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IN THE HIGH COURT OF JHARKHAND AT RANCHI
M. S. Ramachandra Rao, C.J., Deepak Roshan, J.
The State Highways Authority of Jharkhand through its Chief Executive Officer - Appellant
Versus
Intercontinental Consultants & Technocrats Pvt. Ltd. - Respondent
Commercial Appeal No. 7 of 2024
Decided On : 28-02-2025
| Table of Content |
|---|
| 1. procedural background of the arbitration case (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. consideration of claims and defenses (Para 8 , 10 , 11 , 12 , 16 , 17) |
| 3. court's analytical observations on arbitrator's findings (Para 9 , 13 , 14 , 15 , 18 , 19 , 20) |
| 4. decision to set aside parts of the commercial court judgment (Para 21 , 22) |
| 5. final order and directive for fresh judgment (Para 23 , 24) |
JUDGMENT :
M.S. Ramachandra Rao, C.J.
1. This Commercial Appeal is preferred under Section 13 of the COMMERCIAL COURTS ACT , 2015 challenging the judgment dt. 16.03.2024 of Additional Judicial Commissioner-III-cum-Presiding Officer, Commercial Court, Ranchi (for short ‘the Commercial Court’) passed in Commercial Arbitration Case No. 04/2022.
2. By the said judgment the Commercial Court has upheld the Award dt. 14.12.2021 of the Arbitral Tribunal and dismissed the application under Section 34 of the Arbitration and Conciliation Act, 1996 (in short ‘the Act’) filed before the said Court by the appellant/applicant/State Highway Authority of Jharkhand.
3. Admittedly, the appellant had entered into an agreement with the respondent in collaboration with another for providing consultation services relating to the Second Jharkhand State Road Project (ABD Funded). This agreement called the ‘Time-Based Contract Agreement’ was initiated on 02.11.2016 and the contract stipulated a revised price of US$ 29,58,300.00 plus Indian Rs.30,60,60,750.00 for the execution, completion of works, and rectification of defects, inclusive of provisional sum and contingencies but exclusive of local indirect taxes.
4. Following the issuance of a notice to proceed on 16.11.2016, work officially commenced on 01.12.2016. The duration of the contract was set at 50 months including a two month pre-construction period and the subsequent 12 month defects and liabilities period starting from the effective date of the contract.
5. The appellant terminated the contract on 05.06.2018 allegedly due to breach of contract by the respondent.
6. The disputes were referred to an arbitrator. Before the learned arbitrator, the respondent raised 9 claims while the appellant raised counter claims.
7. The decision of the Arbitral Tribunal along with 10 claims passed in the Award is as under:
| Claim No. | Contractor’s claim Amount | Respondent’s Assessment & Counter claim | Tribunal Assessment | |||
| INR | USD | INR | USD | |||
| SOC 1 | -- | -- | Claim Rejected | Claimant’s Claim is upheld | -- | -- |
| SOC 2 | 6,44,67,031 | 4,66,205 | Claim Rejected | 6,44,67,031 | 4,66,205 | |
| SOC 3 | 2,26,49,000 | Claim Rejected | 2,26,49,000 | |||
| SOC 4 | 6,27,41,094 | 6,39,208 | Claim Rejected | 6,27,41,094 | 6,39,208 | |
| SOC 5 | 68,00,000 | Claim Rejected | Rejected | -- | -- | |
| SOC 6 | 1,03,42,664 | 82,156 | Claim Rejected | 1,01,35,810 | 80,500 | |
| SOC7 | 27,79,516 | 9,11,386 | Claim Rejected | 40,68,680 | -- | |
| SOC8 | 65,22,000 | 65,22,000 | ||||
| Sub Total | 16,95,01,305 | 88,98,955 | 17,05,83,615 | 11,85,913 | ||
| SOC9 | 12% interest on the above sum | 12% interest on the above sum 13 | Interest for INR=10 % Compounded and for USD=8% compounded per year | 2,42,04,177 | 1,68,269 | |
| Counter claim of the respondent | Disallowed | |||||
| Total | 19,47,87,92 | 13,54,182 | ||||
8. The appellant questioned the same before the Commercial Court on several grounds and the respondent refuted the said grounds.
The judgment of the Commercial Court
9. The Commercial Court first considered the scope of Section 34 of the Act and referred to the judgments cited by both the parties on the said aspect. It took the view that an application under Section 34 of the Act is not an appeal and the evidence cannot be re-appreciated as in an appeal. It also recognized that there are limited grounds specified in Section 34 of the Act for setting aside an arbitral Award, and after quoting Section 34 of the Act, framed the question as to “whether the Award given by the Arbitrator is against the Public Policy of India with its explanation or it is hit by the grounds mentioned under Section 34 of the Act?”
10. While dealing with Claim 1 which related to setting aside the illegal termination of contract by the appellant through a letter dt. 05.06.2018, which the Arbitra
The court emphasized that a termination of contract deemed improper by an arbitral tribunal cannot be set aside without substantial justification, requiring detailed reasoning from a reviewing court.
The court emphasized that an application under Section 34 of the Arbitration Act does not allow for a full appeal, restricting re-evaluation of evidence and requiring clear grounds for setting aside ....
Judicial intervention in arbitration is limited, focusing on procedural irregularities rather than merit assessments.
The court emphasized the necessity of thorough evidence evaluation in arbitration, allowing for remand due to prior oversights, reaffirming principles against unjust outcomes in legal proceedings.
The judgment emphasizes the limited grounds for interference with arbitral awards under Section 34 of the Arbitration and Conciliation Act, highlighting the need for restraint by courts while examini....
The scope of interference with an arbitral award is confined to the grounds mentioned in Section 34(2) of the Arbitration and Conciliation Act, 1996, and proper reasons must be provided in the judgme....
The main legal point established in the judgment is that the court should not interfere with an arbitral award unless the arbitrator's conclusions are arbitrary, capricious, or perverse. The court's ....
The court affirmed that under Section 34 of the Arbitration and Conciliation Act, 1996, it cannot reassess the merits of an arbitral award unless it violates public policy or is patently illegal.
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