Delhi District Court
M/S Superior Aircon Pvt. Ltd vs Union Of Indiathrough The Executive … on 28 February, 2025
IN THE COURT OF MRS VINEETA GOYAL,
DISTRICT JUDGE (COMMERCIAL-03),
PATIALA HOUSE, NEW DELHI
OMP (Comm) No.36 of 2021
CNR No. DLND01-002719-2021
In the matter of:
M/s. Superior Aircon Pvt. Ltd.
Through its Director,
Mr. Sumeet Rai,
Kailash Complex, Model Town,
Panipat-132103. ........ Petitioner
Versus
Union of India
Through the Executive Engineer (E)
DED-301, East Block 3,
Level 6, R.K. Puram,
New Delhi-110066. ...... Respondent
Date of institution of suit : 20.03.2021
Date of Judgment : 28.02.2025
Appearance : Sh. Vivek Singh, Sh. Apurv Parashari and
Ms. Amrita Sarka, Ld. Counsels for petitioner.
Ms. Ruby and Ms. Laxmi Prabha, Ld. Counsels
for respondent.
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:36:14
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 1 of 39
JUDGMENT
1. The present objection petition under Section 34 of
Arbitration and Conciliation Act, 1996 (as amended) (hereinafter
referred to as the Act) for setting aside award dated 12.03.2020
(hereinafter referred as ‘impugned award’) passed by Ld. Sole
Arbitrator in arbitration case Ref. No.ARB/RB/Delhi/119, has
been filed by the petitioner.
2. Brief factual matrix of the case are that the respondent,
released a Notice Inviting Tenders (NIT) bearing
No.01/SE(E)/DCEC-III/2011-12 and invited bids in the field of
air conditioning for the work ‘c/o Auditorium/Business Centre
(Block C & D) and Block E for ICADR Campus at Plot No.6,
Vasant Kunj, Institutional Area Phase-I, New Delhi (SH: – SITC of
HVAC System)”. The NIT was released with an estimated cost of
Rs.1,98,32,207/- (Rupees One Crore Ninety Eight Lakhs Thirty
Two Thousand Two Hundred and Seven Only) and the work was
to be completed within a stipulated period of four months. The
respondent issued Letter of Intent dated 23.06.2011 in favour of
petitioner wherein the captioned works was awarded to the
petitioner for a total sum of Rs.1,96,74,700/- being 0.79% lower
than the estimated amount of Rs.1,98,32,207/- for a stipulated
period of completion of four months. The petitioner vide its
communication dated 29.06.2011 provided the bank guarantee
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:36:32
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 2 of 39
being Bond No.0429/08/2011 dated 28.06.2011 for an amount of
Rs.9,83,735/- which was valid till 31.03.2012 towards the
performance guarantee. During the course of execution of work,
various disputes arose between the parties out of the contract on
account of delay for reasons which are solely attributable to the
respondent. According to petitioner, the works were completed by
the petitioner as far back as on 08.01.2013 and the final bill was
submitted on 10.05.2017 whereby the respondent on its own
accord, illegally and arbitrarily made deductions from the final bill
to the tune of Rs.14,84,447/- and the respondent paid less for
quantities beyond 30% deviation as well as the extra work done
by the petitioner. Pertinently, in view of Letter of Intent dated
23.06.2011, the stipulated date of commencement of the works
was 09.07.2011 and the actual work could be started much later
owing to delays attributable to respondent and similarly, the actual
date of completion of the works was 08.11.2011 whereas the work
could get completed on 22.12.2016. In terms of Agreement,
several payments due to the petitioner remained outstanding
despite completion of the work. The petitioner, had no option but
to address notices to the Chief Engineer and the Engineer-in-
charge raising various claims, however, the claims of the
petitioner remained outstanding. As per the Clause 25 of the
Agreement, there was an Arbitration clause. To settle the disputes,
the petitioner called upon the respondent for appointment of a
Sole Arbitrator in terms of Clause 25 of the Agreement to
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:36:49
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 3 of 39
adjudicate the disputes between the parties. The Arbitral Tribunal
so constituted entered into a reference. The petitioner filed its
Statement of Claim before the Ld. Sole Arbitrator raising
following 14 claims which are as under :
Claim No. Particulars of Claim Amount of Claim Proposed amended
claim as per
application under
Section 23(3) of the
Arbitration Act, 1996
Claim No.1 Claims for release of residual Rs.14,84,447/-
amount of Final Bill
Claim No.2 Claims for release of losses Rs.2,88,684/-
suffered due to depreciation in
value of T&P retained for a
longer period due to the Act of
omission and commission of
the Department
Claim No.3 Claim for reimbursement of Rs. 17,38,588/-
additional wages/salary paid to
the staff for a longer period on
account of omission and
commission of the Department
Claim No.4 Claim for reimbursement of Rs. 9,06,463/-
extra expenditure incurred
retaining the living
accommodation of staff and
providing Mess & Amenities
to the staff etc., for extended
period of the contract
Claim No.5 Claim for reimbursement of Rs.1,73,786/-
additional expenditure incurred
in maintaining the head office,
telephone bills etc., transport
including its depreciation for
the extended period of contract
due to act of omission and
commission by the Department
Claim No.6 Claim for reimbursement of Rs.1,02,936/-
payment made to labour who
were sitting idle at site due to
non-handing over of site by the
Department
Claim No.7 Claim for reimbursement of Rs. 16,56,785/- Rs.19,95,918/-
Escalation in labour wages,
material etc. on account of
prolonged period of contract
upto the Final Bill as paid by
Digitally signed
by VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:37:07 +0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 4 of 39
department
Claim No.8 Claim for reimbursement of Rs.2,86,633/- Rs.19,98,516/-
Escalation in labour wages,
material etc. on account of
prolonged period of contract
on the Residual Amount of
Final Bill
Claim No.9 Claim for reimbursement of Rs.25,670/-
Bank Charges for Extension of
Performance Guarantee
beyond the stipulated period
Claim No.10 Claim for Loss of Profit @ Rs.5,79,734/-
15% on Unexecuted Portion of
Contract i.e. Contract Amount
(-) Work Executed
[Rs.1,96,74,700.00 –
Rs.1,58,09,809.00] i.e.
Rs.38,64,891.00
Claim No.11 Claim for reimbursement of Rs.22,21,393/-
Interest @ 18% P.A. on
payments delayed for Running
Account Bills / less payment
made in Running Account
Bills / Final Bill
Claim No.12 Cost of Reference to Rs.1,50,000/-
Arbitration
Claim No.13 Pre-petition, Pendente lite & Shall be paid as per
Future Interest @ 18% P.A. on actuals
amounts of Claim 1 to Claim
No.10 from the date dues
withheld till the date of
payment
Claim No.14 Cost (Advocate fee, tribunal Shall be paid as per
fee and misc. expenses) actuals
TOTAL Rs.96,15,119/- Rs.1,16,66,135/-
3. The Ld. Arbitrator, after perusing all the documents and
material filed by the parties, has passed a detailed award on
12.03.2020. In this award, the Ld. Arbitrator has awarded
following sums against each award:-
Claim no.1- Rs. 82,800/-.
Claims no.2, 3, 4, 5 and 6- Rs. 9,39,600/-. Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:37:21
+0530OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 5 of 39
Claim no.7- Rs.6,20,000/-
Claim no.8- Rs. 14,200/-
Claim no.9- Rs. 25600/-.
Claim no.10- Nil.
Claim no.11- Rs. 1,51,600/-
Claim no.12- Rs. 45,000/-
Claim no.13- Simple interest of 10% per annum on amount awarded
against claim nos. 1,2-6, 7,8,9 from 11.08.2018 to date of award.
The Ld. Arbitrator awarded the aforesaid amount which was
to be paid within two months from the date of receipt of award by
the respondent, else, the awarded sum shall carry simple post
award @ 11% per annum from the date of award till the date of
payment.
4. Being aggrieved by the impugned award,the petitioner filed
instant petition on the grounds that the impugned award is ex-facie
contrary to public policy of India as it is in violation of
fundamental policy of Indian law besides being in conflict with
the most basic notions of justice. Further, the impugned award is
against the public policy of India since the same is in
contravention with the fundamental policy of Indian Law and is
therefore, liable to be set aside u/s. 34(2)(b) (ii) of the Act.
5. Ld. Counsel for petitioner submitted that the Ld. Sole
Arbitrator acted with inherent bias in the favour of respondent
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:37:36
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 6 of 39
thereby causing prejudice to the petitioner in the subject
proceedings. In response to the Statement of Claim, the
respondent filed his first Statement of Defence largely admitting
the claims of the petitioner herein. Thereafter, the petitioner herein
filed rejoinder affidavit to the said Statement of Defence,
however, the Ld. Sole Arbitrator allowed the same to be
withdrawn after the filing of rejoinder affidavit by the petitioner
herein and one more opportunity was granted to the respondent to
file Statement of Defence without recording any valid reasons. Ld.
Counsel asserted that contrary to the settled provisions of law, Ld.
Arbitrator, took the law into in his own hands and vide its order
dated 30.05.2019, permitted the respondent to retract the earlier
Statement of Defence which contained all admissions and infact,
directed the respondent to file revise Statement of Defence.
Additionally, it would be pertinent to mention here that during the
pendency of proceedings before Ld. Arbitrator, the petitioner
herein moved an application under Section 23 (3) of the Act
seeking revision of claim amounts specifically Claim no.7 and 8
respectively. The Ld. Arbitrator has completely ignored the said
application and without considering the revised calculation (being
the claims for escalation) decided the said claims and had taken
the unamended calculations which were filed along with the
claim. Ld. Counsel submitted that it is evident from the aforesaid
that Ld. Arbitrator fostered immense prejudice in favour of
respondent and against the petitioner herein.
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:37:47
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 7 of 39
5.1. Ld. Counsel for petitioner further submitted that inherent
bias of ld. Arbitrator can be further evident from the fact that after
the pronouncement of impugned award, the petitioner moved an
application under Section 33 of the Act seeking clarification of the
award. The Ld. Arbitrator dismissed the said application without
giving any notice or even calling for response from the
respondent, in complete violation of principles of natural justice.
Ld. Arbitrator did not act in independent manner which is in
violation of principles of natural justice.
5.2. Ld. Counsel for petitioner further submitted that while
deciding claim no.1 with regard to dispute in rates of agreed items
(for quantity executed beyond deviation limit), the Ld. Sole
Arbitrator has failed to provide any reason as to how petitioner’s
claim submitted under letter dated 08.06.2012 fell short to explain
that the same confirm with the market rates. Ld. Sole Arbitrator
instead of understanding the market rates, went ahead to allow the
said claim on the basis of the agreement rates, whereas Clause 12
of the General Conditions of Contract (GCC) allows the petitioner
to avail the amounts at market rates. The contractual provision
being Clause 12 of GCC mandates that for items whose quantities
are deviating beyond 30% of agreement quantities and for extra
items, market rates are to be paid. Clause 12.2 mandates that rates
shall be determined on the basis of market rates. However, Ld.
Arbitrator, in contravention to the contractual provision concluded
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:37:59
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 8 of 39
that rates to be restricted to agreement rates. It is also relevant to
note that even though the contract provides 30 days for the
respondent to dispute the analysis of rates submitted by the
petitioner and no such dispute was ever raised by the respondent
and the said deduction is not based on any evidence and amounts
to patent illegality appearing on the face of the record. The Ld.
Arbitrator failed to grant market rates ignoring vital evidence and
Contractual clause 12.2, therefore, the failure of Ld. Arbitrator to
grant the market rates is not based on any reasoning, thus, reflects
perversity on the part of ld. Arbitrator in arriving to such
conclusion. Ld. Counsel for the petitioner asserted that the Ld.
Sole Arbitrator ought to have appointed an independent receiver /
valuer to assess the claim amount to arrive at the right and
impartial calculation rather than deviating from the expressed
terms of the contract. Additionally, Ld. Counsel for petitioner
submits that Ld. Arbitrator failed to record any reason as to how
Extra Item no.2 was denied. The Ld. Arbitrator himself observed
that there remains no dispute on the execution of extra items by
the petitioner. Therefore, the Ld. Sole Arbitrator has committed
error in not allowing the claim pertaining to Extra-Items No.2
which was never denied by the respondent.
5.3. Ld. Counsel further submitted that the Ld. Arbitrator failed
to provide any reason as to how the petitioner is liable to receive
only partial claims raised under Claim no.2 to 6. The petitioner
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:38:08
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 9 of 39
has placed all documentary evidence as well as the basis of the
formula used in the common trade parlance to show depreciation
in value of T&P under Claim no.2. The Ld. Arbitrator further
failed to appreciate that the actual completion recorded by the
respondent / Department is on 22.12.2016. When the respondent
itself relies on extensions granted until 2016 which were granted
on account of the fact that works were being done by other
agencies in a piecemeal manner on account of which the petitioner
was asked to execute fractions of the works in 2013, 2014, 2015
and subsequently recommission the plant in September, 2016 and
even thereafter, on account of certain fire norms, ducting work and
fixing of grills etc. were done at the site, therefore, the
depreciation ought to have been granted till 22.12.2016 since the
petitioner was constrained to work at the site in bits and pieces on
instructions of the officials of the respondent and on account of
delays, completely attributed to the respondent.
5.4. Ld. Counsel for the petitioner further submitted that Ld.
Arbitrator failed to appreciate for successful completion of the
works within the stipulated time frame, the petitioner had to pay
advances to labour who would have been deployed at the site.
Admittedly, the delay in execution of work was attributed solely
to the respondent, which is also finding arrived at by the Ld.
Arbitrator but the Ld. Arbitrator failed to appreciate that the
petitioner was forced to retain the manpower due to the acts and
omissions of the respondent even after completing the work as far
Digitally signed
by VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:38:23 +0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 10 of 39
back as on 08.01.2013. The Technical Representatives including
watch and ward staff had been deputed in accordance with Clause
36 of the Agreement r/w Schedule F thereof which otherwise
would have been considered as a breach of terms of agreement on
the part of petitioner if not complied with.
5.5. Ld. Counsel for petitioner next asserted that the Ld.
Arbitrator failed to appreciate that petitioner was constrained to
retain the deputed minimum workforce as per the contract, which
is also evident from the fact that the respondent has never raised
any objection during the entirely of the works regarding non-
deployment of requisite amount of manpower (whether skilled or
unskilled). Ld. Arbitrator failed to appreciate that documentary
evidence was placed on record by the petitioner for substantiating
the claims no.3 to 6 but no documentary proof or evidence in any
other form was produced by the respondent to prove contrary to
the evidence of the petitioner, however, the Ld. Arbitrator solely
relied on the oral evidence of the respondent and partially allowed
the Claim nos. 2 to 6 even though there was no specific denial of
such documentary evidence of the petitioner nor the formula by
the respondent.
5.6. Ld. Counsel for the petitioner further submitted that Ld.
Arbitrator while partially allowing the Claim nos. 7 and 8,
randomly chose to apply an overall escalation of 5% on the work
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:38:40
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 11 of 39
quantum executed in extended period over the period of delay. It
is submitted that with respect to Claim no.8, the said application
of 5% was erroneously applied on the claim no.1 which has no
relation to Claim no.8 which is a separate claim altogether. There
is no basis of this 5% which was awarded by the Ld. Arbitrator to
the petitioner and therefore, such application of mind without
backed by any law or fact tantamount to award bereft of any
reasoning. The petitioner has calculated the escalation on the
basis of wholesale price index and the minimum wages which are
both published by the Indices as well as formula in accordance
with which the escalation was calculated has not been disputed by
the respondent. The Ld. Arbitrator has not provided any reason
from deviating from the formula given in the Contract. Ld.
Counsel for the petitioner stressed that the Ld. Sole Arbitrator
even failed to pass any order on the application u/s. 23(3)
preferred by the petitioner and completely ignored the amended
application preferred by the petitioner.
5.7. Ld. Counsel for the petitioner further argued that under the
Contract Act, 1872, there is no concept of substantial reduction in
damages owing to prolongation of works, specially in a situation
where admittedly, the breach was committed by the respondent
itself. The claim of loss of profit of the petitioner has been
summarily rejected by the Ld. Arbitrator on the perverse findings
that no breach of contract arises or mere fact has reduced. The
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:38:49
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 12 of 39
findings given by Ld. Arbitrator is patently illegal in as much as
the rates are given in bill of quantities based on total value of the
work and the resources are organized basis the value. If the works
are reduced, the contractor is likely to suffer financially and likely
to loss on profits. Ld. Counsel for petitioner further asserted that
Ld. Arbitrator committed patent illegality in looking at the value
of RA bills. The Ld. Arbitrator himself mentions ‘I shall consider
only those RA bills where the gross work done is more than Rs.
25.0 lakhs’ while at the time of computation of amount, the Ld.
Arbitrator seems to have seen net value instead of gross value.
5.8. Ld. Counsel for the petitioner further argued that rate of
interest imposed in ordinary commercial transactions with 18%
per annum, however, Ld. Arbitrator has erred in allowing only
10% rate of interest.
5.9. Ld. Counsel for the petitioner placed reliance upon
judgment, Union of India v/s Ibrahim Uddin., (2012) 8 SCC 148
and submitted that it is trite law that an admission is the best
evidence against a party making it and the Ld. Arbitrator not only
ignored all admissions made by the respondent but gave an
opportunity to the respondent to withdraw all the admissions made
by it in the initial Statement of Defence.
5.10. Ld. Counsel for petitioner further placed reliance upon
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:38:59
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 13 of 39
judgments, A.T Brij Paul Singh v/s State of Gujarat, (1984) 4 SCC
59; Dwarka Das v. State of Madhya Pradesh, (1999) 3 SCC 500;
Vakil Chand Bindal v/s Delhi Development Authority, 1999 (50)
DRJ 9; Mahanagar Gas Ltd v/s Babulal Uttamchand Co., 2013
(4) ArbLR 151 (Bom) (DB); Ssangyong Engineering and
Construction Company Ltd. v. National Highways Authority of
India (NHAI), (2019) 15 SCC 121; Delhi Metro Rail Corporation
v. Delhi Airport Metro Express Pvt. Ltd., 2024 INSC 292; Perkins
Eastman Architects DPC &anr (supra); Delhi Transport
Corporation v. Shyam Lal, (2004) 8 SCC 88; Narayan
Bhagwantrao Gosavi Balajiwale v. Gopal Vinayak Gosavi & Ors.,
AIR 1960 SC 100; Dwaraka Das v. State of M.P. & Anr.,
(1999) 3 SCC 500.
6. Reply to the petition was filed by the respondent stating that
the petitioner is suppressing the material facts as the petitioner has
not expressed any disagreement with award except minor
difference in post award interest amount which is awarded on
13.02.2020. In this regard, the petitioner has asked to provide the
details of award amount Rs. 31,73,052/- vide his Letter dated
07.11.2020 which was paid to him on 31.10.2020. In response to
the said letter, the respondent intimated the details of award
amount paid by respondent vide its letter no.54
(Miscellaneous/Arbitration/DED-301/AB/20-21/1704 dated
24.11.2020). Thereafter, the petitioner through its letter no. Nil
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:39:11
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 14 of 39
dated 14.12.2020 had not expressed any disagreement with regard
to the award amount with only minor difference in post award
interest. The respondent responded the said letter and intimated
about the full details of award amount and post award interest
with deductions. According to the respondent’s letter dated
23.12.2020, Rs. 1,11,276/- is due from the petitioner which has
not been deposited by the petitioner till date. It is asserted by the
respondent that it is implied by the action of the petitioner that
arbitral award was fully accepted by the petitioner in full and final
settlement of amounts with only minor difference in post award
interest due to Contract or under the said Contract. The petitioner
has received an e-payment vide PFMS transaction ID dated
31.10.2020. Rs. 31,73,052/- (Rs. 26,18,000/- award amount + Rs.
84,897 Pre Award interest on Claim no.1 and 2 as Claim no.13 +
Rs. 169355/- post award interest from the date of award to date of
payment i.e. 13.03.2020 to 31.10.2020) as full and final settlement
amount.
6.1. Respondent further submitted that grounds put-forth by the
petitioner for assailing the impugned award passed by the Ld.
Arbitrator were misplaced, devoid of merits and untenable. Ld.
Arbitrator has passed the impugned award after considering all
relevant documents placed on record. There is no error apparent
on the face of it. Ld. Arbitrator was appointed by Chief Engineer
(NDZ)-IV, CPWD, New Delhi in terms of Clause 25 of the
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:39:19
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 15 of 39
Agreement. The petitioner never objected to the appointment of
arbitrator at any time till the award and payment of award amount
received by them.
6.2. Ld. Counsel for respondent submitted that it is well settled
that jurisdiction of the court to interfere with an arbitral record is
the limited one. The court while considering the objections against
the award is not obliged to reassess the evidence. The court is also
not empowered to substitute its own view of finding in place of
view taken or finding recorded by Arbitrator. It cannot take up
itself the task of adjudicating the dispute which was referred to the
Arbitrator like an arbitrator or a court of judicial jurisdiction.
6.3. Ld. Counsel for respondent further submitted that the
impugned award has been passed by Ld. Arbitrator as per the
provisions of Contract, evaluation of the documents and the
evidence placed before him. There is no violation of principle of
natural justice and is in accordance with public policy of India.
Ld. Counsel for respondent stressed that petitioner has suppressed
the material facts and has not mentioned about received award
amount in the objection petition as to misled the court.
6.4. Ld. Counsel for respondent further inviting attention to
order sheet of Ld. Arbitrator of 15.10.2019, stated that on
15.10.2019 was the concluded hearing. The petitioner applied
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:39:28
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 16 of 39
Section 23 of the Act to amend the amount of the claim no.7 and
8. The application was taken on record by Ld. Arbitrator. Both
parties agreed that all claims heard at length and no hearing is
required. The amendment would have an effect if Ld. Arbitrator
would have restricted the amount to its original claim amount. The
Ld. Arbitrator has considered submissions of both the parties and
recorded reasons as to why he is not agreed to the calculation
submitted by the petitioner herein under Claim nos.7 and 8.
6.5. Ld. Counsel for respondent submits that while deciding
Claim no.1, Ld. Arbitrator has considered every submission made
by petitioner herein and respondent as well and concluded on the
basis of factual data submitted by both the parties. Ld. Arbitrator
allowed the claim of Rs. 5,38,366/- for extra items covered under
the extra items statement-1. Items covered in extra items
statement, Ld. Arbitrator did not accept the claim of difference of
rate as the document submitted was much after the date of
completion. Ld. Counsel for respondent further submitted that the
grounds raised by the petitioner with regard to other claims must
be confined within four corners of provisions of Section 34 of the
Act. Ld. Arbitrator has passed a well reasoned award after
considering all records and submissions made by the parties. Ld.
Counsel for respondent has denied all other allegations leveled by
the petitioner.
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:39:38
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 17 of 39
7. I have heard arguments advanced by ld. Counsels for the
parties and gone through the record.
8. It is settled proposition of law that award can only be set
aside under Section 34 (2) of the Act. Section 34 reads as under:-
“34.Application for setting aside arbitral award-
(1)Recourse to a court against an arbitral award may be
made only by an application for setting aside such award
in accordance with sub-section (2) and sub- section (3).
(2)An arbitral award may be set aside by the court only
if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to
which the parties have subjected it or, failing any indica-
tion thereon, under the law for the time being in force; or
(iii) the party making the application was not given
proper notice of the appointment of an arbitrator or of
the arbitral proceedings or was otherwise unable to
present his case; or
(iv) the arbitral award deals with a dispute not contem-
plated by or not falling within the terms of the submis-
sion to arbitration, or it contains decisions on matters be-
yond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to ar-
bitration can be separated from those not so submitted,
only that part of the arbitral award which contains deci-
sions on matters not submitted to arbitration may be set
aside; or
(v) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of
the parties, unless such agreement was in conflict with a
provision of this Part from which the parties cannot dero-
gate, or, failing such agreement, was not in accordance
with this Part; or (b) the court finds that-
(i) the subject-matter of the dispute is not capable of set-
Digitally signed
by VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:39:50 +0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 18 of 39
tlement by arbitration under the law for the time being in
force, or
(ii) the arbitral award is in conflict with the public policy
of India.
Explanation -i) For the avoidance of any doubt, it is clar-
ified that an award is in conflict with the public policy of
India only if the making of the award was induced or af-
fected by fraud or corruption or was in violation of Sec-
tion 75 or Section 81.”
ii) It is in contravention with the fundamental policy of
Indian law;
iii) It is in conflict with the most basic notions of moral-
ity or justice.
Explanation-II- For the avoidance of doubt, the test as to
whether there is a contravention with the fundamental
policy of Indian law shall not entail a review on the mer-
its of the dispute.
[2 (A) An arbitral award arising out of arbitrations other
than international commercial arbitrations, may also be
set aside by the court, if the court finds that the award is
vitiated by patent illegality appearing on the face of the
award: Provided that an award shall not be set aside
merely on the ground of an erroneous application of the
law or by reappreciation of evidence.
9. In case of Union Of India vs Varindera Constructions Ltd.
AIR 2018 SUPREME COURT 2961, the Hon’ble Apex Court has
observed:-
“8. The primary object of the arbitration is to reach a final disposition
in a speedy, effective, inexpensive and expeditious manner. In order to
regulate the law regarding arbitration, legislature came up with
legislation which is known as Arbitration and Conciliation Act, 1996. In
order to make arbitration process more effective, legislature restricted
the role of courts in case where matter is subject to the
arbitration. Section 5 of the Act specifically restricted the interference
of the courts to some extent. In other words, it is only in exceptional
circumstances, as provided by this Act, the court is entitled to intervene
in the dispute which is subject matter of arbitration. Such intervention
Digitally signed
by VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:40:04 +0530OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 19 of 39
may be before, at or after the arbitration proceeding, as the case may be.
In short, court shall not intervene with the subject matter of arbitration
unless injustice is caused to either of the parties.”
10. Thus, it is clear that objective of Section 34 of the Act is
that any claim brought under Section 34 of the Act shall be in
accordance with principles of provisions laid under the Act. There
is no doubt that any unfettered intervention in the tribunal
functioning would defeat the purpose of the Act and same has
been reiterated by Hon’ble Apex Court and High Court time and
again.
11. In case of Anand Brothers P.Ltd.Tr.M.D vs Union Of India
& Ors, decided on 4 September, 2014, it has been held that:-
“14. It is trite that a finding can be both; a finding of fact or a finding
of law. It may even be a finding on a mixed question of law and fact.
In the case of a finding on a legal issue the Arbitrator may on facts that
are proved or admitted explore his options and lay bare the process by
which he arrives at any such finding. It is only when the conclusion is
supported by reasons on which it is based that one can logically
describe the process as tantamount to recording a finding. It is
immaterial whether the reasons given in support of the conclusion are
sound or erroneous. That is because a conclusion supported by reasons
would constitute a “finding” no matter the conclusion or the reasons in
support of the same may themselves be erroneous on facts or in law. It
may then be an erroneous finding but it would nonetheless be a
finding. What is important is that a finding presupposes application of
mind. Application of mind is best demonstrated by disclosure of the
mind; mind in turn is best disclosed by recording reasons. That is the
soul of every adjudicatory process which affects the rights of the
parties. This is true also in the case of a finding of fact where too the
process of reasoning must be disclosed in order that it is accepted as a
finding in the sense the expression is used in Clause 70.”
Digitally signed
by VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:40:14 +0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 20 of 39
12. It is settled position of law that while considering a
challenge to an arbitral award, the court need not examine the
validity of findings or the reasoning behind the findings given by
the Arbitrator. A Court shall not conduct a roving enquiry into the
facts and evidence of the matter or neither shall the court sit in
appeal against the award of arbitration.
13. In case of UHL Power Company Ltd. vs The State Of
Himachal Pradesh Multi., (2022) 4 SCC 116, the Hon’ble Apex
Court reiterated the limited scope under Section 34 of the Act.
16. As it is, the jurisdiction conferred on Courts under Section 34 of the
Arbitration Act is fairly narrow, when it comes to the scope of an appeal
under Section 37 of the Arbitration Act, the jurisdiction of an Appellate Court
in examining an order, setting aside or refusing to set aside an award, is all the
more circumscribed. In MMTC Limited v. Vedanta Limited 7, the reasons for
vesting such a limited jurisdiction on the High Court in exercise of powers
under Section 34 of the Arbitration Act has been explained in the following
words:
“11. As far as Section 34 is concerned, the position is well- settled by
now that the Court does not sit in appeal over the arbitral award and
may interfere on merits on the limited ground provided under Section
34(2)(b)
(ii) i.e. if the award is against the public policy of India. As per the
legal position clarified through decisions of this Court prior to the
amendments to the 1996 Act in 2015, a violation of Indian public
policy, in turn, includes a violation of the fundamental policy of
Indian law, a violation of the interest of India, conflict with justice or
morality, and the existence of patent illegality in the arbitral award.
Additionally, the concept of the (2019) 4 SCC 163 CIVIL APPEAL
NO. 10341 OF 2011 “fundamental policy of Indian law” would cover
compliance with statutes and judicial precedents, adopting a judicial
approach, compliance with the principles of natural justice, and
Wednesbury [Associated Provincial Picture Houses v. Wednesbury
Corpn., (1948) 1 KB 223 (CA)] reasonableness. Furthermore, “patent
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:40:35
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 21 of 39
illegality” itself has been held to mean contravention of the
substantive law of India, contravention of the 1996 Act, and
contravention of the terms of the contract.”
17. A similar view, as stated above, has been taken by this Court in K.
Sugumar v. Hindustan Petroleum Corporation Ltd.8, where it has been
observed as follows:
“2. The contours of the power of the Court under Section 34 of
the Act are too well established to require any reiteration. Even
a bare reading of Section 34 of the Act indicates the highly
constricted power of the civil court to interfere with an arbitral
award. The reason for this is obvious. When parties have
chosen to avail an alternate mechanism for dispute resolution,
they must be left to reconcile themselves to the wisdom of the
decision of the arbitrator and the role of the court should be
restricted to the bare minimum. Interference will be justified
only in cases of commission of misconduct by the arbitrator
which can find manifestation in different forms including
exercise of legal perversity by the arbitrator.”
14. In case of The Project Director National Highways vs M.
Hakeem, (2021) 9 SCC 1, the Hon’ble Apex Court observed as
under:-
“23. It is settled law that a Section 34 proceeding does not contain any
challenge on the merits of the award. This has been decided in MMTC Ltd. v.
Vedanta Ltd., (2019) 4 SCC 163, at 167 as follows: –
14. As far as interference with an order made under Section 34, as
per Section 37, is concerned, it cannot be disputed that such
interference under Section 37 cannot travel beyond the restrictions
laid down under Section 34. In other words, the court cannot
undertake an independent assessment of the merits of the award,
and must only ascertain that the exercise of power by the court
under Section 34 has not exceeded the scope of the provision.
Thus, it is evident that in case an arbitral award has been
confirmed by the court under Section 34 and by the court in an
appeal under Section 37, this Court must be extremely cautious
and slow to disturb such concurrent findings. Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:40:45
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 22 of 39
24. Likewise, in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019)
15 SCC 131, this Court under the caption “Section 34(2)(a) does not entail a
challenge to an arbitral award on merits” referred to this Court’s judgment
in Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644,
the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, 1958 [the “New York Convention”] and various other authorities to
conclude that there could be no challenge on merits under the grounds
mentioned in Section 34 – (see paras 34 to 48). This Court also held,
in Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear
Ltd., (2018) 3 SCC 133 (at 170), that the court hearing a Section 34 petition
does not sit in appeal (see para 51).”
15. Further, in case of State of Jharkand v/s HSS Integrated
DSN, (2019) 9 SCC, the Hon’ble Apex Court held as under:-
6.1. In Progressive-MVR (2018) 14 SCC 688, after considering the
catena of decisions of this Court on the scope and ambit of the
proceedings under Section 34 of the Arbitration Act, this Court has
observed and held that even when the view taken by the arbitrator is
a plausible view, and/or when two views are possible, a particular
view taken by the Arbitral Tribunal which is also reasonable should
not be interfered with in a proceeding under Section 34 of the
Arbitration Act.
6.2. In Datar Switchgear Ltd. (2018) 3 SCC 133, this Court has
observed and held that the Arbitral Tribunal is the master of evidence
and the findings of fact which are arrived at by the arbitrators on the
basis of the evidence on record are not to be scru-tinised as if the
Court was sitting in appeals In para 51 of the judgment, it is
observed and held as under:
51. Categorical findings are arrived at by the Arbitral
Tribunal to the effect that insofar as Respondent 2 is
concerned, it was always ready and willing to perform its
contractual obligations, but was prevented by the appellant
from such performance. Another specific finding which is
returned by the Arbitral Tribunal is that the appellant had not
given the list of locations and, therefore, its submission that
Respondent 2 had adequate lists of locations available but
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:40:54
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 23 of 39
still failed to install the contract objects was not ac-ceptable.
In fact, on this count, the Arbitral Fribunal has commented
upon the working of the appellant itself and expressed its
dismay about lack of control by the Head Office of the
appellant over the field offices which led to the failure of the
contract. These are findings of facts which are arrived at by
the Arbitral Tribunal after appreciating the evidence and
documents on record. From these findings it stands
established that there is a fundamental breach on the part of
the appellant in carrying out its obligations, with no fault of
Respondent 2 which had invested whopping amount of Rs
163 crores in the project. A perusal of the award reveals that
the Tribunal investigated the conduct of the entire
transaction between the parties pertaining to the work order,
including withholding of DTC locations, allegations and
counter-allegations by the parties concerning installed
objects. The arbitrators did not focus on a particular breach
qua particular number of objects/class of objects.
Respondent 2 is right in its submission that the fundamental
breach, by its very nature, pervades the entire contract and
once committed, the contract as a whole stands abrogated. It
is on the aforesaid basis that the Arbitral Tribunal has come
to the conclusion that the termination of contract by
Respondent 2 was in order and valid. The proposition of law
that the Arbitral Tribunal is the master of evidence and the
findings of fact which are arrived at by the arbitrators on the
basis of evidence on record are not to be scrutinised as if the
Court was sitting in appeal now stands settled by a catena of
judgments pronounced by this Court without any exception
thereto.”
16. The Hon’ble Apex Court has held that even where there are
more than one plausible views and the Ld. Arbitrator, in his
wisdom, adopts one of them, having given reasons for his
findings, the court should not interfere with such an award.
17. In case of State of Chattisgarh v/s Sal Udyog (P) Ltd,
(2022) 2 SCC 275, the Hon’ble Apex Court, while discussing the
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:41:05
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 24 of 39
fundamental principles of patent illegality and taking in view the
judgments passed in Ssanyong Engineering vs NHAI, (2019) 15
SCC 131, wherein it was observed that construction on the terms
of contract is primarily for an arbitrator to decide i.e. Arbitrator
makes his decision in such a manner that no fair minded or
reasonable person would and arbitrable view is not a possible
view to take, has held as under:-
“14. The law on interference in matters of awards under the 1996 Act has
been circumscribed with the object of minimising interference by courts
in arbitration matters. One of the grounds on which an award may be set
aside is “patent illegality”. What would constitute “patent illegality” has
been elaborated in Associate Builders v. DDA, where “patent illegality”
that broadly falls under the head of “Public Policy”, has been divided into
three sub-heads in the following words: (SCC p. 81, para 42)
“42. In the 1996 Act, this principle is substituted by the “patent
illegality” principle which, in turn, contains three sub-heads:
42.1. (a) A contravention of the substantive law of India would result
in the death knell of an arbitral award. This must be understood in the
sense that such illegality must go to the root of the matter and cannot
be of a trivial nature. This again is really a contravention of Section
28(1 )(a) of the Act, which reads as under:
’28. Rules applicable to substance of dispute.-(]) Where the place of
arbitration is situated in India,- (a) in an arbitration other than an
international commercial arbitration, the Arbitral Tribunal shall decide
the dispute submitted to arbitration in accordance with the substantive
law for the time being in force in India;’ Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:41:14
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 25 of 39
42.2. (b) A contravention of the Arbitration Act itself would be
regarded as a patent illegality – for example if an arbitrator gives no
reasons for an award in contravention of Section 31 (3) of the Act,
such award will be liable to be set aside.
42.3. (c) Equally, the third sub-head of patent illegality is really a
contravention of Section 28( 3) of the Arbitration Act, which reads as
under:
28. Rules applicable to substance of dispute.-
(1)-(2) * * *
(3) In all cases, the Arbitral Tribunal shall decide in accordance with
the terms of the contract and shall take into account the usages of the
trade applicable to the transaction.”
18. In the case of Mmtc Ltd. vs M/S.Vedanta Ltd., (2019) 4
SCC, wherein Hon’ble Court has observed that Section 34
proceedings does not contain any challenge on the merits of the
award and observed as under:-
167. As far as interference with an order made under Section 34, as
per Section 37, is concerned, it cannot be disputed that such
interference under Section 37 cannot travel beyond the restrictions laid
down under Section 34. In other words, the Court cannot undertake an
independent assessment of the merits of the award, and must only
ascertain that the exercise of power by the Court under Section 34 has
not exceeded the scope of the provision. Thus, it is evident that in case
an arbitral award has been confirmed by the Court under Section
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:41:24
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 26 of 39
34 and by the Court in an appeal under Section 37, this Court must be
extremely cautious and slow to disturb such concurrent findings.
19. As far as the grievance of the petitioner in the case in hand
with respect to impartiality of Ld. Arbitrator is concerned, a
reading of impugned award clearly indicates that Ld. Arbitrator
has given fair opportunity to both the petitioner as well as
respondent to put-forth their cases. It is seen from impugned
award that Ld. Arbitrator duly recorded that the claimant therein
vide reference dated 11.08.2018 gave notice to Chief Engineer
(NDZ) IV, CPWD, New Delhi for appointment of Arbitrator vide
Clause 25 of Agreement. Chief Engineer vide reference no.2486
dated 12.10.2018 appointed a Sole Arbitrator to determine the
dispute and the post dispute agreement of parties towards waiver
of Section 12 (5) of the Act was forwarded by CE,S reference
dated 26.11.2018. The impugned award further indicates that Ld.
Arbitrator gave disclosure under Section 12 (1) of the Act vide
Ref. dated 22.10.2018. In these premises, Ld. Counsel for
respondent has rightly taken the plea that objection with regard to
the appointment of ld. Arbitrator is not tenable. Further, the
perusal of record shows that petitioner has filed Statement of
claim vide Ref. dated 30.01.2019. The respondent filed Statement
of Defence vide Ref. dated 15.03.2019. It is evident from
proceeding sheets dated 30.05.2019 that on being pointed out by
the petitioner herein that in Statement of Defence, respondent has
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:41:35
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 27 of 39
not responded to the claims referred for arbitration and
corresponding to the claim statement made out in Statement of
Claim. The respondent, accepting his mistake assures to submit
Statement of Defence latest by 24.06.2019 and the respondent has
filed revised Statement of Defence on 27.06.2019. It is very
evident from the record that with all fairness, Ld. Arbitrator has
provided opportunity to the petitioner to file rejoinder to the
revised Statement of Defence of the respondent. This further
shows that the Ld. Arbitrator gave full opportunity to the parties
and even every possible opportunity to represent their respective
case and thereby to ensure a fair trial. So far as the other
contention raised by the petitioner that after pronouncement of the
award, the petitioner moved an application u/s. 33 of the Act
seeking clarification in the award and the said application was
dismissed without issuing notice or even calling response from the
respondent is concerned, it is evident from the record that Ld.
Arbitrator discussed the request dated 09.07.2020 made by the
petitioner herein and observed that the request made by the
petitioner herein is misplaced. Ld. Arbitrator categorically
observed that while adjudicating claim no.11 the stated
“expression only says that only those RA bills shall be considered
where the gross work done is more than 25 lakhs. This does not
say that interest is payable on the gross value of the bill.” It is
evident from the findings written by the Ld. Arbitrator that Ld.
Arbitrator considered the contentions of the petitioner herein on
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:41:45
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 28 of 39
factual ground and clarified that the realm of Section 33 of the Act
is only to correct computation / clerical errors in the award and
cannot be used as a tool to advance fresh arguments to support a
claim. This makes it evident that the Ld. Arbitrator considered the
request made by the petitioner herein and cannot be said to have
acted beyond the norms of arbitration. It needs to be highlighted
that the respondent in response to the instant petition has produced
copy of letter no. Nil dated 07.11.2020, copy of letter no. 54
(Misc.)/Arbitration/DED-301/AP/2022-21/1704 dated 24.11.2020,
copy of letter no. Nil dated 14.12.2020, letter no.54 (Misc.)/
Arbitration/DED-301/AP/2022-21/1833 dated 23.12.2023 and
copy of letter no. 54 (Misc.)/Arbitration/DED-301/AP/2022-
21/153 dated 02.11.2020 which indicate that the petitioner
received an amount of Rs. 31,73,052/- from the respondent on
31.10.2020 before the institution of the present petition on
20.03.2021. Ld. Counsel for the respondent has rightly taken a
plea that at no point of time, right from the appointment of
arbitrator till the award is published and alleged payment of award
was received, the petitioner did not object to the appointment and
that the arbitrator has taken a biased procedure. It is not out of
place to mention here that if there is any question about the
conduct of the Arbitrator for procedures during arbitration, the
petitioner should have raised those questions as soon as possible
which was not done by the petitioner. Hence, the petitioner, at this
stage cannot raise the ground that Arbitrator has acted with bias.
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:41:52
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 29 of 39
20. Now, coming to the point raised by the petitioner that while
deciding Claim no.1, the Ld. Arbitrator has failed to provide any
reason as to how petitioner’s claim submitted under letter dated
08.06.2012 fell short to explain that same confirms with market
rates, and the Ld. Arbitrator instead of understanding the market
rates, went ahead to allow on the basis of agreed rate and further,
Ld. Arbitrator failed to record any reason as to how claim under
extra items no.2 is denied. It is evident from record that while
adjudicating claim no.1, the Ld. Arbitrator observed that dispute is
on three counts, firstly, dispute in rates of agreement items (for
quantity executed beyond deviation limit); secondly, dispute in
measurement of two items and thirdly, the dispute in rates of extra
items. While considering the dispute in rates of agreement items
(for quantity executed beyond deviation limit), ld. Arbitrator relied
upon Clause 12.2 and 12.3 of the Agreement and observed that the
claim rates are more than agreed rates whereas, the respondent has
paid rates even less than agreed rates in most of the disputes
items. Ld. Arbitrator further observed that respondent did not
issue any notice under Clause 12.3 expressing any intention to
revise the rates to less than agreed rates and the respondent cannot
reduce rates unilaterally. Ld. Arbitrator further observed that rates
claimed in disputed items in Sub-Head B. Plumbing are far more
than agreement rates and even the petitioner herein himself has
not adopted such rates by making this claim. The Ld. Arbitrator
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:42:02
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 30 of 39
had gone to question that rates as claimed by the petitioner were
without due seriousness /market survey at that stage. Ld.
Arbitrator further noted that a document filed by the petitioner per
se fails to put conviction on record that said claim rates were true
prevailing market rates and concluded that claims rates are to be
restricted to agreement rates in those items where the respondent
has paid even less than agreement rate and rejected the contention
of the petitioner. The Ld. Arbitrator considered the factual data
and awarded an amount of Rs. 2,84,450/- against first part of the
claim. Therefore, the factual aspect recorded on the basis of
documentary evidence cannot be interfered by this court. With
regard to dispute as to the measurement of two items, Ld.
Arbitrator categorically observed that this claim is without any
documentary evidence. Further, with regard to third dispute in
case of extra items, the Ld. Arbitrator again placed reliance upon
Clause 12.2 of the Agreement and further considered the conduct
of the parties, the relevant extract is reproduced as under:-
This conduct of parties clearly establishes that the parties reached
consensus ad idem that the extra items were to be executed by the
claimant at the rates offered by claimant on 29.5.12. Had it not been
so, respondent would have rejected the claim at that stage and would
not have given green signal to go ahead with work. My conclusion
on this basis gets fortified furthermore when I study the principle
highlighted by Hon’ble Supreme Court in the matter McDermott
International inc. vs. Bum Standard Co. Ltd., (2006) as under:
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:42:11
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 31 of 39
It is trite that the terms of the contract can be express or implied. The
conduct of the parties would also be a relevant factor in the matter of
construction of a contract. The construction of the contract
agreement, is within the jurisdiction of the arbitrators having regard
to the wide nature, scope and ambit of the arbitration agreement and
they cannot, be said to have misdirected themselves in passing the
award by taking into consideration the conduct of the parties. It is
also trite that correspondences exchanged by the parties are required
to be taken into consideration for the purpose of construction of a
contract. Interpretation of a contract is a matter for the arbitrator to
determine, even if it gives rise to determination of a question of law.
Thus respondent has no right to reduce the rates much after the work
was executed and thus the corresponding difference is payable to
claimant.
The factual data has been submitted by claimant’s ref. dt. 22.1.2020
and respondent’s ref. dt. 18.2.2020 and I take the data accordingly.
The difference amount payable to claimant works out to Rs.
5,38,366/-(18294 +17749 +17339 + 32898 + 46779 + 136953 +
253290 + 7715 + 4882 + 2467) against EIS-1.
Further I note that the claim against EIS-2 places reliance on exhibit
at p- 527 of SoC which is a document submitted much after the date
of completion. Thus I do not accept the claim on items contained in
EIS-2.
Thus an amount of Rs.5,38,366/- only is payable against this part of
claim.”
21. From the above, it is evident that Ld. Arbitrator has duly
considered documentary evidence on record and therefore, the
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:42:22
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 32 of 39
factual aspect recorded on the basis of documentary evidence
cannot be interfered.
22. Coming to the other contentions of the petitioner with
regard to Claim no.2 to 6, a careful perusal of impugned award
reveals that Ld. Arbitrator duly recorded that stipulated date of
start of work was 08.07.2011 and stipulated date of completion
was 07.11.2011. The work was declared complete by respondent
on 2.12.2016. Ld. Arbitrator took note of the fact that as per own
record of the respondent, the delay of 1889 days were attributable
to the respondent and further also, took note of the fact that as per
own admission of petitioner wherein the work was broadly
completed on 01.11.2013 and remaining work was only about (a
fixing of grills & diffusers and (b) Testing of A/C equipments. Ld.
Arbitrator further noted that it is undisputed that testing work was
done in June-July. After taking note of all the factual aspects, Ld.
Arbitrator returned the finding, the relevant extract is reproduced
as under:-
Thus, I do not see any rationale in providing any tangible resources
after July 13 up to Aug 16 when no work was being executed at all.
Thus, I conclude that out of total delay of 61 months, the expenses on
overheads were incurred in the period 8.11.11 – 8.1.13 (i.e. 14
months). Further, after 8.1.13, there was intermittent requirement in
June- july 13 ( one month) while testing the equipment and then in
last 3 months of 2016 when the pending work was completed after
civil work was done. Resultantly, the respondent is liable to
compensate the claimant for the loss of overheads in this period of 18
months ( 14 +1+3) out of 61 months as claimed by claimant. The
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:42:30
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 33 of 39
claimant has claimed overheads of 32.08 lac (in claims 2- 6) for a
period of 5.12 years i.e Rs.52,200 per month. This would mean claim
of overheads @ {52,200 x 4 months (contract period) } /196.74
x.0.85) i.e. 1.25% of cost of work (excluding 15% CP &OH). I hold
that the claim of overheads @ 1.25% of cost of work is quite
reasonable given the fact that in Schedule F (para 2(x)) of the contact,
percentage on cost of materials and labour, to cover all overheads and
profit has been mentioned as 15% and CPWD works manual para
20.4 adopts cost of overhead expenditure as 7.5% of cost of work.
The corresponding amount towards extra overhead expenses works
out to 52,200 per month x 18 months =Rs.9,39,600/- and this is a
reasonable compensation towards the purpose.
I award Rs. 9,39,600/- to claimant against claims no. 2,3,4,5&6.
23. From the perusal of above findings returned by the Ld.
Arbitrator by adjudicating Claim nos. 2, 3, 4, 5 and 6, the Ld.
Arbitrator considered all the submissions put-forth by the
petitioner. The petitioner has simply stated that claims were
decided without considering the documents without explaining or
bringing on record any such documents which were not
considered by the Ld. Arbitrator.
24. Coming to other contentions raised by the petitioner with
regard to Claim no.7 (Rs.16,46,655/-) and 8 (Rs.3,51,661/-) that
the Ld. Arbitrator completely ignored application under Section
23 (3) of the Act and without deciding the same, has taken
unamended calculations which were filed along with the claim, a
perusal of the impugned award shows that Ld. Arbitrator
observed that formula adopted by the petitioner herein is not a part
of Contract agreement, the relevant extract is reproduced as
Digitally
under:- signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:42:38
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 34 of 39
Claim no.7-xxxxxxxxxxxxx
The respondent has filed the statement of bills vide ref. dt. 17.9.19 and
I take the data from this statement. There is no rationale in considering
that component of work which has already been paid on market rates
and thus only work done on agreement rates in extended period of
contract is being considered.
Gross value of work done after stipulated date of completion = 182.98-
25=157.98 lacDeduct cost of deviation items which were paid on market rate ie.
more than agreement rate (from final bill)
=52,386+14560+14049+46187 + 187183=Rs3,14,365/-
Deduct cost of extra items (from final bill)= Rs 881199/-
Cost of work done after stipulated date of completion excluding the
component which was paid on prevailing market rate = 157.98 -3.15-
8.81=146.02 lac
Taking 15% as contractors profit and overheads from schedule F of
agreement, the prime cost towards this work comes as 146.02 x 0.85 =
Rs 124.11 lac.
Had there been no delay, this work would have been executed within
the period July-Nov. 11. Due to breach by respondent, the substantive
part of this work was executed up to Jan13 (i.e delay of about 14
months) and a small part of job was executed in Sept -Dec16.
I find that the claim calculation as made by claimant is not correct as
no escalation is admissible on the work done within the stipulated
period and further it is not appropriate to take total value of work in
calculations, besides other errors in these calculations. Furthermore,
the formula adopted by claimant is not a part of contract agreement.
I assess that overall escalation of 5% on the work quantum executed in
extended period (excluding the component paid on market rate) over
the period of this delay is reasonable towards the purpose and the
corresponding increase works out to 5% of 124.11 lac = Rs. 6.20 lac.
l award Rs.6,20,000/- to claimant against claim No.7
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:42:46
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 35 of 39
Claim No.08. Claim for reimbursement escalation in labour wages,
material etc. on account of prolonged period of contract on the residual
amount of final bill Rs. 2,86,633/-.
Reasons & Award: The claim is on the same footing as that of claim 7.
The only difference is that it is on the amount of work covered in claim
1.
I note that the award against claim 1 comprises two parts – Rs.
2,84,450(on deviation quantity against agreement items) + Rs.
5,38,366(on extra items).
The claim on extra items has already been considered on the basis of
market rates prevailing during execution and thus any further
escalation as claimed by claimant is not justifiable on such component.
The claim on deviation against agreement items has been considered
on the basis of agreement rates which were quoted considering that the
work would be completed in 4 months and not be delayed abnormally.
Thus the claim of escalation damages is admissible on such amount.
Same reasons as recorded in claim 7 are applicable here as well and an
amount of 5% of Rs.2,84,450/- = Rs. 14,200/- is payable to claimant.
I award Rs. 14,200/- to claimant against claim No. 8.
25. Further, while deciding Claim no.10 towards loss of profits,
Ld. Arbitrator after considering that in the absence of breach, there
can be no case of compensation. Petitioner has failed to point out
any perversity in the reasoning given by the Ld. Arbitrator.
26. It has been held by Hon’ble Apex Court in case titled, Dyna
Technologies Private Limited v/s Crompton Greaves Limited,
(2019) 20 SCC 1 that “the mandate under Section 31 of the Act is
to have reasoning which is intelligible and adequate and, which
can in appropriate cases be even implied by the courts from fair
Digitally signed
by VINEETA
GOYAL
VINEETA Date:
GOYAL 2025.02.28
17:42:55
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 36 of 39
reading of award the documents thereto under if the need be.”
“When we consider the requirement of a reasoned order three
characteristics of a reasoned order can be fathomed. They are:
proper, intelligible and adequate. If the reasoning in the order are
improper, they reveal a flaw in the decision making process. If the
challenge to an award is based on impropriety or perversity in the
reasoning, then it can be challenged strictly on the grounds
provided under Section 34 of the Arbitration Act. If the challenge
to an award is based on the ground that the same is unintelligible,
the same would be equivalent of providing no reasons at all.
Coming to the last aspect concerning the challenge on adequacy of
reasons, the Court while exercising jurisdiction under Section
34 has to adjudicate the validity of such an award based on the
degree of particularity of reasoning required having regard to the
nature of issues falling for consideration. The degree of
particularity cannot be stated in a precise manner as the same
would depend on the complexity of the issue. Even if the Court
comes to a conclusion that there were gaps in the reasoning for the
conclusions reached by the Tribunal, the Court needs to have
regard to the documents submitted by the parties and the
contentions raised before the Tribunal so that awards with
inadequate reasons are not set aside in casual and cavalier manner.
On the other hand, ordinarily unintelligible awards are to be set
aside, subject to party autonomy to do away with the reasoned
award. Therefore, the courts are required to be careful while
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:43:05
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 37 of 39
distinguishing between inadequacy of reasons in an award and
unintelligible awards.”
27. It is trite law that Arbitral Tribunal is final adjudicator of
evidence and its conclusion cannot be interfered with except
where it is found to be patently illegal or in conflict with the
public policy of India. The law which has been settled by Hon’ble
Apex Court is that a possible view by Arbitrator on the facts has
necessarily to pass mustered as the Arbitrator is ultimate master of
quality and quantity of evidence to be relied upon when he
delivers the award. Once the arbitrator has returned a finding after
appreciation of evidence, the court cannot sit in appeal against the
said award and re-appreciate the evidence of discern it afresh. It
has been held in various judgments that if two views are possible
and one adopted by the Ld. Arbitrator, the same cannot be
reversed only because the court prefers the other views.
28. Perusal of impugned award shows that Ld. Arbitrator
interpreted the Contract in its plain meaning and has discussed
each claim of the petitioner minutely and after discerning the
documents produced by both the parties and decided the matter.
There is no error apparent in the findings returned by the Ld.
Arbitrator. It cannot be said that Ld. Arbitrator has taken a biased
decision.
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.02.28
17:43:14
+0530
OMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 38 of 39
29. In view of foregoing discussions,none of the grounds raised
by the petitioner qualify the condition mentioned in Section 34 (ii)
for which the award of Ld. Arbitrator can be interfered with,
accordingly objection raised by the petitioner stands dismissed.
Digitally
signed by
VINEETA
30. File be consigned to record room. VINEETA GOYAL
GOYAL Date:
2025.02.28
17:43:23
+0530
Pronounced in the open Court (VINEETA GOYAL)
on 28th February, 2025. District Judge (Commercial-03)
Patiala House, New DelhiOMP (COMM): 36/21 M/s. Superior Aircon Pvt. Ltd. vs. Union of India Page 39 of 39
[ad_1]
Source link