The court emphasized that an arbitral award must be reasoned and address core contractual issues, with judicial intervention restricted to cases of patent illegality under Section 34 of the Arbitration and Conciliation Act.

JUDGMENT :

Manoj Kumar Gupta, CJ.

1. This Appeal, under Section 37 of the Arbitration and Conciliation Act, 1996 is directed against the judgment and order dated 10.07.2019 passed by the Additional District Judge (Commercial), Dehradun, in Arbitration Case No. 160/2016, whereby the petition filed by respondent no. 1 (hereinafter, referred to as the ‘respondent-company’), under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, hereinafter referred to as the ‘Act’) was allowed, and the Arbitral Award dated 29.07.2016, rendered by the respondent no. 2-Uttarakhand State Micro and Small Enterprises Facilitation Council, Dehradun (for short ‘the Facilitation Council’), was set-aside.

2. The facts, giving rise to the present proceedings, in brief, are that the respondent-company invited tender for supply of 5350 numbers of 28 watt Retrofit Type Energy Efficient Tubelights (T5) for use at its Thermal Power Stations. Pursuant thereto, the bid of the appellant came to be accepted, and a Purchase Order was issued on 10.06.2008, which stipulated that the goods would be supplied within four months of the order. Clause 11 provided that delivery of goods would be made, after getting the sample approved from the respondent-company.

3. Clause 8 of the Purchase Order provides for imposition of penalty for late delivery. Clause 8 is as follows:-

“8. Penalty for Late Delivery In case, the materials are not delivered within the period stipulated in the order, penalty shall be levied at ½% per week on the prices (End cost) subject to maximum 10% reckoned on the value of undelivered supplies.

Due consideration will be given for waival / levy of penalty only for the reasons absolutely beyond your control (Viz.Force Majeure conditions) for which documentary evidence will have to be provided. The request for extension in delivery giving reasons and supporting documents shall have to be made within one month on completion of the supply.”

4. Clause 9 relates to extension in the contractual delivery date and power of the respondent-company to consider extension of delivery period with or without penalty, if the appellant were able to prove by documentary evidence that the delivery got delayed on account of reasons beyond its control. Relevant part of Clause 9 is as follows :-

“9. Extension in the Contractual Delivery Date It will be supplier's responsibility to ensure that goods are delivered within the stipulated delivery period. However, if on account of reasons beyond ones control as laid down in the DGS & D Force Majeure Conditions the Company may consider extension of delivery period with or without penalty & with or without statutory variations. However, delivery extensions will be considered only after execution of the order fully and upon submission of documentary evidence for the reasons of delay.

However, such extension will be subject to the following conditions shown hereunder.

a) ……

b) ……

c) ……”

5. The appellant, for the first time, submitted sample for approval on 08.07.2008, but which was not approved, and was rejected. On 25.08.2008, the appellant was asked to submit a new sample. The second sample was submitted on 06.10.2008, which was again not found to be suitable, and hence was rejected. On 10.10.2008, the appellant was informed about the rejection of the sample and also that it had not deposited Security Deposit, as per Clause 48. On 21.11.2008, the respondent-company issued a show-cause notice to the appellant, whereby it was required to show cause, as to wh