The court affirmed that deductions for non-performance are valid when based on contract conditions and substantiated by timely verification reports, emphasizing the importance of evidentiary reasoning in arbitration.

JUDGMENT

[VIA VIDEO CONFERENCING]

Sanjeev Narula, J. (Oral)--The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] impugns the Arbitral Award dated 22nd September, 2021 passed by a Sole Arbitrator, wherein claims raised by the Petitioner (Claimant at Arbitration) were dismissed.

THE FACTS

2. The Petitioner-M/s. Concept Communications Ltd. [hereinafter, "CCL"] -- a company engaged in the business of providing Out of Home [hereinafter, "OOH"] advertising services - was the successful bidder in a tender floated by the Respondent-Bharat Sanchar Nigam Ltd. [hereinafter, "BSNL"]. Parties executed an Agreement dated 17th September, 2009 thereto, whereby CCL was engaged for providing OOH advertising services in five territorial Circles in India, namely - Maharashtra, Tamil Nadu, Andhra Pradesh, Chennai, Andaman and Nicobar and Andhra Pradesh [hereinafter, the "Project"]. The said territorial circles comprised of various Secondary Switching Areas [hereinafter, "SSAs"]. Pursuant thereto, BSNL issued a Release Order on 18th September, 2009, and awarded work for brand visibility of BSNL through PCO Glow Sign Boards namely -(i) `PCO Glow Sign Board (Double sided)-Lit Boards' [hereinafter, "Lit Boards"] and (ii) `PCO Signage (Flange Double Sided)-Non-Lit Boards' [hereinafter, "Non-Lit Boards"].

3. According to CCL, the work assigned to it was completed in accordance with the Release Order, yet, BSNL acted in blatant violation of the terms of the Agreement as well as the Release Order, and under false and specious pleas, refused to release payments to CCL. In these circumstances, CCL triggered the arbitration clause, and consequently, the Arbitral Tribunal was constituted to adjudicate the disputes.

AT ARBITRATION

4. CCL raised a claim of Rs.29,64,05,971.12/- which had two components -- (i) payment unlawfully withheld by BSNL; and (ii) deductions made on account of the liquidated damages and penalty imposed by BSNL. On the other, BSNL refuted the afore-noted claims and justified the imposition of damages. The following six issues were framed:

"1. Whether the claim has not been filed by authorized and competent person? (QPR)

2. Whether the Claimant had not executed the work and raised the bills in accordance with the conditions of Agreement dated 17.09.2009 and release order dated 18.09.2009? (OPR)

3. Whether the Claimant is entitled to the Claim? (OPC)

4. Whether the Claimant is entitled to Damages, if any? (OPC)

5. Whether the Claimant is entitled to interest, if any and at what rate? (OPC)

6. Relief. "

5. On consideration of documentary and oral evidence produced by the parties, Arbitral Tribunal passed the impugned Award dismissing CCL's claim in entirety. However, it was held entitled to the return of performance bank guarantees along with interest. The challenge in the present petition is confined to rejection of monetary claims.

CONTENTIONS OF CCL [THE PETITIONER]

6. Mr. Jayant Mehta, Senior Counsel for CCL, impugns the Award on the following grounds:

6.1. CCL was contracted to supply and install lit and non-lit sign boards of a certain quality. Despite having successfully completed the Project and there being no disputes with regard to quality, CCL was not paid for the work done. The Award essentially rewrites the contractual terms by imposing the obligation to maintain the sign boards upon CCL - which was never envisaged originally between the parties. The Award is in violation of the terms and conditions agreed upon by the parties and suffers from patent illegality, inasmuch as the