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IN THE HIGH COURT OF ALLAHABAD
Manoj Kumar Gupta, Prashant Kumar, JJ.
Agra Development Authority Agra – Appellant
Versus
M/s Baba Construction Pvt. Ltd. – Respondent
First Appeal From Order No. 1033, 1867, 1868, 1869 of 2021
Decided On : 24-03-2023
Arbitration - Agra Development Authority - Clause 32, Clause 33, Arbitration Act, 1940 - The court discussed the clauses of the agreement, the appointment of the arbitrator, and the scope of reference. The court emphasized that the arbitrator had the jurisdiction to entertain and dispose of the claims made by the claimant, as the scope of reference was wide and inclusive of all disputes arising out of the agreement. The court also highlighted that the appellant had several opportunities to file a defense but chose not to do so, and therefore, it was not open for them to raise any dispute on merits in their appeal. The court cited various legal principles and precedents to support its decision.
Fact of the Case:
The appellant, Agra Development Authority, came out with a tender for construction of flats. Disputes arose regarding delays, payments, and service tax. The arbitrator passed an award in favor of the claimant. The appellant challenged the award under Section 34 of the Arbitration and Conciliation Act, which was dismissed by the Commercial Court, Agra.
Finding of the Court:
The court found that the arbitrator had the jurisdiction to entertain and dispose of the claims made by the claimant, as the scope of reference was wide and inclusive of all disputes arising out of the agreement. The court also found that the appellant had several opportunities to file a defense but chose not to do so, and therefore, it was not open for them to raise any dispute on merits in their appeal.
Issues: The issues included the scope of reference of the arbitrator, the appellant's failure to file a defense, and the challenge to the award under Section 34 of the Arbitration and Conciliation Act.
Ratio Decidendi: The court held that the arbitrator had the jurisdiction to entertain and dispose of the claims made by the claimant, as the scope of reference was wide and inclusive of all disputes arising out of the agreement. The court also emphasized that the appellant had several opportunities to file a defense but chose not to do so, and therefore, it was not open for them to raise any dispute on merits in their appeal.
Final Decision: The court dismissed the appeal, emphasizing the narrow scope of interference under Section 37 of the Arbitration and Conciliation Act.
JUDGMENT :
Prashant Kumar, J.
1. Heard Sri Atul Dayal, learned Senior Counsel assisted by Sri Krishna Agarwal, learned counsel for the appellant and learned counsel for the respondent.
2. The appellant herein (Agra Development Authority) came out with a tender, for construction of 52 Mutli Storey Super Delux Type Flats in Phase-II, Taj Nagri, Agra. After opening of the bid, the bid of M/S Baba Construction Pvt. Ltd. was found to be the most suitable and was accepted on 15.05.2008. Thereafter, an agreement was executed between the parties. According to the agreement, the date of commencement of work was 25.05.2008 and the project was to be completed on 24.11.2009.
3. The relevant clauses of the agreement are enumerated below for reference:-
(a) If the Contractor considers any work demanded of him to be outside the requirements of contract or considers any record or ruling of the Engineer-in-Charge or of his subordinates to be unfair, he shall immediately upon such work being demanded or such record or ruling being made ask in writing for written instructions or decisions where upon he shall proceed without delay to perform the work or confirm to the procedure or ruling and within twenty days after date of receipt of the written instructions or decision he shall file a written protest with the Engineer-in-Charge stating clearly in detail the basis of his objections. Except for such protest or objections as are made on record in the manner herein specified and within the time limit stated the recorded rulings instructions of decisions of the Engineer-in-Charge shall be final and conclusive instructions or decisions of Engineer-in-Charge contained in letters transmitting drawing to the Contractor shall be considered as written instructions or decisions subject to protest or objection as wherein provided.
(b) If the Contractor is dissatisfied with the final decision of Engineer-in-Charge in pursuance of Clause 32(a) the Contractor may within twenty-eight days after receiving notice of such decision give notice in writing requiring that the matter be submitted to arbitration and furnishing detailed particulars of:-
the dispute or difference specifying clearly the point at the issue. If the Contractor fails to give such notice within the period of twenty days is stipulated above the decision of Engineer-in-Charge/ADA shall be conclusive and binding on the Contractor.
CLAUSE 33: ARBITRATOR
Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and to the quality of workmanship or materials used on the work or as to any other question claim right or rates for extra items sanctioned and decided or not by the competent authority under the conditions of the contact, designs, drawings specifications estimates instructions or order on these conditions or otherwise concerning the work or the executive or failure to execute the same whether anything during the progress of the work or after the person or person appointed by the Vice-Chairman, ADA. It will be no objection to any such appointment that the matter to which contract relates and that in the course of his duties as ADA servant he had expressed views on all or any of the matters or dispute or differences. The arbitrator to whom the matter is originally or subsequently referred being incapacitated to act the Vice-Chairman of the ADA shall appoint another person to act as arbitrator in accordance with the term of contract. It is also a term of his contract that no person other than a person appointed by the Vice-Chairman of the ADA as aforesaid/shall act as arbitrator and if for any reason that is not possible, the matter is not to be referred to the arbitration at all. The arbitrator(s) may from time to time with consent of
The court emphasized the wide scope of reference of the arbitrator and the appellant's failure to file a defense, highlighting the limited scope of interference under Section 37 of the Arbitration an....
The court confirmed that judicial interference in arbitral awards is limited to cases of patent illegality or perverse findings, respecting the finality of arbitration.
Point of Law : An award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score.
Judicial review of arbitral awards is limited; courts should not interfere unless there is clear evidence of perversity or violation of public policy.
The main legal point established in the judgment is the limited scope of interference under Section 37 of the Arbitration and Conciliation Act, 1996, and the importance of interpreting the contract a....
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