Appellate courts have limited grounds for interfering with arbitral awards under the Arbitration Act, primarily focused on patent illegality, evidential sufficiency, and compliance with contractual obligations.

JUDGMENT :

ANIL KSHETARPAL, J.

1. Through the present Appeal under Section 37 (1)(c) of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as 'A&C Act'], the Appellant (Petitioner before the District Judge) assails the correctness of the order dated 25.01.2024 [hereinafter referred to as 'Impugned Order'], whereby the District Judge dismissed the petition filed by the Appellant under Section 34 of the A&C Act and upheld the Arbitral Award dated 24.04.2023 [hereinafter referred to as 'Award'], passed by the learned Arbitrator.

2. Herein, the Appellant contends that the District Judge, while passing the Impugned Order, failed to appreciate the patent illegality apparent on the face of the Award, and, in the absence of any pleading or proof of loss by the Respondent, erroneously upheld the encashment of 50% of the Performance Security by the Respondent.

3. Accordingly, the core issue that falls for consideration before this Court is whether the findings of the Arbitrator are based on no evidence and are, therefore, perverse, thereby rendering the Award vitiated by patent illegality.

4. For sake of clarity, consistency and the ease of reference, the parties in the present appeal shall be referred to in accordance with their respective status before the District Judge.

FACTUAL MATRIX

5. Before adverting to the issues arising for consideration, it would be apposite to briefly notice the relevant facts.

6. The Petitioner is a service provider engaged, inter alia, in the business of providing facility management services comprising skilled, semi-skilled and unskilled manpower to various organisations on All India basis. Its services include sanitation, housekeeping, gardening, technical services and payroll management.

7. The Respondent is one of the premier medical and healthcare institutions in the country. On 17.07.2020, the Respondent issued a Tender Enquiry Document for award of a Parallel Rate Contract, zone-wise (Zone-I & Zone-II), for outsourcing sanitation services and glass façade cleaning on a two-year contractual basis.

8. The Petitioner successfully bid for the said tender and, on 23.04.2021, was awarded the work for Zone-II, vide Letter of Acceptance [hereinafter referred to as 'LOA']. In terms thereof, the Petitioner was required, inter alia, to- (i) commence services with effect from 01.05.2021; and (ii) furnish a Performance Bank Guarantee equivalent to 10% of the total contract value for two years for Zone-II, amounting to Rs.3,18,26,136/- valid for a period of two years and four months. The Petitioner furnished a Performance Bank Guarantee dated 15.05.2021 for an amount of Rs.95,47,841/- issued by Yes Bank Limited, valid up to 03.09.2023.

9. Pursuant to the LOA, although deployment of employees commenced on 01.05.2021, the parties formally executed a Parallel Rate Contract for outsourcing of sanitation services and glass façade cleaning on 09.06.2021.

10. During the initial phase of deployment of staff in May 2021, the Petitioner deployed 419 persons across four locations within a period of seven days, in order to ensure tha