2023 Supreme(Del) 720

IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Bawana Infra Development Pvt. Ltd. – Appellant
Versus
Delhi State Industrial & Infrastructure Development Corporation Limited ("dsiidc") – Respondent
O.M.P. (COMM) 24 of 2019
Decided On : 16-03-2023

The Court held that the impugned award with respect to Claim 7 was not well-reasoned as required by the Act under Section 31(3), and the impugned award with respect to the award in Claim 11 is contrary to the provisions of the Agreement between the parties. Therefore, the impugned award, being contrary to provisions of the Agreement, suffers from infirmity and patent illegality.

Headnote:

The Court partially allowed the petition and set aside the arbitral award with respect to Claims 7 and 11, where perversity and thus Patent Illegality was observed.

Fact of the Case:

The petitioner, a special purpose vehicle established after the respondent circulated a tender inviting bid from interested parties on a Public Private Partnership Modality, was awarded the contract for the re-development, operation, and maintenance of the 'Bawana Industrial Area' (hereinafter referred to as "the Project Area") situated in Delhi. The respondent is Delhi State Industrial and Infrastructure Development Corporation Ltd. (hereinafter referred to as "DSIIDC"), a Government Company incorporated under the Companies Act. The parties, thereafter, proceeded to execute a Concessionaire Agreement dated 20th July 2011 (hereinafter referred to as "the Agreement") whereby it was agreed between the parties that the entire amount towards the re-development of the project was to be invested by the petitioner and an amount of Rs. 7.48 crores would be paid as an annuity to the petitioner every year for a period of 13 years. The respondent invited bids vide advertisement dated 10th March 2011 for redeveloping, operating and maintaining the infrastructure and utilities of the industrial area of Bawana Industrial Area, Delhi on Public Private Partnership basis. The consortium of the selected bidder submitted its bid on 29th April 2011 and was finally awarded the above- mentioned work vide letter of award dated 20th June 2011. The parties, thereafter, proceeded to execute a Concessionaire Agreement dated 20th July 2011 (hereinafter referred to as "the Agreement") whereby it was agreed between the parties that the entire amount towards the re-development of the project was to be invested by the petitioner and an amount of Rs. 7.48 crores would be paid as an annuity to the petitioner every year for a period of 13 years. The petition has been filed against the impugned Award dated 12th September 2018 passed by Justice R.C. Jain(Retd.), the learned Sole Arbitrator.

Finding of the Court:

The Court held that the impugned award with respect to Claim 7 was not well-reasoned as required by the Act under Section 31(3), and the impugned award with respect to the award in Claim 11 is contrary to the provisions of the Agreement between the parties. Therefore, the impugned award, being contrary to provisions of the Agreement, suffers from infirmity and patent illegality.

Issues: Whether the impugned arbitral award is liable to be set aside as per the provisions given in Section 34 of the Arbitration and Conciliation Act, 1996.

Ratio Decidendi: The Court observed that the learned Arbitral Tribunal, while adjudicating upon the aforementioned claims, gave similar reasoning for its decision. The Court held that the learned Arbitral Tribunal had very well considered the Concessionaire Agreement and the evidence placed on record to adjudicate upon these claims. The Court further held that the learned Arbitral Tribunal has carefully considered the provisions of the Concessionaire Agreement along with the provisions of law and jurisprudence to adjudicate upon these claims. The Court also held that the learned Arbitral Tribunal has considered the necessary facets of the Concessionaire Agreement along with the evidence present on the record. The Court further held that the learned Arbitral Tribunal, while adjudicating upon claims, must also be well aware of the impact of the decision on both parties. The Court also held that the learned Arbitral Tribunal has evidently erred in adjudicating upon the aforementioned claim. The Court further held that the learned Arbitral Tribunal has gone beyond the contract and awarded an interest rate that is quite clearly not the rate the parties had previously agreed upon. The Court also held that the learned Arbitral Tribunal has failed in adopting a judicial approach during the arbitration proceedings, analysis of the contract, and thus while giving the award.

Final Decision: The Court partially allowed the petition and set aside the arbitral award with respect to Claims 7 and 11, where perversity and thus Patent Illegality was observed.