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2022 Supreme(Ker) 44

IN THE HIGH COURT OF KERALA AT ERNAKULAM
P.B. Suresh Kumar, C.S. Sudha, JJ.
Lloyed Insulations (India) Ltd. – Petitioner
Versus
Foremexx Space Frames – Respondent
ARB.A NO. 17 of 2013
Decided On : 17-01-2022

Advocates:
Advocate Appeared:
For the Petitioner: Sri.S.Vinod Bhat, Sri.Legith T.Kottakkal, Advs.
For the Respondent: Sri.K.L.Varghese (Sr.), Sri.Ranjith Varghese, Sri.Rahul Varghese, Smt.Santha Varghese

Point of Law : On appreciation of evidence is the realm of the Tribunal and that court under Section 34 cannot re-appreciate evidence as is done in civil appeals and that it is only when Tribunal bases its conclusion on irrelevant and extraneous matters, an interference would be called for.

Headnote:

Arbitration and Conciliation Act, 1996 - Sections 29, 31 – and 34 - Contract Act - Sections 62 and 63 – Form and contents of arbitral award - Tender Notice - Delay in execution of work - Termination of contract - Technical and commercial bid - Application for setting aside arbitral award - Greater Cochin Development Corporation (GCDA) which owns Jawaharlal Nehru International Stadium (Stadium), decided to construct a roof for Stadium and hence invited tenders for same vide tender notice - Claimant quoted for work and was qualified in technical bid - However, they failed to qualify for commercial bid as they had no previous experience of completing a job of value of Rs.5 Crores, which was a pre-requisite for bid - Can an Arbitral Tribunal pass more than one award? Does Act, 1996 contemplate a Majority Award and a Minority Award? Can Presiding Arbitrator direct remaining two Arbitrators to write separate Awards and then adopt one, without giving separate or independent reasons either for accepting one and rejecting other? No, says learned counsel for appellant. According to him, passing multiple awards and the procedure adopted by Presiding Arbitrator in accepting one Award without giving his reasons for same, are violations or breach of provisions of Sections 29 and 31 of Act.

Finding of the court :

It is true that Majority Award is not signed by Arbitrator No.2, but only by Arbitrator No.1 and Presiding Arbitrator. However, that is not necessary which is clear from Section 31(1) - Termination of contract by respondent for flimsy reasons was held to be unjustified and that it amounted to breach of contract on part of respondent. According to Tribunal, total lack of progress of work alleged in Ext.C35 was only a ruse for termination of contract - Tribunal has not considered any irrelevant evidence or extraneous matters and therefore court below refused to interfere with matter. Court find no infirmity or perversity as contemplated under sub-section 2-A of Section 34 in findings of Tribunal and therefore court below was right in refusing interference - Finding of Tribunal on novation is a perverse finding and so court below ought to have exercised its jurisdiction under section 34 and set aside award. It is true that Tribunal went wrong in concluding that Section 62 of Contract Act applies in this case. However, as rightly pointed out by court below, Tribunal did not completely ignore original agreement. Due to inability of claimant in supplying materials and in erection of roof structure, said part of contract alone was taken over by respondent by way of Ext.C22A. The remaining terms of the contract as agreed to by claimant as per original agreement, continued to be their responsibility. Therefore, finding of Tribunal that there had been a novation of original agreement as contemplated under Section 62 of Contract Act is incorrect and so finding of court below on this point is therefore justified – Tribunal has not considered any irrelevant evidence or extraneous matters and therefore court below refused to interfere with matter.

Result : Appeal is dismissed.

JUDGMENT :

C.S.Sudha, J.

Can an Arbitral Tribunal pass more than one award? Does the Arbitration and Conciliation Act, 1996 (the Act) contemplate a Majority Award and a Minority Award? Can the Presiding Arbitrator direct the remaining two Arbitrators to write separate Awards and then adopt one, without giving separate or independent reasons either for accepting one and rejecting the other? No, says Sri.S.Vinod Bhat - the learned counsel for the appellant. According to him, passing multiple awards and the procedure adopted by the Presiding Arbitrator in accepting one Award without giving his reasons for the same, are violations or breach of the provisions of Sections 29 and 31 of the Act. We will examine the tenability of this argument advanced by the learned counsel for the appellant.

2. The appellant herein is the sole respondent and the respondent herein, the claimant in the arbitration proceedings before the Arbitral Tribunal consisting of three Arbitrators, namely, Mr. Justice J.B. Koshy, the Presiding Arbitrator; Mr. Justice K.A. Abdul Gafoor (Arbitrator no.1) and Mr. Justice K. Sampath (Arbitrator no.2). Aggrieved by the Award passed by the Arbitral Tribunal, the appellant herein moved the District Court under Section 34 of the Act. The court below partly set aside the Award. Not satisfied with the same, the present appeal has been filed. Parties will be referred to as described before the Arbitral Tribunal.

3. A brief reference to the facts of the case –

The Greater Cochin Development Corporation (GCDA) which owns the Jawaharlal Nehru International Stadium (the Stadium), Kaloor, Kochi decided to construct a roof for the Stadium and hence invited tenders for the same vide tender notice dated 14.03.2006. The claimant quoted for the work and was qualified in the technical bid. However, they failed to qualify for the commercial bid as they had no previous experience of completing a job of the value of Rs.5 Crores, which was a pre-requisite for the bid. As the respondent was the successful bidder, the work was allotted by the GCDA to them. Pursuant to this, there were discussions between the claimant and the respondent as the former had drawings ready with them for the work which the respondent desired to utilise for the work. The claimant expressed willingness to execute the work as a sub-contractor under the respondent. Hence, the respondent entered into a sub-contract with the claimant relating to designing, submission of drawings, supply of materials, fabrication and erection of the roof structure, except the roofing. The total value of the work was fixed at Rs. 615 lakhs. The Letter of Intent (LoI) dated 16.07.2007 issued by the respondent was approved by the GCDA. The period for completion of the work was fixed as five months from 22.10.2007. Accordingly, the work order was issued. As per the work order, the claimant had to design, fabricate the frames of the roof and erect the same using scaffoldings. During the course of execution of the work, disputes arose relating to the demand made by the claimant for clearing the periodical bills. The request of the claimant was not acceded to by the respondent. According to the claimant due to the nonpayment of the bills as well as labour unrest, the progress of the work was affected. Out of the 28 modules of space frame, only one could be erected. Due to the slow pace of work, negotiations and talks took place between the parties. It was then decided that the claimant would be relieved of the job of erection of the frames, which would be taken over by the respondent. Accordingly, M/s. BECPL was engaged for the erection of frames by using a crane. Thereafter, M/s.BECPL also withdrew from the work and then M/s.BAVA Engineers Pvt. Ltd. was engaged for executing the work of erection of the frames. While so, disputes again arose between the parties relating to the working of M/s.B

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