An arbitral award cannot be set aside for lacking elaborate reasoning but must provide intelligible bases; deductions for shortfall in MGCC are impermissible without clear contract provisions.

JUDGMENT :

AVNEESH JHINGAN, J.

1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "the Act") challenging the arbitral award dated 02.05.2023, modified vide order dated 07.07.2023.

FACTS

2. The facts in brief emerging from the record are that the parties to the lis executed a contract on 01.06.2007 whereby the respondent was to replace "Existing MG Sets for Roughing and Finishing Stand Drives Motors of Plate Mill by Digital Thyristor Converters" at Bhilai Steel Plant (hereinafter "BSP"). The work was to be completed by the respondent within twenty-one months and was for a price of Rs.44,93,20,127/-. The contract was executed, the commissioning certificate and the final acceptance certificate were issued on 03.08.2010 and 24.05.2013 respectively. The final invoices dated 28.05.2018 were submitted by the respondent and the payment was released on 10.07.2018 after deducting liquidated damages (in short "LD") and Rs.1,40,38,523/- for shortfall in minimum guaranteed CENVAT credit (in short "MGCC"). On failure of conciliation attempts, the arbitration proceedings as per clause 6 of the General Contract Conditions (in short "GCC") were invoked on 28.12.2021.

3. The arbitrator framed seven issues:

“1. Whether the claims of the Claimant are barred by Limitation?

2. Whether the claims are barred by principles of estoppel, waiver and acquiescence?

3. Whether the Claimant is entitled to the declaration from this Tribunal that the amount Rs.1,40,38,523/- deducted by the Respondent on account of shortfall of guaranteed CENVAT is bad in law?

4. Whether the Claimant is entitled to reimbursement of Rs.1,40,38,523/- deducted by the Respondent on account of shortfall of guaranteed CENVAT.

5. Whether the Respondent has withheld any amount on account of Entry Tax over and above the withheld amounts towards shortfall in CENVAT Credit and levy of Liquidated damages?

If yes, what amount?

6. Whether the Claimant is entitled to reimbursement of Rs.31,02,155/- on account deduction made against Entry Tax?

7. Whether the Claimant is entitled to interest and if so and, if so, at what rate?

8. Relief and costs;”

3.1 Issues 1, 2, 4 and 7 were decided in favour of the respondent/claimant. The claim was held to be within limitation and there was no estoppel, waiver or acquiescence by the respondent. The deduction of Rs.1,40,38,523/- on account of shortfall in MGCC was faulted. Interest pendente lite @12% and post-award interest @9% were awarded. The respondent was held entitled to costs of Rs.18,20,644/-. Hence, the present petition.

SUBMISSION OF THE PETITIONER

4. Learned senior counsel for the petitioner contends that a notice dated 17.05.2014 was issued for imposing LD and deducting the shortfall in MGCC and therefore, the initiation of arbitration on 28.12.2021 is time-barred.

4.1 It is contended that in response to the notice dated 17.05.2014 no objection was raised against the deduction on account of shortfall in MGCC, the right to contest the deduction was waived and the respondent was estopped from invoking arbitration. Further that at the time of final discharge the respondent undertook not to raise any claim and an affidavit dated 09.05.2015 to a similar effect was executed.

4.2 It is canvassed that the arbitrator wrongly held that vide letter dated 21.05.2018 directions were issued by the petitioner for submission of the final invoices.

4.3 The argument is that the arbitrator h