On 1st October, a bench of Delhi High Court consisting of Justice Vibhu Bakhru, held that the scope of interference in an arbitral award is confined to the grounds as set out under Section 34 of the A&C Act. Undisputedly, an arbitral award can be interfered with under Section 34(2)(b)(ii) and Section 34 (2A) of the A&C Act only if the Court finds that the award is opposed to the public policy of India or is vitiated by patent illegality appearing on the record.
Facts of the case:
The petitioners had filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 impugning an arbitral award dated 30.01.2021 rendered in the context of disputes between the parties in connection with a contract dated 05.11.2014 relating to the work of “Construction of service buildings, loco shed, RCC Trunk Drain and Misc. Civil Works in connection with the Construction of Private Railway Siding for Solapur Super Thermal Power Project of NTPC Limited near Hotgi Railway Station in Solapur District, Maharashtra-Pkg.4” delivered by the Arbitral Tribunal comprising of a learned Sole Arbitrator.
The petitioners contend that the impugned award is vitiated by patent illegality as, it is contrary to the terms of the Contract and has been made in disregard of the documentary evidence placed on record.
Contention of the Petitioner:
Mr Taneja, learned counsel appearing for the petitioner submitted the following:
- It was submitted that the impugned award is patently illegal and contrary to the public policy of India inasmuch as, it had awarded claims payable to Cannon in complete disregard to the provisions of the Contract.
- It was also submitted that in respect of the award concerning the claim relating to excavation of ‘hard rock’, he submitted that the said award was contrary to the CPWD Specifications regarding classification of soils as defined in Clause 2.1 of the CPWD Specifications.
- He submitted that the measurement of earth work in case of hard rock was required to be taken by stacking the hard rock and not solely by measuring the depth of cutting/excavation of earth.
- He contended that clauses 2.11.1 and 2.11.3 of the CPWD Specifications make it abundantly clear that the soil could be classified as hard rock only if the excavation was carried out by blasting and in cases where blasting was prohibited, by mechanical means.
- Next, he submitted that the Arbitral Tribunal had also grossly erred in allowing Cannon’s claim for additional expenditure on account of increase in royalty as in terms of Clause 22 of the SCC, the rates agreed were firm till the end of the Contract.
Contention of the respondent:
Mr Simil Purohit, learned counsel appearing for Cannon, countered the aforesaid submissions on the following grounds:
- He submitted that the scope of Section 34 of the A&C Act does not permit further enquiry into the factual findings returned by the Arbitral Tribunal as the Arbitral Tribunal is the final adjudicator on all questions of fact as well as interpretation of the Contract.
- He also submitted that the Arbitral Tribunal had awarded the amount payable for earth work in hard rock after adjusting for the payments received for work carried out in ordinary soil. The decision to do so was made after evaluating, amongst other material, the correspondence between the parties; the noting made in field book; and, the report received from Walchand College of Arts and Science, Solapur.
- He argued that the instructions that the hard rock were required to be stacked was issued at a much belated stage and even at that stage, no space was provided to Cannon to stack the excavated hard rock.
- Next, he submitted that the decision of the Arbitral Tribunal awarding additional amount for tie bolts could not be faulted. The CPWD Specifications required tie bolts to be used for holding the shuttering on RCC walls, where its thickness exceeded the specified limit.
Observation and Judgment of the court:
The hon’ble bench of the court made the following observation:
- The scope of interference in an arbitral award is confined to the grounds as set out under Section 34 of the A&C Act.
- The Court is not required to examine the disputes between the parties and reappreciate the evidence or material placed before the Arbitral Tribunal to arrive at a fresh decision and supplant its decision in place of the findings of the Arbitral Tribunal.
- The Arbitral Tribunal’s finding as to a question of fact cannot be interfered with unless this Court concludes that it is patently illegal or otherwise falls foul of the public policy of India. According to NTPC/IIL, the Arbitral Tribunal had found that Cannon had, in fact, carried out earth work in hard rock and therefore, was entitled to the difference between the earth work in ordinary soil/ordinary rock (which was paid) and earth-work in hard rock, at the agreed rates for such work.
In the light of the above, the court held that it was unable to accept that the decision of the Arbitral Tribunal is contrary to the terms of the Contract between the parties, as contended on behalf of NTPC. It was further held that the Arbitral Tribunal’s decision to reject the counter-claims made by NTPC cannot be faulted.
However, the impugned award to the extent that the Arbitral Tribunal has awarded compensation at the rate of 12.5% per annum on the amounts awarded against certain claims, for the period prior to the date of the impugned award, was set aside.
Read Judgment ;
SOURCE ; .latestlaws.com/
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