The court affirmed the limited scope of review under Section 34 of the Arbitration and Conciliation Act, allowing for setting aside awards only on grounds of patent illegality or if the award is perverse.

JUDGMENT :

R.SUBRAMANIAN, J.

PRAYER: Original Side Appeal filed under Order XXXVI Rule 9 of the Original Side Rules read with Clause 15 of Letters Patent, to set aside the fair and decreetal order dated 22.04.2019 in OP No.951 of 2016

1. This appeal under section 37 of the Arbitration and Conciliation Act, is at the instance of the petitioners in the original petition under section 34 of the Arbitration and Conciliation Act, bearing OP No.951 of 2016 which sought for setting aside the award of the sole Arbitrator dated 03.09.2016 made on a dispute relating to a construction Agreement between the parties dated 19.06.2013.

2. The first petitioner is a Central Government Company, which is involved in Healthcare, particularly provision of infrastructure development for the health care facilities of the Government of India. In the course of its business, the first petitioner called for tenders for construction of an Urban Health Centre in Puducherry. The project, which was valued at Rs.3,17,57,662/- was awarded to the respondent to carry out the civil construction of the Urban Health Centre of the Jawaharlal Institute of Post Graduate Medical Education and Research, Puducherry (JIPMER, Puducherry). An agreement was entered into between the parties on 19.06.2013 and the possession of the site with an old building was handed over to the respondent on 20.06.2013.

3. As per the terms of the contract, all statutory clearances required for construction were to be obtained by the contractor. There was some delay in grant of approval by the statutory Authorities and eventually approval was granted on 04.02.2014. On 03.03.2014 the old building that was existing was demolished and a Boomi Pooja was also performed. However, on the same day i.e. on 03.03.2014, the Executive Engineer of the Irrigation Division of the Public Works Department, wrote to the contractor requiring them to stop work.

4. A copy of the said letter dated 03.03.2014 was forwarded to the Senior Manager of the first appellant by the contractor on 06.03.2014. The stoppage of work was on the premise that the permission granted to divert the existing RCC hume pipe drainage course, which was running within the Urban Health Centre at the junction of Sardar Vallabhai Patel Road, Ambour Salai and Gingee Salai was deferred by the Executive Engineer of Irrigation Division. This led to various correspondence between the officials of the Appellants and the Government of Puducherry, Subsequently on 03.07.2015, after all most a year and four months, the Government of Puducherry withdrew the stop work order and permitted the work to be commenced.

5. In the interregnum, the respondent wrote to the Appellants on 17.07.2014 requesting extension of time and pointing out that it has been incurring expenses in maintenance of the site and providing essential skeleton staff for the said purpose. It was also contented that monthly expenses were in the region of Rs.1,00,000/-. Since there was no reply, on 28.08.2014, the respondent sent a notice reiterating its demands and requiring appointment of an Arbitrator under Clause 25 of the Agreement, to resolve the issues. On 11.09.2014, the appellants sent a communication assuring that the respondent/Contractor would be paid for the work done and the delay was due to factors beyond the control of the parties. This was followed by a provisional extension of time on 12.12.2014 extending the period of contract by 90 days from 15.12.2014, the said letter also reiterated that the extension is granted without prejudice to the rights of the owner/appellants to recover liquidated damages in accordance with Clause 2 of the General conditions of the contract.

6. The respondent had on 20.10.2014 addressed the letter seeking appointment of an Arbitrator terming the reply dated 11.09.2014 as evasive. It must be pointed out at this juncture that the respondent had on 08.01.2015 raised a complaint that the three communications dated 12.06.2014, 12.09.2014 and 12.12.2014 addr