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2025 Supreme(Mad) 3076
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Abdul Quddhose, J.
M/s.G.Sakthi Constructions, rep. by its Partner - Petitioner
Versus
Union of India, rep. through Deputy Chief Engineer/MTP(R)/Southern Railway - Respondent
Arb.O.P.(Com.Div) No.582 of 2022
Decided On : 10-03-2025
Important Points
Subject
Arbitration Law - Arbitral Award Challenge
Act Referred
LIMITATION ACT : S.14
Headnote
(A) Arbitration and Conciliation Act, 1996 - Section 34 - Challenge to Arbitral Award dated 24.01.2022 - Petitioner, a contractor, disputes the non-speaking nature of the award regarding certain claims - Claims partially allowed but others dismissed without reasons - Court finds the award unintelligible and arbitrary, lacking necessary reasoning - Petitioner granted liberty to initiate fresh arbitration. (Paras 3, 9, 19, 23)
(B) Reasoned Award - Section 31(3) of the Act mandates that an arbitral award must be reasoned - Arbitrator's failure to provide reasons for rejecting claims constitutes grounds for setting aside the award. (Paras 15, 16)
(C) Claims - The petitioner claimed various amounts for costs and losses due to the respondent's failure to hand over the work site - The Arbitrator awarded some claims but rejected others without adequate justification. (Paras 3, 9)
(D)
Findings of Court:
The court determined that the Arbitrator's conclusions were based on conjectures and lacked evidentiary support, thus rendering the award unsustainable. (Paras 9, 19) (E)
Issues: Whether the Arbitrator's award was a reasoned award and whether the claims were arbitrarily dismissed without justification. (Paras 3, 19) (F)
Ratio Decidendi: The court ruled that an arbitral award must be reasoned as per Section 31(3); the lack of reasoning in the award is grounds for setting it aside. (Paras 15, 19) (G)
Result: The impugned arbitral award dated 24.01.2022 is set aside, and the petitioner is granted liberty to initiate fresh arbitration. (Para 23) (H) Parties: Petitioner (Claimant) and Respondent (Union of India, represented through Deputy Chief Engineer).
Advocate Appeared:
For the Petitioner: Mr. Sricharan Rangarajan, Senior Counsel for Mr.Athiban Vijay A.K.
For the Respondent: Mr.R.Rajesh Vivekananthan, Deputy Solicitor General of India
ORDER :
Abdul Quddhose, J.
This petition has been filed under Section 34 of the Arbitration and Conciliation Act, challenging the impugned Arbitral Award dated 24.01.2022 passed by the Arbitrator.
2.The petitioner is the claimant and the respondent is the respondent in the arbitration. The petitioner was a contractor appointed by the respondent. There arose disputes between the petitioner and the respondent under the said contract. In accordance with the arbitration clause, the petitioner had invoked arbitration. In accordance with the arbitration clause, an Arbitrator was appointed from the panel of Arbitrators maintained by the respondent. Both the parties participated in the arbitration. The petitioner had made various claims before the Arbitrator against the respondent. The details of the claims made by the petitioner against the respondent and the amounts awarded by the Arbitrator under the Award are summarised hereunder:
| S.Nos. | Description of claim | As per SOC | Amount awarded by AT |
| 1 | Tender Form Cost | 10,930.00 | NIL |
| 2 | Earnest Money Deposit | 3,67,180.00 | 3,67,180.00 |
| 3 | Tools for site lab | 70,000.00 | 52,500.00 |
| 4 | Labour for providing site shed | 50,000.00 | 50,000.00 |
| 5 | Material for providing site shed | 1,06,525.00 | 80,000.00 |
| 6 | Furniture for site shed | 23,300.00 | 18,640.00 |
| 7 | Steel works for site shed | 30,277.00 | NIL |
| 8 | Preparation of program chart and design mix | 75,000.00 | 75,000.00 |
| 9 | Design Engg. site visit for alignment marking including survey | 0 | NIL |
| 10 | Borewell provided at site for water managements | 96,400.00 | 96,400.00 |
| 11 | Motor for Borewell | 17,600.00 | 17,600.00 |
| 12 | Site labour payments | 0 | NIL |
| 13 | Site Watchman Salary | 9,64,000.00 | Lumpsum Award for Claim No.13 |
| 14 | Site Supervisor Salary | 6,00,000.00 | Claim No.14 |
| 15 | Site Engineer Salary | 12,30,000.00 | Claim No.15 |
| 16 | Store maintainers Salary | 3,60,000.00 | Claim No.16 6,00,000.00 |
| 17 | Pile foundation machinery advance | 2,00,000.00 | 1,00,000.00 |
| 18 | MSME - Material charges | 23,136.00 | 23,136.00 |
| 19 | Survey charges for bridge marking | 50,000.00 | 50,000.00 |
| 20 | JCB hire charges | 40,000.00 | 40,000.00 |
| 21 | BG charges remitted to bank | 17,984.00 + 5,985.00 = 23,969.00 | 23,969.00 |
| 22 | Interest 18% on EMD | Not quantified | NIL |
| 23 | Interest 18% on Tender form cost | Not quantified | NIL |
| 24 | Interest 18% on BG | 21,44,600.00 | NIL |
| 25 | Damages for anticipated profit 5% on total contract value | 65,02,917.00 | 13,00,583.00 |
| 26 | Pre-Arbitration, Pendentelite & Post Award Interest | Not quantified | NIL |
| 27 | Cost of arbitration, Counsel's fee etc. | Not quantified | 50,000.00 |
| 28 | Final bill and SD recovered | To be quant. | 1,68,807.00 |
| Total Claims | 1,29,85,834.00 + unquantified amount | 31,13,815.00 |
3.Aggrieved by the award passed in respect of Claim Nos.3, 5, 13 to 16 and 24 to 26, referred to supra, the petitioner has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 . The petitioner has challenged the impugned Arbitral Award on the ground that the impugned Arbitral Award pertaining to Claim Nos.3, 5, 13-16 and 24-26 is a non-speaking award as according to him, no reasons have been given for rejecting those claims made by the petitioner. According to the petitioner, since no reasoning has been given by the Arbitrator for rejecting the aforementioned claims, the grounds raised by the petitioner will fall within the purview of Section 34 of the Arbitration and Conciliation Act, 1996 .
4.Heard Mr.Sricharan Rangarajan, learned Senior Counsel for Mr.Athiban Vijay A.K., learned counsel for the petitioner and Mr.R.Rajesh Vivekananthan, learned Deputy Solicitor General of India appearing for the respondent.
5.Learned Senior Counsel appearing for the petitioner would submit that even though some of the claims of the petitioner have been partly allowed by the Arbitrator, the petitioner is willing to go for fresh arbitration in view of the fact that the remaining claims made by the petitioner has not been awarded by the Arbitrator and the Arbitral Award in entirety is a non-speaking award, which is based on conjectures and surmises.
6.Learned Senior Counsel appearing for the petitioner drew the attention of this Court to the impugned Award and in particular, he referred to the di
