IN THE HIGH COURT OF JUDICATURE AT MADRAS
INDIRA BANERJEE, ABDUL QUDDHOSE, JJ.
Madras Port Trust Rajaji Salai – Appellant
Vs.
S & S Enviro Technologies Limited & Ors. – Respondents
O.S.A.No.377 of 2013
Decided On : 11-01-2018
Arbitration and Conciliation Act, 1996 – Section 37 – Major Port Trusts Act, 1963 – Setting Aside Award – Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is against a judgment and order passed by the learned Single Judge dismissing a petition under Section 34 of the 1996 Act filed by the appellant for setting aside an award passed by an Arbitral Tribunal consisting of three Arbitrators, namely, Shri K.V. Kuppuswamy, Shri K. Natarajan and Shri B. Raghava, in relation to disputes that had arisen between the appellant and the first respondent with regard to a contract executed for the design, construction and commission of a 3.5 MLD Sewage Treatment Plant at the premises of the Madras Port Trust. – Held, Arbitral Tribunal has in effect and substance awarded damages. – Unlike liquidated damages which have to be computed on the basis of evidence, damages in the nature of unliquidated damages for computation of loss of profit might be computed based on some amount of guesswork and/or estimation. – Awarding of loss of profit at the rate of 8% of the contract value in a turnkey project cannot be held to be so unreasonable and if at all unreasonable, to be construed as against public policy. In our view, the learned Single Bench very rightly refused to set aside the award. – Court find no grounds for interference with the judgment under appeal. – Court may refer to the recent judgment of the Supreme Court in Associated Builders v. Delhi Development Authority, reported in (2015) 3 SCC 49, where the Supreme Court unequivocally held that none of the grounds in Section 34(2)(a) of the 1996 Act deal with the merits of the decision rendered by an Arbitral Tribunal. – It is only when the award is in conflict with the public policy of India as prescribed in Section 34(2)(b)(ii) of the 1996 Act, that the Court might interfere. – Patent violation of Indian statutes, of course, which would adversely affect the administration of justice could be interfered with as contrary to the fundamental policy of Indian Law. – However, this is not a case of patent violation of any statute. – Appeal Dismissed
Ms. Indira Banerjee, J.
1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”) is against a judgment and order dated 20.4.2009 passed by the learned Single Judge dismissing a petition under Section 34 of the 1996 Act filed by the appellant for setting aside an award dated 3.11.2003 passed by an Arbitral Tribunal consisting of three Arbitrators, namely, Shri K.V. Kuppuswamy, Shri K. Natarajan and Shri B. Raghava, in relation to disputes that had arisen between the appellant and the first respondent with regard to a contract executed for the design, construction and commission of a 3.5 MLD Sewage Treatment Plant at the premises of the Madras Port Trust.
2. The first respondent is a company engaged in the execution of environmental engineering projects. The appellant, a major port under the Major Port Trusts Act, 1963, invited tenders for design, construction, testing and commissioning of a 3.5 MLD Sewage Treatment Plant at the premises of the Madras Port area on a turnkey basis. Pursuant to the aforesaid tender, the first respondent submitted its offer, which was duly accepted by the appellant and an agreement, being Agreement No.37 of 1995, was duly executed by and between the appellant and the first respondent, whereby the contract work was required to be executed at a contract value of Rs.2.55 Crores.
3. Disputes, however, arose between the appellant and the first respondent which were, as stated above, referred for arbitration to the Arbitral Tribunal. It is the case of the appellant that there was some difference in the views of different arbitrators. The Second Arbitrator did not agree with the other two Arbitrators in relation to their findings with regard to claim Nos.12, 3A, 3B, 4 and 11.
4. In the application for setting aside of the award filed by the appellant under Section 34 of the 1996 Act, it was urged as under:
“(a) The Petitioner submits that the scope of Arbitration is limited and conclusion of the Arbitrators are beyond the scope and as a result the award is liable to be set aside.
(b) The Petitioner submits that the Arbitrators are under duty bound to give reasons for arriving at their conclusions in making the award. The Arbitrators have failed to give valid reasons. The reasons themselves are unsustainable and cannot be accepted under Law.
(c) The Petitioner submits that the award is liable to be set aside for it was based on wrong parameters and also contain errors on the face of the award.
(d) The Arbitrator has not considered the evidence let in before than in the right prospective.
(e) The Arbitration award is more on surmises than the facts and figures contained in the records.
(f) The award is liable to be set aside on the ground that the Arbitral Tribunal had exceeded their jurisdiction in taking extraneous circumstances into consideration.
(g) The Arbitral Tribunal failed to consider the terms and conditions of the agreement which are binding on both parties which alone is the basis of finding out as to who is at fault and what is the cost of the fault and what are they entitled for the same.
(h) The Arbitrators had failed themselves in appraising the facts in the right perspective since the policy of the Petitioner is that the contractor has to adhere to the terms and conditions of the agreement even if they are not in favour especially when the agreement was signed the work was commenced.
(i) The Tribunal failed to appreciate the fact that the contractor has done only 1% of the total work after a prolonged period of several extensions of time.”
5. The grounds urged are of a general nature, unsubstantiated by particulars. There can be no doubt that after the enactment of the 1996 Act and repeal of the Arbitration Act, 1940, an award which is not reasoned might be set aside on that ground alone, unless of course the arbitration agreement expressly provides that no reasons need be given in support of the award. However, in this case, we
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