The court affirmed that judicial interference in arbitral awards is limited, focusing on the necessity of cogent reasoning and adherence to public policy.

ORDER :

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)

1. By way of present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Act”), the appellant begs to challenge the legality, validity and propriety of the judgment and order dated 29.05.2023 passed by the learned Commercial Court, Rajkot (for short the “Commercial Court”) in Civil Misc. Application No. 33 of 2022, preferred under Section 34 of the Act.

2. The factual matrix which led to the filing of the present appeal under Section 37 of the Act is that the appellant – original respondent is a statutory local authority governed under the provisions of The Gujarat Provincial Municipal Corporation Act, whereas, the respondent, is a Company registered under the Companies Act, and engaged in the business of ‘Turnkey Execution and Development of Environmental and Infrastructure Projects’ related to water and Sewage Treatment Plants.

2.1. It is the case of the appellant that the appellant intended to design, build and commissioning a project of 44.5 MLD Sewage Treatment Plant (STP) based on conventional activated slugged process at Madhapar, District : Rajkot. The appellant also intended to give contract for operation and maintenance of the said plant for a period of three years to the highest bidder. Pursuant thereto, bids were invited in the year, 2012 through E-tender process and in the said process, the respondent being the highest bidder, was awarded the work. Thereafter, in the month of March, 2013, an agreement was entered into between the appellant and the respondent for the STP project.

2.2. In pursuance to the agreement, the respondent commenced the work. However, a dispute arose between the parties and in the wake of such dispute between the parties, the appellant terminated the agreement on 07.12.2020 and the respondent was also blacklisted. As far as the order of blacklisting is concerned, same is pending adjudication before this Court. However, being aggrieved by the order of termination dated 07.12.2020, the respondent initiated arbitration proceedings under Section 11 of the Act by way of preferring writ petition being IAAP No. 139 of 2020. This Court vide order dated 29.10.2021 appointed the learned Arbitrator to resolve the dispute between the parties and the Arbitral Tribunal presided by sole Arbitrator came to be constituted.

2.3. Thereafter, the arbitration proceedings were initiated, which culminated into Arbitration Case No. 12 of 2021. The Arbitral Tribunal by way of award dated 01.10.2022, allowed the claim of the respondent along with 9% interest on various heads. Being dissatisfied with the award passed by the Arbitral Tribunal, the appellant preferred an application under Section 34 of the Act being Civil Misc. Application No. 33 of 2022 before the Commercial Court. The Commercial Court by way of order dated 29.05.2023 rejected the application preferred by the appellant under Section 34 of the Act. Hence, the present appeal is preferred under Section 37 of the Act.

3. We have heard Mr. Prakash Jani, learned Senior Advocate assisted by Mr. Nishant Lalakhiya, learned advocate for the appellant and learned advocate Mr. Rajesh Ranjan, assisted by Mr. Rutul Desai, learned advocate appearing for the respondent.

4. Mr. Prakash Jani, learned Senior Advocate has taken three-fold contentions. The first contention is with regard to the findings given by the learned Arbitrator at issue no. 8 which is at page ’156’ of the paper-book. Mr. Prakash Jani, learned Senior Advocate has contended by that the findings given by the Arbitral Tribunal are without any reason, and the learned Arbitrator has just given breakup of payment towards the Running Account Bill and interest as well as retention of amount. There is no finding with regard as to why such amount has to be paid towards the Running Account Bill nos. 27, 28 and 29. Therefore, issue no. 8 is decided against the appellant without any cogent reason or finding and ther