IMPORTANT POINT
The court affirmed that judicial intervention in arbitral awards is limited to grounds of public policy or patent illegality, emphasizing respect for the Arbitrator's findings.

JUDGMENT :

M.C. Tripathi, J.

1. Heard Sri Manish Goyal, learned Additional Advocate General assisted by Sri Devansh Rathore, learned Additional Chief Standing Counsel for the State-appellants and Sri Jagat Narayan Mishra, learned counsel for the opposite party.

2. The instant appeal under Section 37 of 1996 Act, [Arbitration and Conciliation Act, 1996] has been filed seeking quashing of the impugned judgment and order dated 14-02-2023 passed by the Presiding Officer, Commercial Court, Jhansi in Arbitration Case No. 31 of 2022 (State of U.P. Vs. M/S Virat Construction), arising out of Arbitration Case decided between the parties by the Sole Arbitrator on 03-05-2022.

Relevant factual aspects and background

3. A tender was invited on 01-08-2008 by the appellants for the construction of Head Regulator at Km.0.410 of Margin Bandh to protect the Banda City from the flood of Cane River. In response to it, the contractor/opposite party no.2/claimant applied and his bid was found to be responsive, when tender was opened on 10-09-2008. Accordingly, the tender was awarded to the claimant and letter of acceptance was issued on 07-11-2008. In accordance with the letter of acceptance dated 07-11-2008, the claimant was required to submit the balance security money plus stamp duty within ten days, which was duly complied by him. Thereafter both the parties entered into a contract agreement on 22-11-2008. As per the contract agreement the cost of the work was Rs.4,96,92,893.00 only. The date of commencement of the work was given as 22-11-2008 and the period of completion of the work was nine (09) months, hence the stipulated date of completion was given as 21-08-2009.

4. It is claimed by the opposite party no.2/claimant that since the time for execution of the contract was only nine months, so he immediately mobilised his equipments, machines, labours, staffs and other construction materials to the site with sincere intention to complete the work within stipulated time. However, he could not start the work because the appellants failed to finalise the logistics of the work before execution of the contract. The appellants also failed to issue the stock materials namely cement and tor steel of different dia within stipulated time. The failure to finalise the logistics resulted in a prolonged delay and also resulted in a financial loss to the claimant.

5. The work remained suspended/closed at various times, due to which the claimant’s staff, labours and machinery remained idle at work site without doing any work, and this was duly intimated to the appellants by the claimant. The effect of this delay was that the project started after lapse of six months and this delay could not be attributed to the contractor. Because of this inordinate delay and various other issues, the claimant claims that he had suffered a huge loss, which resulted into a dispute between the parties. As per the agreement, the matter was referred to the Arbitrator.

6. As per agreement, the Chief Engineer (Betwa) Irrigation and Water Resources, Department of U.P., Jhansi, who was actually the project proponent, appointed a Sole Arbitrator vide order dated 05-02-2021 for adjudication of the dispute. After the Arbitrator entered into the reference, the claimant had filed the statement of claims and the appellants filed the statement of defence. Thereafter, pleadings were complete, evidences were adduced and the parties were heard.

7. The Sole Arbitrator had considered the pleadings of the parties and contractual terms and conditions. He had also considered the oral/written arguments and legal submissions made by both the parties. He also considered the agreement and the provisions of I.D. Form No.111, which formed part of the contract as well as general conditions of the contract. He had also examined Clause 2 (A) of I.D. Form No.111, which stipulated that the time is the essence of contract. The Sole Arbitrator also considered and examined Clause-5 (Extension of time) of I.D. Form No.111