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IN THE HIGH COURT OF DELHI
Rajiv Shakdher, Poonam A. Bamba, JJ.
SMS Water Grace BMW Pvt. Ltd. - Appellant
Versus
Govt. of NCT of Delhi Directorate of Health - Respondent
FAO (OS) (C) No. 82 of 22
Decided On : 31-05-2022
Narrow scope for court interference with arbitral awards; only to address jurisdictional errors or patent illegality.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Commercial Courts Act, 2015 - Appeal against arbitral award - The appellant sought to set aside the award on grounds of erroneous interpretation of agreement concerning biomedical waste disposal. The Single Judge dismissed the petition upholding the award of the Arbitral Tribunal. (Paras 1, 2, 3, 6, 9).
(B) Nature of Arbitral Proceedings - The scope of interference with an arbitral award is narrow, primarily to check for jurisdictional errors or patent illegality. (Para 9.5)
Facts of the case:
The appellant entered into a contract for the establishment of a Centralised Treatment Facility (CTF) for biomedical waste, which involved disputes over the extent of waste treatment obligations and costs. (Paras 2, 8)
Findings of Court:
No merit was found in the appellant's claims regarding limits imposed by the agreement on waste collection, and the findings were upheld as legitimate interpretations by both the Arbitral Tribunal and the Single Judge. (Paras 6, 10)
Issues: The primary issue was the interpretation of Clause 10 concerning the appellant's obligations for waste treatment and whether an upper limit existed for such obligations. (Paras 3, 9)
Ratio Decidendi: The court reaffirmed that the interpretation by the Arbitral Tribunal was correct, emphasizing that the terms of the agreement did not limit the appellant's obligations regarding waste treatment. (Para 10)
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. background on arbitration appeal (Para 1 , 2) |
| 2. appellant's arguments against the award (Para 3 , 4 , 5) |
| 3. court's observations on contract interpretation (Para 6 , 8 , 9) |
| 4. scope of court interference in arbitral awards (Para 7 , 10) |
| 5. dismissal of appeal (Para 11) |
JUDGMENT
Poonam A. Bamba, J. 1. Present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 (`Arbitration Act' in short) read with section 13 of the Commercial Courts Act, 2015 (`the Act' in short) has been preferred by the appellant praying for setting aside of the judgment of the Ld. Single Judge, dated 13.12.2021 in O.M.P. (COMM) no. 537 of 2020 ("impugned judgment" in short). Vide impugned judgment, the Ld. Single Judge dismissed the appellant's petition u/s. 34 of the Arbitration Act while declining to interfere with the award dated 18.03.2020 (`Impugned Award' in short) rendered by the Arbitral Tribunal constituted of a sole arbitrator.
2. Ld. Single Judge has given the factual background of the matter in detail in paras 5 to 24 of the impugned judgment. Hence, reference here is made briefly to the facts relevant for disposal of this appeal, which are as under:
i. The Directorate of Health Services, Government of NCT of Delhi, the respondent herein invited tenders for establishment of Centralised Treatment Facility (`CTF' in short) for treatment of bio-medical waste generated from private hospitals/public nursing homes, diagnostic centres, laboratories/blood banks, medical/ISM colleges, as a joint venture, on Build Operate Transfer (`BOT' in short) basis for a period of ten years. It was supposed to be a joint venture, the respondent Government of NCT of Delhi was to provide land to the selected party/agency for establishing the CTF, (transferring the site on such terms and conditions as may be approved by the Delhi Development Authority/Municipal Corporation of Delhi); and the selected tenderer was obliged to incur all capital expenditure for establishing the CTF as well as for its operation and maintenance;
ii. The tender documents provided that the selected tenderer would transport and treat the bio-medical waste generated in Hospitals and Dispensaries under the Government of NCT of Delhi, free of cost;
iii. Sans other details, suffice it to mention that the petitioner tendered for the project and was successful. An agreement was entered into between the appellant and the respondent on 21.07.2006 (`Agreement' in short), whereby the appellant undertook to install/operate and maintain the centralized facility at Gazipur, Delhi for processing bio-medical waste generated from private hospitals/nursing homes, diagnostic centres/laboratories/blood banks, medical/ISM colleges;
iv. In terms of Clause 12 of the Agreement, the appellant agreed to pay a sum of Rs.4,32,000/- per month as monthly charges to the respondent from the date of commencement of the facility till the date of handing over of the site back to the respondent;
v. The respondent in terms of Agreement, delivered possession of the land at Gazipur to the appellant on 07.08.2006, for establishment of CTF. However, as the Delhi Pollution Control Committee (`DPCC' in short) declined to grant the consent to establish CTF at the given site at Gazipur, finding it not fit, a new site/land measuring 1/2 acre - approximately 2000 sq.mt. at Nilothi was allotted to the appellant in lieu of the Gazipur site. Accordingly the parties entered into an addendum Agreement dated 04.11.2009;
vi. DPCC on 21.04.2010 granted consent to establish CTF at the aforesaid site at Nilothi. Accordingly, the CTF was established;
vii. A dispute had arisen between the parties regarding the charges pertaining to the earlier period and also the period of contract in view of delay in consent by DPCC; and the same was taken to the sole arbitrator (the `First Arbitral Tribunal', in short)' The First Arbitral Tribunal, vide award dated 11.09.2015, inter alia, held that the contract period of 10 ye
