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IN THE HIGH COURT OF DELHI
Vibhu Bakhru, J.
SMS Water Grace BMW Pvt. Ltd. - Appellant
Versus
Govt. of NCT of Delhi Directorate of Health Services - Respondent
O.M.P. (COMM) 537 of 2020
Decided On : 13-12-2021
The interpretation of contractual obligations under the agreement extends beyond specified quantities, mandating collection and treatment of all bio-medical waste free of charge.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Petitioner filed a petition challenging an arbitral award regarding obligations under an agreement to treat bio-medical waste - Claim of collection payment rejected by the tribunal due to non-compliance with agreement terms. (Paras 1, 4, 25-62)
(B) Contract Interpretation - The arbitral tribunal held that obligations to collect, transport, and treat waste are unlimited despite 'about 1000 kg/day' clause - Obligations extend to all waste identified by the respondent, free of cost. (Paras 36-60)
Facts of the case:
The petitioner contested an arbitral award claiming it was only obliged to treat a limited quantity of waste; the court ruled against this interpretation citing the terms and context of the agreement.
Findings of Court:
The tribunal's interpretation was upheld, confirming obligations were not limited to about 1000 kg/day but included all bio-medical waste from designated establishments.
Issues: Whether the interpretation of 'about 1000 kg/day' limits obligations under the agreement.
Ratio Decidendi: The court stated that the contract obligations are broad, overriding the specified quantity, and the tribunal's reasoning was deemed proper given the intent and context of the agreement.
Result: Petition dismissed.
JUDGMENT
Vibhu Bakhru, J.
Introduction
1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the `A&C Act') impugning an arbitral award dated 18.03.2020 (hereafter the `impugned award') rendered by the Arbitral Tribunal constituted of a Sole Arbitrator (hereafter the `Arbitral Tribunal').
2. The controversy between the parties, essentially, relates to the obligations of the petitioner to collect and treat bio-medical waste from Healthcare establishments identified by the Government of NCT of Delhi (the respondent), free of any charge, in terms of Clause 10 of an agreement dated 21.07.2006 (hereafter the `Agreement').
3. The petitioner contends that in terms of the said clause, its liability to collect, transport and treat bio-medical waste from the Healthcare establishments was limited to approximately 1000 kgs. per day. The respondent disputes the same. According to the respondent, the petitioner was obliged to collect, transport, treat and dispose of all the bio-medical waste from all Healthcare establishments identified by it, free of charge, during the term of the Agreement.
4. The Arbitral Tribunal accepted the respondent's contention and rejected the claims made by the petitioner. It also rejected the counterclaims raised by the respondent.
Factual background
5. The petitioner is engaged, inter alia, in the business of treating waste material.
6. The Directorate of Health Services, Government of NCT of Delhi (the respondent) had acquired land measuring 1000 sq. meters at Ghazipur, Delhi, for establishment of the Centralised Treatment Facility (hereafter `CTF') for treatment of bio-medical waste. It invited tenders for establishing a CTF for bio-medical waste generated from private hospitals/public nursing homes, diagnostic centers, laboratories/blood banks, medical/ISM colleges, as a joint venture, on BOT (Build Operate Transfer) basis for a period of ten years.
7. The joint venture was premised on the respondent providing the site and infrastructural support to the selected party/agency for establishing the CTF, in terms of transferring the site on such terms and conditions as may be approved by the Delhi Development Authority/Municipal Corporation of Delhi. The selected tenderer was obliged to incur all capital expenditure for establishing the CTF as well as for operation and maintenance.
8. The tender documents also expressly provided that the selected tenderer would transport and treat bio-medical waste generated in hospitals and dispensaries under the Government of NCT of Delhi (where treatment facilities were not available on site) free of cost.
9. The petitioner tendered for the project and was successful. The respondent issued a Letter of Intent dated 23.04.2006 (hereafter `LoI') and called upon the petitioner to furnish a Performance Bank Guarantee. The petitioner submitted the Performance Bank Guarantee on 21.07.2006 and thereafter, the parties entered into the Agreement dated 21.07.2006.
10. In terms of the Agreement, the respondent agreed to provide the land at Ghazipur for setting up the CTF. And, in terms of Clause 12 of the Agreement, the petitioner agreed to pay a sum of Rs.4,32,000/- to the respondent as monthly charges till the date of handing over of the site back to the respondent.
11. In compliance with its obligations, the respondent delivered possession of the land at Ghazipur to the petitioner on 07.08.2006. The petitioner applied to the Delhi Pollution Control Committee (hereafter `DPCC') for Consent to Establish the proposed Centralized Bio-Waste Treatment Facility [under the Air (Prevention and Control of Pollution) Act, 1981 and the Water (Prevention and Control of Pollution) Act, 1974] at the site. However, the DPCC declined to grant the Consent to Establish as sought, by its letter dated 25.06.2007. The petitioner states that it immediately handed over the possession of the site at Gazipur to the respo
