2023 Supreme(Mad) 2810

IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. SUBRAMANIAN, R. KALAIMATHI, JJ.
M/s. Engineering Projects (India) Limited, New Delhi – Appellant
Versus
Tamil Nadu Generation & Distribution Corporation, rep. By its Chief Engineer, Chennai – Respondent
O.S.A. Nos. 38 & 65 of 2011
Decided On : 11-09-2023

Headnote:

JUDGEMENT (Prayer: Original Side Appeal filed under Order XXXVI Rule 1 of the Original Side Rules, against the order dated 29.07.2010 in O.P.No.34 of 2007. Prayer: Original Side Appeal filed under Order XXXVI Rule 1 of the Original Side Rules r/w. Section 37 of Arbitration and Conciliation Act, 1996, against the order dated 29.07.2010 in O.P.No.34 of 2007.) R. Subramanian, J. 1. Challenge in these two appeals under Section 37 of the Arbitration and Conciliation Act, 1996 is to the order of the Hon''ble Judge made in Arbitration O.P.No.34 of 2007 dated 29.07.2010. By the said order, the Hon''ble Judge, while upholding the claim of the appellant in O.S.A.No.38 of 2011 with reference to certain parts of the award, rejected the same in respect of the other parts. Both the parties to the contract dated 12.08.1994, which is the foundation of the claim are, therefore, on appeal.

Fact of the Case:

The parties are referred as per their rank in O.P.No.34 of 2007. 2. The petitioner, then known as the Tamil Nadu Electricity Board invited international competitive bids for construction of External Coal Handling System (ECHS) Phase-II of the Thermal Power Station, Tuticorin. The respondent namely, M/s.Engineering Projects (India) Limited, a Government of India Enterprise submitted its offer on 25.05.1992. The work was divided into three separate contracts by the petitioner. While the first part dealt with design and supply of mechanical / electrical equipment and steel, the 2nd part comprised of erection, testing and commissioning of mechanical / electrical equipment and fabrication / erection of steel structures and the 3rd part consisted with entire associated civil works and foundations of the project. While the 1st and 2nd parts of the contract were awarded to the respondent, the 3rd part of the contract was awarded to another agency called M/s.CemIndia later named as M/s.Trafalgar House India Limited on 12.08.1994. 3. Two letters of intent / contracts were entered into between the petitioner and the respondent. The details are :-

Finding of the Court:

18. Before the Arbitral Tribunal, an application was filed under Section 16(2) of the Arbitration and Conciliation Act, contending that the Arbitral Tribunal does not have jurisdiction in as much as the timelines prescribed under Clause 27 of the General Conditions of Contract have been breached by the respondent. The petitioner contend that the arbitration was not invoked within those timelines and therefore, the remedy of the respondent is under general law and not under the arbitration Clause. 19. The Arbitral Tribunal concluded that, it cannot take a generalised decision in respect of the claims and it has to be decided after going into each and every claim on its merits. The Tribunal therefore, unanimously decided to proceed with arbitration on the claims submitted by Engineering Projects (India) Limited.

Issues: 20. The Arbitral Tribunal grouped the issues that arose for its consideration under three headings namely, the preliminary issues three in number, issues of the claimant namely, the respondent 23 in number and issues of the petitioner 16 in number. The Tribunal found that some of the issues were interlinked and took them up together. The Tribunal also arrived at a broad agreed basis for consideration of the issues, which are Clause 5.2 & 27 of the General Conditions of Contract and the relevant provisions of the Arbitration Act. The Arbitrators took up each of the issues separately and after referring to the various documents and highlights provided by the parties concluded that of the total delay of 40 months, atleast 24 months was attributable to the petitioner, while the remaining 16 months were attributable to the respondent.

Ratio Decidendi: 48. We must, at the out set, point out that the law relating to the power of the Court under Section 34 of the Arbitration and Conciliation Act to interfere with the awards is by now very well settled. This award having been passed prior to the amendment introducing 34(2)-A by Act 3 of 2016, we cannot consider the question of Patent Illegality. Therefore, the only ground set out in Sub-Section 2 of Section 34 are available to the Court to set aside the award. The award can be set aside only if it falls within the four corners of Section 34(2). 49. Useful reference could be made to the judgment of the Hon'ble Supreme Court in Associated Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49, wherein, the Hon'ble Supreme Court had laid down the parameters that would enable the Court to set aside the award. The following grounds specified under Section 34(2)-A are not available to the parties in the case on hand and it was also not the case of the parties that the award should be set aside on any of the grounds enumerated under subclauses 1 of 5 Clause (a) of sub-Section 2 of Section 35. Of the two grounds available under Clause (b) of sub-Section 2 of Section 34, the first one is not applicable therefore the only ground that was available to the Court under Section 34 is that the Arbitral award is in conflict with the Public Policy of India.

Final Decision: 77. We are forced to conclude that the order of the Hon''ble Judge is in breach of the contours that are set out by the two pronouncements of the Hon''ble Supreme Court referred to above. Hence, the order needs to be necessarily set aside. Both the appeals will therefore stand allowed and the order of the Hon''ble Judge will stand set aside in its entirety and the award will stand confirmed in its entirety. We do not impose costs in these appeals considering the fact that we have interfered with the order on the basis of the law laid down in subsequent pronouncements of the Hon''ble Supreme Court. Consequently, the connected miscellaneous petitions are closed.