Under Section 34, courts have narrow jurisdiction over arbitral awards; no interference unless perverse or against public policy, respecting plausible contract interpretations by arbitrator.

JUDGMENT :

Ajay Mohan Goel, J.

By way of this petition, filed under Section 34 of the Arbitration and Conciliation Act, 1996, petitioners have, inter alia, prayed for the following relief:-

“It is, therefore, respectfully prayed that this application may be allowed and the award dated 10.10.2018 (Annexure P-3) made by the Hon'ble Arbitral Tribunal may be set aside in so far as it relates to allowing the claim of the respondent and holding the petitioner not entitled to claim/deduct/recover Rs.3,55,31,187/- on account of interest (Rs 1,43,89,166/-) and penalty (Rs 2,11,42,021/-) from the pending invoices/bills of the respondent or otherwise. The petitioner may also be allowed such other and further relief as may be considered just and proper in the facts of the case and justice be done.”

2. The case of the petitioner is that it is a company incorporated under the Companies Act. As per the petitioner, it entered into a contract with the respondent-company relating to:-

1) Providing requisite IT hardware, software and peripherals at Data Center (DC) at Shimla, Disaster Recovery Center (DRC) at Paonta Sahib and various offices of 14 towns namely Shimla, Solan, Nahan, Paonta, Baddi, Bilaspur, Mandi, Sundernagar, Chamba, Dharamshala, Hamirpur, Kullu, Una and Yol.
2) Development / Implementation of following software applications at Data Center/Disaster Recovery Center level:-

a. Meter Data Acquisition System (MDAS).
b. Energy Audit (EA).
c. Identity & Access Management System (IAMS)
d. Management Information System (MIS). containing Dataware Housing (DW) & Business Intelligence (BI) tools.
e. Enterprise Management System (EMS) & Network Management System (NMS), which is a part of hardware.

3. To execute the work, the parties entered into an agreement and Clause 15.1 and Clause 15.3 of the contract provided as under:-

“Clause 15.1: The prices quoted by the supplier shall be inclusive of all duties/taxes/levies. Responsibility for including all applicable taxes/duties/levies in the proposal lie with the bidder and the utility shall not be responsible for any error/omission on the part of the bidder. Payment of taxes/duties/levies shall not be made separately.
Clause 15.3: For goods supplied from within the Purchaser's country, the Supplier shall be entirely responsible for all taxes, duties, entry tax, license fees, other levies etc, incurred until delivery of the Goods and Related service to the Purchaser. The Purchaser will provide Central sales tax Form C, whenever applicable.”

4. According to the petitioner, in light of the above mentioned terms of the contract, the entire responsibility to include all duties/taxes/levies including the entry tax payable, was with the claimant and the claimant had specifically accepted the letter of acceptance issued by the respondent on 30.08.2010, which categorically mentioned that the cost of entry tax as applicable will be the liability of the supplier i.e. the price quoted were inclusive of entry tax.

5. Further as per the petitioner, the respondent- company raised dispute with regard to the reimbursement of entry tax as also the amounts of penalties and interest levied thereupon by the Excise Authorities. The matter was referred to the arbitration of the learned Sole Arbitrator and in terms of the impugned Award, learned Arbitrator has allowed the claim petition vide Award dated 10.10.2018, in the following terms:-

“(i) Claim of Rs.2,28,48,842