claim No. 2 and Claim No. 5 given a finding that the whole delay in execution of the contract was on the part of the respondent. However, in contradiction to its statement held that the petitioner was not entitled to the bonus/incentive.
6. It is further submitted tha
An arbitral award must stay within the bounds of the arbitration agreement; claims exceeding this scope can be annulled, underscoring limited judicial interference in arbitration matters.
The main legal point established in the judgment is the correct interpretation and application of contractual provisions in arbitration disputes.
An arbitral award must provide clear and intelligible reasoning; lack thereof renders it void under Section 34 of the Arbitration Act.
The court emphasized the requirement for the arbitrator to assign reasons in support of the award and the limited scope of interference by the court in arbitration awards.
The scope of interference with an Arbitral Award under Section 34 of the Arbitration and Conciliation Act, 1996 is fairly limited and narrow. The Courts shall not sit in an appeal while adjudicating ....
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