IN THE HIGH COURT OF DELHI AT NEW DELHI
Manoj Kumar Ohri, J.
Municipal Corporation of Delhi – Appellant
Versus
Natraj Construction Company – Respondent
FAO 432 of 2010
Decided On : 22-03-2023
Arbitration - Work Order - Arbitration and Conciliation Act, 1996 - Section 34 - Section 37 - National Insurance Co. Ltd. v. Sujir Ganesh Nayak & Co. - DDA v. K.C. Chibber & Co. - Sushil Kumar Bhardwaj v. Union of India - Municipal Corporation of Delhi v. Natraj Construction Company - Swiss Timing Limited v. Commonwealth Games 2010 Organizing Committee - ADTV Communication Pvt. Ltd. v. Vibha Goel & Ors. - Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited - State of Jharkhand and Others v. HSS Integrated SDN and Another - MMTC Limited v. Vedanta Limited - Haryana Tourism Limited v. Kandhari Beverages Limited - Main Legal Point
Fact of the Case:
The appellant challenged the judgment dismissing their objections under Section 34 of the Arbitration and Conciliation Act, 1996, related to a work order for providing and fixing Retro-Reflective Sign Board. The appellant contended that the claim was time-barred and the matter was under investigation by the CBI. The respondent argued that the grounds raised were beyond the scope of Section 37 of the Act and referred to relevant case law.
Finding of the Court:
The court found that the scope of interference under Section 37 of the Arbitration Act is narrow and can only be done in cases where the finding is perverse, contrary to evidence, or against public policy. The court also noted that interference with an order made under Section 34 cannot exceed the restrictions laid down under Section 34. The court emphasized that an award can only be set aside if it is found to be contrary to the fundamental policy of Indian Law, the interest of India, justice, morality, or if it is patently illegal.
Issues: The issues involved in the case were the time-barred claim, the pendency of CBI investigation, and the scope of interference under Section 37 of the Arbitration Act.
Ratio Decidendi: The court held that the claim was not time-barred in view of the amended Section 28 of the Indian Contract Act, and the pendency of CBI investigation did not affect the present work order. The court also emphasized the narrow scope of interference under Section 37 of the Arbitration Act and the limited grounds for setting aside an award.
Final Decision: The court found no merit in the appeal and dismissed it.
JUDGMENT
Manoj Kumar Ohri, J.
1. The appellant is aggrieved with the judgment dated 01.05.2010 passed by learned ADJ-04, North District, Delhi in C.S. No.15/2010, whereby the objections filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter, referred to as the 'Act') were dismissed and the Award dated 06.11.2009 upheld.
2. Notably, the appellant floated a tender for providing and fixing Retro- Reflective Sign Board on Maharshi Parshuram Marg in C-29 II, Delhi. The respondent participated in the tender and was awarded the work vide Work- Order No.933/EE/RD1/RZ/TC/03-04/31/11 dated 09.03.2004. The contractual amount was Rs.3,16,899/- and the time for completion of work was three months. Indisputably, the respondent completed the work within time i.e. 22.05.2004 and submitted a bill for an amount of Rs.2,93,857/-. On 30.11.2004, the appellant cleared the said bill and passed a sanction order for an amount of Rs.2,66,398/-. The said amount however was not paid for the reason that the CBI had registered an FIR with respect to the sub-standard quality of work in cases relating to fixation of Retro- Reflective Sign Board and the officials of the appellant-Corporation as well as the respondent were named as accused persons therein.
The respondent invoked the arbitration clause in the agreement between the parties, resulting in passing of the Award on 06.11.2009, whereby its claim of Rs.2,93,857/- for the work done and refund of earnest money of Rs.7,750/- was allowed. The Arbitrator also awarded interest @ 15% per annum on the above amounts from 01.05.2007 till the date of award. In addition, Rs. 73,000/- were directed to be paid towards cost of the arbitration proceedings. The objections filed by the appellant under Section 34 of the Act came to be dismissed vide the impugned judgment.
3. Ms. Tanu Priya Gupta, learned counsel for the appellant, contended that as per Clause 25 of the Contract Agreement, any challenge was required to be raised by the respondent within 120 days of 30.11.2004, whereas the arbitration proceedings were initiated much later and thus, the claim was time barred. It was next contended that the learned ADJ ought to have interfered with the impugned award in terms of sub-section 2(a)(v)(b), Section 34 of the Act for the reason that the matter was under investigation by the CBI. In support, learned counsel referred to the decisions in National Insurance Co. Ltd. v. Sujir Ganesh Nayak & Co. and Another reported as (1997) 4 SCC 366, DDA v. K.C. Chibber & Co. reported as 2009 SCC OnLine Del 2110: and Sushil Kumar Bhardwaj v. Union of India reported as 2009 SCC OnLine Del 4355.
4. Learned counsel for the respondent contended that the grounds raised in the present appeal are beyond the scope of Section 37 of the Act. It was submitted that the Work Order in the present case was never under CBI investigation and the charge-sheet filed consequently was in relation to some other Work Order. In support of his submissions, learned counsel placed reliance on the following decisions:
i. Municipal Corporation of Delhi v. Natraj Construction Company reported as 2012 SCC OnLine Del 2501
ii. Swiss Timing Limited v. Commonwealth Games 2010 Organizing Committee reported as (2014) 6 SCC 677;
iii. ADTV Communication Pvt. Ltd. (Formerly Aez Infratech Pvt. Ltd.) v. Vibha Goel & Ors. reported as 2018 SCC OnLine Del 8843; and
iv. Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited reported as (2022) 1 SCC 131.
5. There is no gainsaying that the jurisdiction of this Court under Section 37 of the Act is limited in scope. In this regard, it is deemed expedient to advert to the decision in State of Jharkhand and Others v. HSS Integrated SDN and Another reported as (2019) 9 SCC 798, where the Supreme Court observed as follows:
"7. As held by this Court in a catena of decisions, the award passed by the Arbitral Tribunal can be interfered with in the proceedings under Sec
National Insurance Co. Ltd. v. Sujir Ganesh Nayak & Co. and Another
Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited
Haryana Tourism Limited v. Kandhari Beverages Limited
MMTC Limited v. Vedanta Limited
State of Jharkhand and Others v. HSS Integrated SDN and Another
Swiss Timing Limited v. Commonwealth Games 2010 Organizing Committee
The main legal point established in the judgment is the limited scope of interference under Section 37 of the Arbitration and Conciliation Act, 1996, and the importance of interpreting the contract a....
Claims in arbitration must adhere to statutory limitation periods; failure to comply renders them non-maintainable, emphasizing the strict nature of limitation under arbitration law.
The Court held that the Arbitral Award does not suffer from any infirmities enshrined in Section 34 of the Act. The Impugned is not in conflict with the public policy of India. Further, the learned T....
Clauses in contracts that prohibit claims for damages are against public policy and void under Section 23 of the Indian Contract Act, 1872, as they undermine the sanctity of contracts.
The appellate jurisdiction under section 37 is limited to the grounds prescribed under section 34. Courts cannot re-appreciate evidence or substitute their views for that of the arbitrator, provided ....
The court reaffirmed the limited scope of judicial review of arbitral awards under Sections 34 and 37 of the Arbitration and Conciliation Act, emphasizing that courts cannot reappraise evidence or in....
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.