The judgment reinforces the principle that courts have limited grounds to interfere with arbitral awards, respecting the finality of arbitration under the Arbitration and Conciliation Act.

ORDER :

Pranav Trivedi, J.

1. The instant First Appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1986 (hereinafter referred to as the “Act 1996”) challenging the judgment and order dated 11.09.2023 passed by the learned 4th Additional District Judge, Vadodara, Commercial Court (for short the “Commercial Court”) in Commercial Civil Misc. Application No. 76 of 2022, wherein the Commercial Court, rejected the application preferred by the appellant under Section 34 of the Act.

2. The facts resulting into filing of the First Appeal is that the appellant is a Board constituted under the provisions of the Gujarat Water Supply and Sewerage Board Act, 1978 and is wholly owned and controlled by the State of Gujarat. The appellant issued tender for the work related to ‘Dabhoi Water Supply Scheme’. The respondent participated in the tender issued by the appellant. Pursuant thereto, the parties executed the agreement dated 01.11.2011 being Agreement No. B:2-74-2011/12 and B:2/75-2011/12 for a stipulated period of 12 months. The respondent also submitted bank guarantee of Rs.31,22,150/- as per the terms and conditions of the tender.

2.1. It is the case of the appellant that the respondent failed to carry out the contract works within the stipulated time as well as extended time. Consequently, the respondent issued notice of termination dated 15.07.2013. Therefore, the contract agreement came to be terminated by the appellant on 16.08.2013. Pursuant thereto, the respondent was also black-listed for a period of three years and the bank guarantee was ordered to be invoked.

2.2. Pursuant to the termination of the agreement and order of injunction of bank guarantee, the respondent preferred regular civil suit being Regular Civil Suit No. 455 of 2013 against the appellant, inter alia praying for setting aside the termination notice and permanent injunction restraining the appellant from encashing the bank guarantee. During the pendency of the suit, both the parties filed joint ‘purshis’ before the Commercial Court and on the basis of the joint settlement purshis, judgment and decree dated 23.11.2013 came to be passed. However, the settlement ‘purshis’ was not executable and enforceable, which resulted into the appellant again preferring suit before the Commercial Court being Regular Civil Suit No. 640 of 2014 inter alia praying for declaration and permanent injunction against the implementation of the said judgment and decree dated 23.11.2013. In Regular Civil Suit No. 640 of 2015, Exhibit-5 application was filed for interim injunction which came to be rejected, by way of order dated 30.08.2016.

2.3. Being aggrieved by the rejection of Exhibit-5 application, the appellant preferred appeal being Misc. Civil Appeal No. 17 of 2017 before the learned District Judge, Vadodara. During the course of hearing of the aforesaid appeal, second settlement agreement came to be executed and the court below referred all the issues to the Arbitrator. Upon consent of the parties, on the name of the Arbitrator, Regular Civil Suit No. 640 of 2014 as well as appeal Misc. Civil Appeal No. 17 of 2017 came to be withdrawn by the appellant.

2.4. Pursuant to the withdrawal of the suit as well as the appeal, the dispute was referred to the Arbitrator. The Arbitrator after hearing both the parties at length, passed an award dated 20.03.2018, partly allowing the claim of the respondent by directing the appellant to pay sum of Rs.65,58,939/- along with 8% interest from the date of termination of the contract till the date of payment. Aggrieved by the award dated 20.03.2018, the appellant preferred application under Section 34 of the Act, which came to be numbered as Commercial Civil Misc. Application No. 76 of 2022. The said Commercial Misc. Application came to be rejected by way of order dated 11.09.2023. It is this order dated 11.09.2023 is impugned in the present appeal.

3. The main ground of challenge urged by the learned counsel for the appellant w