Delhi High Court
Quadrant Televentures Limited vs Atc Telecom Infrastructure Pvt. Ltd. & … on 24 December, 2024
Author: Dinesh Kumar Sharma
Bench: Dinesh Kumar Sharma
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
RESERVED ON -14.10.2024
% PRONOUNCED ON -24.12.2024
+ O.M.P. (COMM) 396/2019, I.A. 13233/2019, I.A. 19283/2022
QUADRANT TELEVENTURES LIMITED .....Petitioner
Through: Mr. Akhil Sibal, Sr. Adv. with Mr.
Yashvardhan, Mr. Nikhil Y. Chawla,
Mr. Gyanendra Shukla, Ms. Kritika
Nagpal, Mr. Pranav Das, Advs.
versus
ATC TELECOM INFRASTRUCTURE PVT. LTD. & ANR.
.....Respondents
Through: Mr. Rajshekhar Rao, Sr. Adv. with
Mr. Manish Jha, Ms. Shalini Sati
Prasad, Mr. Zain Maqbool, Ms.
Mehrunissa Anand, Mr. Arsh Rampal,
Advs. for R-1.
CORAM:
HON'BLE MR. JUSTICE DINESH KUMAR SHARMA
JUDGMENT
DINESH KUMAR SHARMA,J :
1. The present petition has been filed under Section 34 of the Arbitration
and Conciliation Act, 1996 (hereinafter “the A&C Act”) challenging the
Award dated 25.05.2019 (hereinafter “impugned award”) passed by the
Ld. Sole Arbitrator whereby the Ld. Sole Arbitrator has allowed the
claims of Respondent No. 1 and rejected the counter-claims of theSignature Not Verified
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petitioner.
2. Briefly stating, the facts of the present case are that Essar Commvision
Limited, being the predecessor-in interest of the Petitioner, was awarded
the BSO license in the year 1997 for the Punjab service area. Thereafter,
New Telecom Policy (NTP) was announced in 1999, which allowed the
licensees to migrate from a Fixed License Fee regime to a Revenue
Sharing Regime and the licenses to be granted for an initial period of 20
years extendable by an additional period of 10 years. In November 2003,
Union of India on the recommendation of the sector Regulator, Telecom
Regulatory Authority of India (hereinafter referred to as TRAI)
introduced the Unified Access service (UAS) licensing regime,
permitting an access service provider to offer both fixed and/or mobile
services under the same license, using any technology and also gave an
option to the existing operators to either continue under the present
regime or migrate to the new UAS License in the existing service area.
3. The Petitioner’s license originally a Basic Service Operation (BSO)
license was converted to UASL in November 2003 to continue to
provide wireless services in the already allocated/contracted spectrum
and permitted to operate in the same service area in which it was already
operating. However, the effective date of the UASL was to run from
original date i.e. 30.09.1997 and not 14.11.2003 on which the UASL
was executed between the Petitioner and the DoT.
4. A Master Service Agreement dated 18.05.2006 was executed between
HFCL Infotel Ltd. (the erstwhile name of the Petitioner) and Tata
Teleservices Ltd. A MSA was executed between Quipo Telecom
Infrastructure Ltd. & HFCL Infotel Ltd. (the Petitioner herein) wasSignature Not Verified
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executed on 20.11.2007. Another MSA was executed between Datacom
Solutions Pvt. Ltd. (erstwhile name of Videocon Telecommunications
Ltd., Respondent No. 2 herein) and Quippo Telecom Infrastructure Ltd.
An Addendum Agreement dated 22.01.2009 was executed between
Datacom Solutions Pvt. Ltd. and Quippo Telecom Infrastructure Ltd. to
QTIL MSA dated 01.11.2008 regarding Clause 1.4.1 of the said MSA.
Another MSA was executed between Wireless-TT Info Services Ltd.
and Datacom Solutions Pvt. Ltd. on 14.08.2009 (“WTTIL MSA”). An
Addendum Agreement dated 20.05.2010 was executed between VTL
and Quippo Telecom Infrastructure Ltd. to MSA dated 01.11.2008
whereby the Petitioner was included as a Party under the QTIL MSA
dated 01.11.2008 and all the obligations and the benefits arising out of
MSA dated 01.11.2008 were made be applicable and available to
Petitioner for GSM sites in Punjab Circle.
5. An Addendum Agreement dated 20.05.2010 was executed between VTL
(Respondent No. 2), WTTIL & HFCL (the Petitioner herein) whereby
the Petitioner was included as a Party under the WTTIL MSA dated
14.08.2009 and all the obligations and the benefits arising out of MSA
dated 14.08.2009 were made applicable and available to Respondent No.
1 for GSM sites in Punjab Circle. An Addendum Agreement dated
27.12.2010 was executed between Viom Networks Ltd., (Respondent
No.1), Respondent No.2 and the Petitioner. Viom Networks Ltd., Viom
Infra Networks (Maharashtra) Ltd., Respondent No. 2. and the Petitioner
entered into a MOU dated 12.12.2011 to settle certain disputes that had
arisen. Supplementary agreement was executed between the parties to
settle the disputes on 12.09.2013.
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6. Since the period of the UASL held by the Petitioner was due to expire in
September 2017, the Petitioner requested the DOT to allow it to use the
GSM spectrum for a period of twenty years from the date of allocation
of GSM spectrum (i.e. from the period 10.09.2008 to 09.09.2028) for
Punjab circle. The Petitioner also vide letter dated 09.11.2015 asked the
DOT for an extension of the license of Punjab Circle so as to make it co-
terminous for the period of which allocation to use the newly acquired
GSM spectrum was given in 2008. DoT refused to allow the use of GSM
spectrum for the period (10.09.2009 to 09.09.2028) vide letter dated
18.11.2015. DOT again refused the extension of UASL vide letter dated
01.12.2015.
7. Aggrieved by the aforesaid, the Petitioner filed Telecom Petition No. 56
of 2016 before the Ld. Telecom Disputes Settlement & Appellate
Tribunal inter alia challenging the aforesaid actions of the DOT and
seeking continuation of its license. The aforesaid petition is still pending
adjudication. The Petitioner sent the communication dated 02.01.2017 to
Respondent No.1 intimating it about the closure of its GSM services
w.e.f. 15.02.2017. Respondent No. 1, after the receipt of the letter dated
02.01.2017 sent a letter raising claims w.r.t the alleged unpaid invoices
and the exit penalty. The Petitioner made a payment of Rs.
2,52,75,603.27/- as also acknowledged by Respondent No.1, as the full
and final payment to Respondent No. 1 for all services rendered by
Respondent No. 1 to the Petitioner.
8. Ld. Sole Arbitrator was appointed by this Court vide order dated
06.09.2017 in a petition filed by Respondent No. 1 under Section 11 of
the A&C Act being Arb. P. No. 563/2017.
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9. On 25.05.2019, Ld. Arbitrator published the impugned award and
allowed the claims of respondent no.1. Ld. Arbitrator passed the award
on 25.05.2019 in favor of ATC Telecom Infrastructure Pvt. Ltd.,
accepting its claims and rejecting the counter-claims raised by Quadrant
Televentures Ltd. The findings were based on a detailed analysis of the
contractual terms, evidence, and legal submissions. Regarding ATC’s
claim for unpaid invoices amounting to ₹19.85 crore, Ld. arbitrator
concluded that these invoices were valid and enforceable under the
agreements. The arbitrator held that ATC had provided sufficient
evidence of services rendered, including documentation substantiating
its claims. Quadrant’s defense, alleging overpayment and a final
settlement of dues, was found unsubstantiated, as Quadrant could not
produce evidence to support its contention. Ld. arbitrator noted that the
payment of ₹2.52 crore made by Quadrant was not intended to cover all
outstanding dues but was a partial payment, as confirmed by ATC’s
records.
10. On the exit penalty claim of ₹58.11 crore, Ld. arbitrator ruled that
Quadrant had breached the lock-in period obligations stipulated in the
MSAs by prematurely vacating telecom sites. Ld. arbitrator emphasised
that the lock-in clauses were clear and enforceable, requiring the
Quadrant to pay penalties equivalent to the charges for the unexpired
term. Quadrant’s argument that the termination was due to regulatory
compulsion caused by the Department of Telecommunications’ (DoT)
refusal to extend its Unified Access Service License (UASL) was
rejected. Ld. arbitrator noted that the agreements did not include any
provision exempting Quadrant from its contractual obligations in case of
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regulatory issues. Furthermore, Ld. arbitrator accepted ATC’s
calculations of the exit penalties, finding them consistent with the terms
of the agreements and supported by evidence.
11. Quadrant’s counterclaims and jurisdictional objections were also
dismissed. Ld. arbitrator held that the dispute was commercial in nature,
arising from private agreements, and did not involve regulatory or
statutory issues that would necessitate adjudication by the Telecom
Disputes Settlement & Appellate Tribunal (TDSAT). Ld. arbitrator
further stated that Quadrant failed to prove any violation of natural
justice or procedural impropriety during the arbitration process.
12. In conclusion, the arbitrator found Quadrant liable for both the unpaid
invoices and the exit penalties. The award directed the Quadrant to pay
the full amounts claimed by ATC, amounting to ₹77.96 crore (₹19.85
crore for unpaid invoices and ₹58.11 crore as exit penalties), along with
applicable interest. The findings underscored ATC’s compliance with
the agreements and Quadrant’s failure to honour its financial obligations.
13. Sh. Akhil Sibal, Learned senior counsel for the petitioner, submitted that
the arbitrator lacked jurisdiction to adjudicate the dispute, citing the
Telecom Disputes Settlement & Appellate Tribunal (TDSAT) as the
exclusive forum for resolving disputes between telecom service
providers and infrastructure providers. The Ld. Senior counsel asserted
that since the dispute arose under a telecom licensing framework
regulated by the Telecom Regulatory Authority of India (TRAI) Act,
1997 and the matter should have been referred to TDSAT instead of
arbitration. The Ld. Senior counsel relied on Sections 14 and 15 of the
TRAI Act, which confer exclusive jurisdiction to TDSAT to adjudicate
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disputes between telecom service providers and infrastructure providers
like ATC, accordingly the arbitrator incorrectly assumed jurisdiction
over the dispute, which should have been adjudicated by TDSAT as per
the statutory framework governing the telecom sector. Reliance has been
placed upon Reliance Infratel Ltd. v. Etisalat DB Telecom Pvt. Ltd.
[Petition 75/2012, TDSAT].
14. It was further submitted that the petitioner had made a full and final
settlement of all outstanding dues with ATC, amounting to ₹2.52 crore.
Quadrant asserted that ATC had acknowledged receipt of this payment,
which should have been sufficient to close any financial obligations.
However, the arbitrator, according to the petitioner, erred in accepting
ATC’s claims for ₹19.85 crore in unpaid invoices, as there was no clear
evidence to substantiate these demands. The Ld. Senior counsel further
argued that ATC’s invoices were either inflated or unsupported by
proper documentation, and therefore, the arbitrator’s acceptance of these
invoices was a misapprehension of the facts.
15. The petitioner also challenged the exit penalties imposed for prematurely
vacating telecom sites before the expiry of the lock-in period. Quadrant
contended that the termination of services was forced by regulatory
compulsion, specifically the DoT’s refusal to extend the petitioner’s
UASL license. The Ld. Senior counsel emphasised that this regulatory
decision was beyond its control and should have been considered a valid
exemption from the lock-in period penalties. The Ld. Senior counsel
pointed out that the agreements between the parties did not provide for
penalties in cases where termination was due to external factors such as
government or regulatory actions. The Ld. Senior counsel argued that
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the arbitrator failed to appreciate the regulatory context of the dispute
and the public policy considerations involved, particularly in light of the
DoT’s actions that led to the cessation of services.
16. Furthermore, the Ld. Senior counsel argued that the arbitral award was
contrary to public policy, particularly because it failed to consider the
natural justice principles. The Ld. Senior counsel claimed that the
arbitrator did not give adequate weight to its evidence, including the
detailed correspondence and payments made to ATC over the years. The
Ld. Senior counsel argued that the award was based on a perverse
appreciation of the evidence, where the arbitrator ignored crucial
documents and did not properly evaluate the terms of the MSAs. This,
according to the petitioner, rendered the award unreasonable and
inconsistent with the legal and contractual framework between the
parties.
17. Additionally, Quadrant submitted that the award violated the principles
of fairness and transparency. The Ld. Senior counsel contended that
despite presenting a clear and valid defence, the arbitrator’s findings
were one-sided and failed to address critical issues raised by Quadrant
regarding the payment history, contractual obligations, and the lack of
jurisdiction. The Ld. Senior counsel argued that such an award was
unjust and against the public interest, particularly in light of the DoT’s
refusal and the regulatory challenges that led to the discontinuation of
services.
18. Ld. Senior Counsel for the petitioner submitted that the Ld. arbitrator
had misinterpreted the terms of the contract, especially the clauses
relating to the lock-in period and the exit penalty. Ld. Senior Counsel
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emphasised that Clause 2.4 of the Supplementary Agreement dated
12.09.2013 specifically addressed the issue of the lock-in period in the
event of non-renewal of the license and regulatory issues. It stipulated
that if Quadrant’s UASL license was not renewed, the lock-in period
penalties would be absorbed by Respondent No. 2 (Videocon Telecom
Ltd.). Therefore, Quadrant argued that the arbitrator’s failure to consider
this clause was a material error. It was also submitted that Clause 1.6 of
the MSA dated 01.11.2008 states that in case of termination due to
regulatory action (like the DoT’s refusal to extend the UASL), no
penalty is due. It was argued that the Ld. arbitrator did not consider this
provision, which should have absolved Quadrant from the exit penalties
imposed by ATC.
19. Learned senior counsel for the petitioner, while disputing the exit
penalty of ₹58.11 crore imposed by ATC for prematurely vacating
telecom sites before the expiry of the lock-in period, submitted that the
termination of services was forced by the DoT’s refusal to extend
Quadrant’s UASL license, and therefore, the exit penalty should not be
enforced due to the force majeure circumstances. Clause 10.6.2 of the
MSA dated 14.08.2009 provided for exemption from penalties in cases
of regulatory actions. Ld. Senior Counsel argued that the arbitrator
wrongly interpreted this clause and held Quadrant liable for penalties
despite the regulatory issue. It was submitted that the DoT’s refusal to
extend the UASL was a valid external cause for termination, which
should have been considered by the arbitrator, as it falls within the scope
of contractual force majeure. Learned senior counsel for the petitioner
submitted that the petitioner had already settled all dues with ATC by
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making a full and final payment of ₹2.52 crore in January-February
2017. ATC’s acknowledgement of the settlement in their
correspondence. Clause 6.1 of the MSA, outlined the process for the
settlement of outstanding invoices, and no further claims were made by
ATC post-payment.
20. It was further submitted that the ₹19.85 crore claim for unpaid invoices
raised by ATC was unsupported by evidence, as ATC failed to provide
proper documentation or detailed calculations for this amount. Ld.
Senior Counsel contended that the arbitral award was against public
policy due to the misapplication of contract terms and failure to adhere
to principles of fairness. It is submitted by the Ld. Senior Counsel for the
petitioner that the Ld. arbitrator had not properly considered the
documents and evidence provided by the petitioner, which led to an
unreasonable award. Specifically, the contract clauses that exempted the
petitioner from penalties due to regulatory actions were ignored.
Reliance is placed upon ONGC v. SAW Pipes Ltd. (2003) 5 SCC 705, to
assert that penalties under a contract must be genuine pre-estimates of
loss, not punitive. It is argued that the termination was due to DoT’s
refusal (an external cause), the penalties could not be justified. Reliance
was placed upon Ssangyong Engineering & Construction Co. Ltd. v.
NHAI (2019) 15 SCC 131, wherein it was inter alia held that an arbitral
award should be set aside only in cases of jurisdictional errors or public
policy violations. Reliance was also placed upon Food Corporation of
India v. Assam State Coop. Marketing & Consumer Federation Ltd.
[Appeal (civil) 2259 of 1999], to emphasize that the acknowledgment of
debt extends the limitation period, suggesting that ATC’s claim was
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time-barred or should have been adjusted against earlier payments made
by Quadrant.
SUBMISSIONS ON BEHALF OF RESPONDENTS
21. Mr. Raj Shekhar Rao, Ld. Senior Counsel appearing on behalf of
Respondent No. 1 submitted that ATC had initiated the arbitration
against Quadrant and Videocon Telecommunications Limited under
various other Agreements, the Master Infrastructure Provisioning
Agreement dated 14.08.2009 (“MSA”). It is submitted that ATC was
providing telecom infrastructure facilities and services to Quadrant, a
telecom operator in Punjab. On failure of Quadrant to pay the
outstanding amounts in terms of the MSA and premature exit from
ATC’s sites without paying exit charges, the disputes arose and were
referred to Ld. Sole Arbitrator.
22. Ld. Senior Counsel submitted that the Ld. Arbitrator, by a detailed and
reasoned award–after recording the evidence of both parties–allowed
the claims of ATC. Ld. Senior Counsel further submitted that the Ld.
Arbitrator, after extensively dealing with all the issues framed and
giving elaborate reasons in support of its findings, allowed all the claims
except Claim E, i.e., the Claim for reimbursement of municipal charges.
It was also submitted that out of the total awarded amount,
approximately Rs. 20 Crores (Claim A) is towards the outstanding
monthly charges and power & fuel/diesel charges. To this, there is no
substantial challenge by Quadrant in the present Petition, except that a
part of it was barred by limitation. Learned senior counsel for the
respondent submitted that while allowing Claim A, Ld. Arbitrator has
inter-alia held that in the light of the overwhelming evidence supporting
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the Claimant’s case and the lack of evidence to back any contentions
made by the Respondent, the tribunal decided issue No. 1 in favour of
the Claimant.
23. Learned senior counsel for the respondent no.1/ATC also submitted that
it is well-established law that the interpretation of contracts falls within
the exclusive domain of the arbitrator and hence the supervising court
cannot interfere with that interpretation. It was submitted that Section 34
of the Arbitration Act does not contemplate ‘misinterpretation of
contract’ as one of the grounds for challenging an arbitral award and an
Arbitral Tribunal is legitimately entitled to take the view which it holds
to be correct after considering the material before it and interpreting the
provisions of the agreement, and if the arbitral tribunal does so, its
decision has to be accepted as final and binding.
24. The learned senior counsel submitted that the disputes relating to the
merits of this case cannot be investigated by this Court in view of
Explanation 2 of amended Section 34, which specifically bars the Court
from going into the merits of the dispute. Section 34 of the Act
authorizes a very narrow jurisdiction to set aside the arbitral tribunal’s
award. The court does not act as if it were an appellate court, revisiting
the evidence and undertaking an extensive factual review of the merits
of the dispute with the mandate to cure or correct errors.
25. Mr. Raj Shekhar Rao, Ld. Senior Counsel appearing on behalf of
Respondent No. 1 also submitted that the Arbitral Tribunal rejected the
submission of Quadrant that the arbitration clauses provide that lock-in
penalty cannot be levied by ATC in case Quadrant is either unable to
obtain an extension of its operating license or unable to continue its
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business for reasons beyond its control. Non-renewal/non-extension of
license by DOT amounts to frustration of contract; therefore, no lock-in
penalty was liable to be paid by Petitioner. It was submitted that the
tribunal held that there is nothing in the Agreement to suggest that QTL
was to be absolved from payment of lock-in charges if it failed to obtain
the telecom license by 29.09.2017. If that were the intention, a clause to
that effect would have been added by the Parties. Indeed, it is clear from
the background of the case that any waiver of the lock-in charges was
possible only upon an explicit request and agreement to that effect.
Therefore, it was submitted that the tribunal’s finding that the lock-in
charges are very much valid and applicable in favor of the Claimant and
payable by Respondent No. 1 correct.
26. Ld. Senior Counsel also submitted that the tribunal in para 230 of the
Award, held that the Respondent, being the party in breach, has not led
any evidence to show that no loss has resulted. On the other hand, the
Claimant has led evidence, on its part, to demonstrate that it could not
find any new tenancies, even after making considerable efforts for the
same.
27. Learned senior counsel further submitted that the tribunal, in para 233 of
the Award, has held that the agreements, and the provision on lock-in
charges especially, were negotiated on an arms-length basis between
parties who were of equal standing and properly advised, as a genuine
pre-estimate of loss, and that it is not in the nature of a penalty, contrary
to the argument of Respondent No. 1.
28. Further in respect to the contention of the petitioner that the award of
Exit Fee is against the express terms of agreements between parties and
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the tribunal erroneously applied the business efficacy test, and the lock-
in charges are in the nature of damages payable on the breach. Learned
senior counsel had submitted that Clause 10.5 of the WTTIL MSA
provided that in case Quadrant was to exit during the lock-in period, it
was liable to pay the IP Fee for the residual period of the lock-in for the
sites as provided in the MSA. It was submitted that Quadrant was not
liable to pay the Lock-in charges only in case of termination due to
default or breach on the part of Claimant/ATC.
29. Learned senior counsel also submitted that it is not the case of Quadrant
that the MSA was terminated due to default or breach by ATC. Clause
15.2 of the WTTIL MSA, in fact, fastens absolute liability upon
Quadrant to pay for the lock-in charges in case of early exit as it
provided that in no case Datacom shall be relieved from its obligation
under Clause 10.5 of this Agreement. Learned senior counsel for the
respondent no.1 also submitted that Quadrant’s case is that it exited from
the sites of ATC due to non-extension of their license, however the
license was to expire only on 29 September 2017, still Quadrant decided
to discontinue the GSM services prematurely in January 2017 only due
to financial unviability of the business.
30. Learned senior counsel also submitted that the primary liability of
Quadrant to pay the lock-in charges was not extinguished by merely
having ATC agree to VTL absorbing the unexpired lock-portion of the
lock-in period of the existing tenancies of Quadrant. Learned senior
counsel submitted that it was always the intention of the parties that the
liability of Quadrant for lock-in charges would remain in case of
premature exit by the Quadrant. It was submitted that the Quadrant in
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the present case is akin to a principal debtor and Respondent No. 2
(VTL), a guarantor, and had joint and several liabilities towards the
payment of exit fee. Therefore, the failure of VTL to absorb the
tenancies of Quadrant for the reason of their discontinuation of the
telecom services in 2016 makes Quadrant liable to pay for the lock-in
charges.
31. Learned senior counsel submitted that the payment of lock-in charges is
not a payment for a breach of the MSAs, but it is a payment that
becomes due on the occurrence of an event other than a breach of
contract. Without prejudice to the aforesaid, it was submitted that Clause
10.5 of WTTIL MSA read with Clause 2.4 of the Supplementary
Agreement is a genuine pre-estimate of loss suffered by ATC in case of
early exit of the MSA by Quadrant. Reliance was placed upon ONGC vs.
SAW Pipes (Supra), and Construction and Design Services vs. DDA,
(2015) 14 SCC 263 wherein it was inter-alia held that there exist certain
contracts where loss may be presumed, even without proof and burden
would be on the party in breach to show how no loss has resulted from
the breach. Quadrant did not lead any evidence in this regard. To the
contrary, ATC has led evidence to show that despite its best efforts to
secure new tenancies, it failed to do so.
32. Learned senior counsel submitted that the parties did not seek to
completely absolve QTL from payment of lock-in charges, if it failed to
obtain the telecom licenses by 29 September 2017 as no such claim was
inserted into the contracts/agreements.
33. Further in respect to the contention of the petitioner that the finding in
the Award on invoices is not based on any evidence and is also against
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the law of limitation and specific terms of the Contract and pleadings,
the learned senior counsel for the respondent no. 1 submitted that the
payments made by Quadrant were not commensurate with the services
provided by ATC vide specific invoices, but as per Quadrant’s own
convenience. Though the payments were required to be made by
Quadrant within seven days of raising the invoices as per the terms
stipulated in the MSA, the same was not adhered to by Quadrant. Part
payments were made by Quadrant towards unpaid invoices. The dealings
between the parties continued and did not terminate with providing one
service, and thus, the services got united with one another and formed
one continuous demand which kept on being carried forward from year
to year till the last invoice was raised. Thus, it all formed one cause of
action and could not be divided. The nature of transactions as well as the
payments made and the conduct of Quadrant would show that the
payments were made on account of outstanding invoices and if that was
so, the last payment was to be taken as the date for calculation of
limitation as per Article 14 read with Section 19 of the Limitation Act.
Learned senior counsel submitted that the only conclusion comes out to
be that the period of limitation commenced from January 2017 when the
last payment of Rs. 2.52 crore was made.
34. Further, with respect to the contention of the petitioner that the dispute
cannot be adjudicated via arbitration in view of the exclusive jurisdiction
of the TDSAT it was submitted that this issue has already been decided
by the Delhi High Court in favor of ATC in the matter of Viom
Networks Pvt Ltd. vs. Videocon Telecommunications Limited
[O.M.P.(I) (COMM.) 95/2016] and the judgments cited by Quadrant on
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this point have all been considered by the High Court in the above
matter and rejected.
35. Learned senior counsel submitted that the arbitrator is the ultimate
authority when it comes to the facts and evidence in a case. It was
emphasised that findings based on these factors cannot be challenged in
a Section 34 petition, unless there are clear violations of jurisdiction or
public policy. He argued that the interpretation of the terms of the
contract is also within the exclusive domain of the arbitrator and cannot
be revisited by the court under Section 34 unless the decision is
perverse.
36. Learned Senior counsel submitted that Section 34 of the A&C Act, is
designed to limit judicial intervention in arbitral awards. Learned senior
counsel submitted that it is a settled proposition that the court does not
sit as an appellate tribunal over the arbitrator’s decision. Reliance was
placed upon Ssangyong Engineering (Supra), wherein it was inter-alia
held that an arbitral award should not be interfered with merely because
an alternative view is possible.
37. Learned senior counsel submitted that the petitioner’s challenge focused
primarily on facts and evidence and sought to re-interpret the contractual
terms. However, as per the settled law, such an approach is beyond the
permissible scope of interference in a Section 34 petition. The arbitrator
had based his award on a detailed examination of both documentary
evidence and oral testimonies. It was further submitted that the petitioner
had claimed that the Supplementary Agreement (SA) of 12.09.2013
absolved them from the exit penalties for the unexpired lock-in period.
Respondent No. 1, however, argued that Clause 2.4 of the SA did not
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absolve the petitioner from these penalties. The clause was specifically
drafted to protect Respondent No. 1’s interests, as the petitioner had
defaulted on previous payments, amounting to ₹70.88 crores as admitted
dues at the time of signing the agreement.
38. Learned senior counsel further submitted that the petitioner and
Videocon Telecom Ltd. (VTL) had agreed jointly to resolve their
disputes and settle the outstanding dues under the SA. In this context,
Clause 1.4-1.6 of the SA mandated that the petitioner and VTL were
jointly responsible for making the payments for the lock-in period.
Respondent No. 1 firmly argued that the failure of the petitioner to
extend the telecom license did not provide a regulatory exemption from
the contractual obligation to pay exit penalties for the unexpired lock-in
period and Ld. arbitrator rightly held that the petitioner’s failure to
obtain the license extension was an internal failure and not a Force
Majeure event that could justify a waiver of penalties. In support of its
claim, Respondent No. 1 referenced testimonies and cross-examinations
of witnesses like Mr. Deepak Khanna and Mr. Munish Bansal, which
were crucial in establishing the factual and contractual context for the
dispute. Learned senior counsel submitted that the petitioner’s attempt to
discredit these pieces of evidence was found to be without merit by the
arbitrator. Reliance is placed upon Dyna Technologies (P) Ltd. v.
Crompton Greaves Ltd. (2019) 20 SCC), wherein the court emphasised
that an arbitrator’s interpretation of a contract should not be lightly
interfered with. Further, reliance was placed upon Associate Builders v.
DDA (2015) 3 SCC 49, wherein it was inter-alia held that the court can
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only intervene in an arbitral award if it is found to be arbitrary or grossly
unjust
FINDING & ANALYSIS
39. Section 34 of the A&C Act, as contained in Chapter VII ‗Recourse
Against Arbitral Award’ provides limited grounds for setting aside an
award. Under Section 35 (2) (a) an award can be set aside only if the
petitioner establishes on the basis of the record of the arbitral tribunal
that a party was under some incapacity or the arbitration agreement was
not valid under the law to which the parties have subjected it or under
the law for the time being in force. The award can also be set aside if the
petitioner establishes that the petitioner was not given the proper notice
of the appointment of an arbitrator or the arbitral proceeding or was
otherwise unable to present his case. The award can also be set aside if
it is established that the arbitral award deals with a dispute not
contemplated by or not falling within the terms of the submissions to
arbitration or if it contains a decision on matters beyond the scope of the
subject matter in dispute. The petitioner can also challenge the impugned
award if the composition of the arbitral tribunal or arbitration procedure
was not in accordance with the agreement of the parties or if the court
finds that the subject matter of the dispute was not capable of settlement
by arbitration under the law for the time being or the arbitral award is in
conflict with the public policy of India. The explanation I appended to
Section 34 (2) of the A&C Act clarifies for the avoidance of any doubt
that an award is in conflict with the public policy of India only if the
making of the award was induced or affected by fraud or corruption or
was in violation of section 75 or Section 81 of the A&C Act or it is in
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contravention of the fundamental policy of Indian law, or it is in conflict
with the most basic notions of morality or justice. Explanation 2 further
clarifies that for the avoidance of doubt, the test as to whether there is a
contravention of the fundamental policy of law shall not entail a review
on the merits of the dispute. Section 34 (2) (a) of the A&C Act provides
that an award in domestic arbitration can also be set aside if the court
finds that the award is vitiated by patent illegality appearing on the face
of the record. However, it provides that an award shall not be set aside
merely on the grounds of an erroneous application of the law or by re-
appreciation of evidence. Thus, the grounds available for challenging
and setting aside the award as provided in Section 34 (2) and Section 34
(2) (a) of the A&C Act are limited.
40. It is also necessary to refer to Section 5 of the A&C Act, which provides
that the judicial intervention should be minimal. Before proceeding
further, it is advantageous to refer to Section 28 of the A&C Act. Section
28 (2) of the A&C Act provides that the arbitral tribunal shall decide ex
aequo et bono or as amiable compositeur only if the parties have
expressly authorised it to do so. The bare reading of this makes it clear
that the arbitrator is bound to pass an award only in accordance with the
terms of the contract. The principle of equity is generally not brought in
only except if the parties authorised the arbitrator to do so. Section 31
sub-section (3) of the A&C Act also provides that arbitral award shall
state the reasons upon which it is based unless the parties have agreed
that no reasons are to be given. Thus, the arbitral award must contain
the reasons. The scope of exercising jurisdiction under Section 34 of the
A&C Act provides that the intention of the legislature is to minimise the
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supervisory role of the courts. The endeavour of the legislature is to
make arbitration responsive and effective to a contemporary requirement
as an alternative dispute redressal mechanism. It is no longer resintegra
that while dealing with the objections under Section 34 of the A&C Act
a court does not sit in appeal over the arbitral award and the jurisdiction
to interfere can only be on the well-settled limited grounds.
41. In ONGC Ltd. vs. Saw Pipes Ltd. (Supra) it was inter alia held that the
award would be set aside if it is contrary to (a) fundamental policy of
Indian law, or (b) the interest of India: or (c) justice or morality; or (d) in
addition, if it is patently illegal. It is also a settled proposition that the
illegality must go to the root of the matter. In case of illegality being
trivial in nature the award cannot be set aside on the ground of being
against the public policy. An award can be set aside if it shocks the
conscience of the Court. Reliance can be placed upon MMTC Limited
vs. Vedanta Limited (2019) 4 SCC 163. In K. Sugumar v. Hindustan
Petroleum Corporation Ltd. (2020) 12 SCC 539 it was inter alia held
that there is the highly constricted power of the civil court to interfere
with an arbitral award for the reason that if 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. It was
further inter alia held that 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. In Dyna Technologies (P) Ltd. (Supra), it was inter alia
held that arbitral awards should not be interfered with in a casual and
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cavalier manner, unless the Court comes to a conclusion that the
perversity of the award goes to the root of the matter without there being
a possibility of alternative interpretation which may sustain the arbitral
award. It is a settled proposition that the mandate under Section 34 of
the A&C Act is to respect the finality of the arbitral award and the party
autonomy to get their dispute adjudicated by an alternative forum as
provided under the law. It has also been held by the constitutional courts
that if there are two plausible interpretations of the terms and conditions
of the contract, then no fault can be found, if the learned Arbitrator
proceeds to accept one interpretation as against the other. In regard to
the interpretation of the contract in Parsa Kente Collieries Limited v.
Rajasthan Rajya Vidyut Utpadan Nigam Limited AIR 2019 SC 2908, it
was inter alia held that an Arbitral Tribunal must decide in accordance
with the terms of the contract but if a term of the contract has been
construed in a reasonable manner, then the award ought not to be set
aside the ground there could be any other interpretation. It was further
inter alia held that construction of the terms of a contract is primarily for
an Arbitrator to decide unless the Arbitrator construes the contract in
such a way that it could be said to be something that no fair-minded or
reasonable person could do.
42. It is also a settled proposition that errors of fact cannot be corrected by
the court while exercising the jurisdiction under Section 34 of the A&C
Act as it does not sit in appeal over the award. In Parsa Kente Collieries
Limited (supra) it was further inter alia held that a possible view by the
Arbitrator on facts has necessarily to pass muster as the Arbitrator is the
ultimate master of the quantity and quality of evidence to be relied upon
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when he delivers his arbitral award. It was further observed that thus 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. Reliance can also be placed upon NHAI v. ITD Cementation
(India) Ltd., (2015) 14 SCC 21 and SAIL v. Gupta Brother Steel Tubes
Ltd., (2009) 10 SCC 63. The view was reiterated in Dyna Technologies
(P) Ltd. (supra) wherein it was inter alia held that the courts should not
interfere with an award merely because an alternative view on facts and
interpretation of contract exists. It was reminded that the court should
defer to the view taken by the Arbitral Tribunal even if the reasoning
provided in the award is implied unless such an award portrays
perversity unpardonable under Section 34 of the A&C Act. In South
East Asia Marine Engg. & Constructions Ltd. [SEAMAC Limited] v.
Oil India Ltd. AIR 2020 SC 2323, it was inter alia held that the courts
should not interfere with an award merely because an alternative view
on facts and interpretation of the contract exists. In UHL Power
Company Ltd. Vs State of Himachal Pradesh 2022 INSC 202, it was
inter alia held that if the view taken by the arbitrator regarding the
interpretation of the relevant clauses is both possible and plausible, then
merely because another view could have been taken, it can hardly be a
ground to interfere with the Arbitral award. Thus, the perusal of Section
34 of the A&C Act along with the judgments as discussed above it is
clear that the scope of the jurisdiction while entertaining a challenge
against the arbitral award is very limited.
43. Learned counsel for the petitioner in regard to the jurisdiction under
Section 34 of the A&C Act has relied upon Patel engineering Ltd. V.
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North eastern electric Power corporation ltd. (2020) 7 SCC 167; South
East Asia Marine engineering & constructions Ltd. v. Oil India Ltd.
(2020) 5 SCC 164; PSA Sical Terminals Pvt. Ltd. v. Board of trustees
of V.O. Chidambranar Port Trust Tuticorin & Ors. 2021 SCC OnLine
SC 508; BCCI V. Deccan Chronicle Holdings Ltd 2021 SCC OnLine
Bom 834; Vishal Engineers & Builders v. Indian Oil Corporation
Limited 2011 SCC OnLine Del 5124; ONGC V. Saw Pipes Ltd.
(Supra). In regard to Section 21 of the A&C Act, the petitioner has
relied upon State of Goa v Praveen Enterprises (2012) 12 SCC 581. In
regard to the law on penalty clauses in contracts the petitioner has relied
upon Cavendish Square Holding BV v. Makdessi [2015] 3 WLR 1374.
In regard to consumer liability, the petitioner has relied upon The
Amalgamated Electricity Company Ltd. v. The Jalgaon Borough
Municipality [1975] 2 SCC 508.
44. The primary challenge being put up by the petitioner assailing the
impugned award is that the learned arbitrator has wrongly awarded
Rs.58.11 Crores towards exit charges plus interest. Learned senior
counsel for the petitioner has emphasized that the impugned award is in
the teeth of clause 2.4 of the supplementary agreement. Learned senior
counsel for the petitioner has submitted that the petitioner had to exit as
the license was not renewed by the Department of Telecommunications
(“DOT”). Learned senior counsel for the petitioner has also submitted
that the learned arbitrator has not taken into account clause 7 of the
Master service agreement dated 20.11.2007 between Quipo Telecom
Infrastructure Ltd. & HFCL Infotel Ltd. It has further been submitted
that the learned arbitrator has not taken into account clause 1.6 of
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passive infrastructure sharing agreement dated 01.11.2005 between
Datacom Solutions Pvt. Ltd. and Quippo Telecom Infrastructure Ltd..
Learned senior counsel for the petitioner has submitted that in the
impugned award through the learned arbitrator referred to clause 10.1 to
10.5 of the Master Infrastructure Provisioning agreement (master
agreement) dated 14.08.2009. However, Ld. Arbitrator completely
ignored clause 10.6 which provided that either party may terminate this
Master without incurring any liability in case either of the Party is being
winded up or ceases to carry on its business, including on account of
Datacom’s failure/inability to obtain extension of its Operating License.
Learned senior counsel has also argued that without prejudice the above
contentions, the impugned award is also contrary to Section 74 of the
Contract Act since damages under Section 74 require proof of loss and
such proof can be dispensed with if the loss is impossible to prove.
45. Learned senior counsel has also argued that exit fees are in the nature of
damages and respondent no.1 was mandated by law to prove the same
by way of evidence which it has failed to do. Reliance was placed upon
Kailash Nath Associates v DDA & Anr. (2015) 4 SSC 136, wherein it
was inter alia held that compensation under Section 74 is contingent
upon demonstrating actual damage or loss caused by the contract breach.
Learned senior counsel has submitted that in this it was also inter alia
held that the mere existence of a liquidated damages clause is
insufficient and actual quantifiable loss must be definitively proven.
Learned senior counsel has submitted that it was further inter alia held
that compensation is not automatic but requires substantive evidence of
damage. In regard to the law on penalty clauses in contracts learned
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senior for the petitioner has relied upon Cavendish Square Holding BV
v. Makdessi [2015] 3 WLR 1374. In this case, it was inter alia held that
a clause is not a penalty if it serves a legitimate business interest and is
not out of proportion to that interest. It emphasised that the focus should
be on whether the clause imposes a detriment disproportionate to any
legitimate interest of the innocent party in enforcing the contract.
Learned senior counsel has also relied upon The Amalgamated
Electricity Company Ltd. v. The Jalgaon Borough Municipality [1975]
2 SCC 508.
46. Mr. Rajshekhar Rao, learned senior counsel for the respondent while
opposing this contention has relied upon Ssangyong Engg (Supra).
Learned senior counsel has submitted that in Ssangyong Engg (Supra).,
the apex court inter alia held that 2015 amendments to the A&C Act,
narrow the grounds for challenging arbitral awards, particularly under
the “public policy of India” clause, which now only includes
“fundamental policy of Indian law” and “justice or morality.” Learned
senior counsel submits that these amendments aim to reduce court
interference in arbitration, thereby speeding up proceedings. Learned
senior counsel has further submitted that the new ground for challenge
“patent illegality” covers fundamental legal errors beyond the
misapplication of the law. Learned senior counsel has further submitted
that it was further inter alia held that mere contravention of substantive
law is no longer grounds for setting aside an award. However, failure to
provide reasons for an award or unreasonable contract interpretation can
be grounds for challenge based on “patent illegality.” Mr. Rajshekhar
Rao, learned senior counsel for the respondent submitted that in the
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present case learned arbitrator has given sufficient reasons in the
impugned award. Learned senior counsel has also relied upon Dyna
Technologies (P) Ltd. (Supra) to emphasize the point that the courts
must give respect to the finality of the award and party autonomy.
47. Learned senior counsel submits that Unlike appellate jurisdiction,
Section 34 mandates deference to the Arbitral Tribunal’s view, even if an
alternative interpretation exists, unless the award is unreasonably
perverse. Learned senior counsel submits that it was emphasised that
frequent interference would undermine the commercial purpose of
opting for alternative dispute resolution. Learned senior counsel has
further relied upon Associate Builders (Supra) and has submitted that in
this case, it was inter alia held that an award that shocks the conscience
of the court or is deemed unreasonable could be challenged. Learned
senior counsel submitted that errors in law, such as unreasonable
misinterpretations of the contract, may result in the award being
overturned. It was further inter alia held in this case that courts typically
defer to the arbitrator’s interpretation unless it is clearly irrational.
Learned senior counsel has further relied upon MMTC LTD. V. Vedanta
Ltd. (2019) 4 SCC 163 to emphasise that the challenge to the award is
limited to specific grounds, such as violations of the fundamental policy
of Indian law, patent illegality, or conflicts with justice or morality and
these grounds include contraventions of substantive law, judicial
precedents, natural justice principles, and Wednesbury reasonableness.
It was inter alia held in MMTC LTD. (Supra) that following the 2015
amendment, “public policy” violations now encompass fraud,
corruption, or significant illegality but exclude mere errors of law or
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reappreciation of evidence. Learned senior counsel has also relied
upon National Highways Authority of India v. ITD Cementation India
Ltd. (2015) 14 SCC 21 (supra) to emphasise that the interpretation of
contract terms is primarily for the arbitrator, who may adopt a
reasonable view based on the material before them. Learned senior
counsel has also relied upon Konkan Railway Corpn. Ltd v. Chenab
Bridge Project (2023) 9 SCC 85 wherein it was inter-alia held that the
focus under Section 34 is limited to checking if the arbitral tribunal’s
view is perverse or arbitrary, not to reinterpret contracts. Learned senior
counsel has further relied upon Union of India v. M/s D.N. Revri & Co.
& Ors. (1976) 4 SCC 147 in which it was inter-alia held that a contract
should be interpreted to give effect to its purpose rather than invalidate
it, adopting a common-sense approach over strict legal rules. Learned
senior counsel has further relied upon Nabha Power Ltd. v. Punjab
SPCL & Anr (2018) 11 SCC 508 wherein it was inter-alia held that the
principle of implied terms in contracts is based on ensuring business
efficacy, meaning terms are implied to reflect the presumed intentions of
the parties and make the transaction workable. Learned senior counsel
has submitted that in Nabha Power Ltd. (Supra), it was further inter alia
held that implied terms in contracts are those that are not expressly
stated but are necessary to give business efficacy to the agreement. It
was further emphasised that for a term to be implied, it must be
reasonable, equitable, and so obvious that it goes without saying and is
capable of clear expression and should not contradict any express term
of the contract. Learned senior counsel has also relied upon Kailash
Nath Associates (supra) to emphasise that even in this case reliance was
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placed upon ONGC Ltd. v. Saw Pipes Ltd.(Supra) to emphasise that
reasonable compensation must be awarded, whether or not actual loss is
proven, provided it is not a penalty or unreasonable. It was further inter
alia held that pre-estimated damages, if genuine, are enforceable without
proof of actual loss. Learned senior counsel has further submitted that it
was inter alia held that proof of actual loss is not mandatory when
damages are difficult to quantify, provided the pre-estimate is
reasonable. Learned senior counsel has further relied upon ONGC Ltd.
v. Saw Pipes Ltd (supra) to emphasise that liquidated damages
stipulated in the contract, if reasonable and not penal, can be enforced
without proof of actual damages, especially when the contract explicitly
states them as a genuine pre-estimate. Learned senior counsel has relied
upon Construction and Design Services V. Delhi Development
Authority (2015) 14 SCC 263. In respect to the objection raised as to
the debt being barred by the limitation Learned senior counsel has relied
upon Asset Reconstruction Co. (India) Ltd. Bishal Jaiswal & Anr.
(2021) 6 SCC 366; Dena Bank v. C. Shivakumar Reddy, (2021) 10
SCC 330; DSC Ltd. v. S.P. Singla Constructions (P) Ltd., 2018 SCC
OnLine Del 12690 and Gannon Dunkerley & Co. Ltd. v. Zillion
Infraprojects (P) Ltd, 2023 SCC OnLine Del 4815. Learned senior
counsel has submitted that the award cannot be considered as irrational
or perverse or based on no evidence.
48. The discussion made hereinabove makes it explicit that the court while
hearing the challenge of an award under Section 34 of the A&C Act
does not in appeal over the award. The arbitrator is considered to be the
final arbiter of the facts. The award can only be challenged on the
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limited grounds as set up in Section 34 of the A&C Act. The
jurisdiction under section 34 of the Act is entirely different from the
appellate jurisdiction. Thus, the court in this jurisdiction cannot
reappreciate the evidence led before the trial court. The court also cannot
substitute its own view with the view taken by the arbitrator, if view
taken by the arbitral tribunal is reasonable and plausible. The court
cannot sit with a microscope in his hand to assess the correctness of the
award. The award is only required to have passed the test of being in
sync with ‘the public policy of India’ which now includes ―fundamental
policy of Indian Law‖, and ―justice and morality‖. The court is also
required to see that the impugned award should not be patently illegal.
Thus, in order to see that whether the tribunal has not violated any of the
conditions as mentioned above it is necessary to examine the impugned
award.
49. The arbitral tribunal was constituted pursuant to the arbitration petition
No.6/2015 ATC Telecome Infrastructure Private Ltd. vs. Quadrant
Televentures Ltd. and Anr. under Section 11 of the A&C Act. Learned
Tribunal on the basis of the pleadings of the parties including counter
and counterclaim, framed the following issues on 02.06.2015:
1. Whether the Claimant is entitled for an Award of a sum of Rs.
13,22,73,649/- and Rs.6,63,21,775 towards the outstanding
Monthly charges and Power fuel/Diesel charges respectively?
OPC
2. Whether the Claimant is entitled for an Award of a sum of Rs.1,
93,73,703/- towards the Billed Interest (calculated upto Feb. 2016
and Rs. 41,65,852.99/-(calculated for the period March 1, 2016 to
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March 31, 2017) towards the Unbilled Interest. OPC
3. Whether the Claimant is entitled for an Award of interest at the
rate of 1.5% over and above the applicable SBI PLR per annum
on delayed payment for the period 1st April 2017 till the payment
is made? OPC
4. Whether the Claimant is entitled for an Award of a sum of
Rs.58.11 Crores towards exit charges in accordance with Clauses
2.2, 2.3, and 2.4 of the Supplementary Agreement dated 12
September 2013 along with interest @ 15% p.a. from February
2017? OPC
5. Whether the Claimant is entitled for an Award of a sum of Rs.
42,99,759/- along with interest 18% p.a. till payment is made,
towards the recurring Municipal Charges and property taxes?
OPC
6. Whether the Claimant is entitled to cost of litigation and
arbitration expenses? OPC
7. Whether the Claimant is entitled to penderit-lite and future
interest on the claimed amounts? If so at what rate? OPC
8. Whether the disputes under the present proceedings are not
arbitrable in view of Section 14 of the Telecom Regulatory
Authority of India Act, 19977 OPD
9. Whether the Respondent No. 1 is entitled to recover from the
Claimanta sum of Rs 26,52,910/-on account of outages? OPD
10. Whether the Claimant failed to maintain the requisite SLAV
Quality of Service under the MSAS / Agreements, as alleged? if no
whether the Respondent is entitled to recover from the Claimant a
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sum of Rs. 8.40 Crores? OPD
11. Whether the Respondent No. 1 is entitled to recover from the
Claimant a sum of Rs.55,65,315/- on account of deposit made by
the Respondent No. 1 with the Claimant? OPD
12 Whether the Respondent No. 1 is entitled to recover from the
Claimant a sum of Rs.35.09 crores on account of excess energy
invoices from the Claimant? OPD
13. Whether the Respondent No. 1 is entitled to recover from the
Claimantla Sum of Rs. 57, 14,96,144,57/-on account of equipment
installed at the tower site of the Claimant? OPD
14 Whether the Respondent No.1 is entitled to recover interest till
the date of filing of its counter claims? it so from which dates and
at what rate? OPD\ 15. Whether the Respondent No.1 is entitled
to recover from the Claimant pendente lite and future interest on
the sum awarded in its favour? If so at what rate? OPD
16. Whether the Respondent No.1 is entitled to costs of the
arbitration as well as the costs for the proceedings under Section
9, appeal arising therefrom and Section 11 conducted before the
Hon’ble Delhi High Court?
OPD
50.It is pertinent to mention that Corporate Insolvency Resolution
Process was initiated against Videocon Telecommunication Limited
(Respondent No.2 in the present matter) by the NCLT vide an order
dated 08.08.2018 in Company Petition (IB) No.1 (MB) of 2018. The
NCLT declared a moratorium under Section 14 of the Insolvency and
Bankruptcy Code, 2016. As a result, the arbitration proceeding against
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Respondent No.2 was adjourned sine die. During the arbitration
proceedings, the claimant examined three witnesses, namely Nitin
Kohli (CW1 ), Sachin Jain (CW2), and Sudhir Prasad (CW3).
Respondent No. 1 examined two witnesses, i.e., Mohnish Bansal
(RW1) and Deepak Khanna (RW2). Perusal of the impugned award
indicates that the learned arbitrator captured the commercial
agreement between the parties and the claim of the claimant. The
learned arbitrator also captured the petitioner’s case and a counter
claim in detail. The findings of the learned arbitral tribunal on the
issues were given as follows:
(i) Learned Arbitral first dealt with issue no.(viii) whereby it was
claimed by the petitioner that the present proceedings were not
arbitrable in view of Section 14 of Telecom Regulatory Authority of
India (TRAI) Act, 1997. An application under Section 16 of the Act
was also filed by the petitioner. Learned arbitral tribunal discussing
the arguments being raised by both the parties and took into account
the relevant provisions of the Indian Telegraph Act, 1885 and TRAI,
Learned arbitral tribunal also took into account the applicability of the
judgment delivered in Viom Network Limited, AIR 2014 Delhi 31
and it was noted that in Viom Network Limited had taken into account
the judgment passed by the Apex court and TDSAT order dated
10.04.2012 in Reliance lnfratel v. Etisalat DB Telecom Ltd., Petition
75 of 2012. It is pertinent to mention here that Civil Appeal No. 6459
of 2012 against the said judgment is pending before the Hon’ble
Supreme Court, however, the TDSAT judgment has not been stayed.
It was also noted that appeal against VIOM Network is also pending
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however no stay has been granted. The petitioner has challenged this
finding in view of Section 14 of 15 of TRAI Act, 1997 stating the
license held by petitioner is a license within the meaning of section 4
of Indian Telegraph Act, 1885. It was stated that both the parties were
service providers as defined under Section 2 (e) and (j) of the TRAI
and mere existence of an arbitration clause in the MSAs cannot
exclude the exclusive jurisdiction of TDSAT Mere existence of an
arbitration clause in the MSAs cannot exclude the exclusive
jurisdiction of TDSAT. Reliance was also placed upon Union of
India v. Tata Teleservices (Maharashtra) Ltd., (2007) 7 SCC 517,
Cellular Operators Association of India & Ors. V. Union of India &
Ors., (2203) 3 SCC 186, Vimal Kishore Shah & Ors. V. Jayesh
Dinesh Shah & Ors., (2016) 8 SCC 788, Dhulabhai v. State of M.P.,
AIR 1969 SC 78 and Hon’ble TDSAT in Reliance Infratel v. Etisalat
DB Telecom Ltd., Petition No. 75 of 2012. However, the perusal of
the impugned award indicates that all these provisions were
considered threadbare by the learned arbitrator. It was specifically
noted that Section 2 (e) requires a licensee to provide specified
telecommunications services, which is also defined under Section
2(k). It was noted that the claimant are in the in the business of
providing a limited number of services, i.e., arranging the land for
erection of telecom towers; erecting the towers; civil construction
work; installation of Diesel Generators sets; arranging and
establishing shelters; electricity connection; and operation and
maintenance of telecom towers. It was noted that thus these do not
fall under the definition of telecommunication services, as a result of
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which the Claimant cannot be considered a licensee under the TRAI
Act. Given the scope of jurisdiction under Section 34 of the Act and
the reasoned finding of the learned arbitrator this court does not find
any reason to interfere in this issue.
(ii) The petitioner has also challenged the finding of the award on
the ground that there was no arbitration clause in the Supplementary
Agreement dated 12.09.2013 under which the dispute arose between
the parties. It was also submitted that the arbitration proceedings were
not invoked under the supplementary agreement. Reliance was placed
upon Seth Thawardas Pherumal v. Union of India, AIR 1955 SC
468, and Duro Felguera, S.A. V. Gangavaram Port Limited, (2017)
9 SCC 729. It was also submitted that the arbitration proceedings
were not invoked in the supplementary agreement. This issue was
also threadbare discussed by the learned arbitrator. Learned arbitral
tribunal noted that supplementary agreement is a a “supplement” to
the previous agreements between the parties, these being the WTTIL
MSA and the QTIL MSA. Clause 4.1 of the supplementary
agreement was referred to and it was noted that there there is no need
to have a separate arbitration clause for every SA, as it is understood
that the arbitration clause in the MSA will apply to any disputes
arising out of the SA as well. Reliance was placed upon Chloro
Controls lndia Private Ltd. vs Severn Trent Water Purification Inc.
&Ors. (2013) 1SCC 461 wherein it was inter alia held that in cases
where there is a parent agreement and several ancillary agreements,
the intention of parties to refer disputes to arbitration must be given
effect to, even if some of the ancillary agreements do not reiterate the
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arbitration clause. Learned arbitral tribunal rightly rejected the
contention and this court do not find any ground to interfere in the
same.
(iii) Learned tribunal dealt with the issue no. 1 regarding entitlement
of the claimant for an award of a sum of Rs. Rs.13,22,73,949/ and
Rs.6,63,21,775 towards the outstanding Monthly charges and power
and fuel/diesel charges respectively. Learned tribunal after duly
noting all the contentions of petitioner including the ground of
limitation. Learned tribunal after noting the different clauses of the
WTTIL MSA agreed with the claimant respondent that the invoices
have clearly been not paid. Learned tribunal took into account the
notice issued by the petitioner under Rule 30 of the Companies Act in
which listed the Claimant as its creditor on its books and its records,
thus establishing that there were payments still due as of 12 December
2016. The learned tribunal took into account the testimony of RW1 in
detail. On the ground of limitation the reliance was placed upon
Ashok Parshad vs. Mahalakshmi Co. Ltd., 2013 SCC Del 3629, and
inter alia held that the claim for the invoices has been made well
within time, and no bar of limitation applies. The petitioner has
challenged this finding on the ground award has been passed without
any reason whatsoever. Learned senior counsel submitted that the
award impugned is unreasonable and the judgment of Ashok Parshad
(supra) is not applicable to the facts of the present case. It was
submitted that Section 19 of the Limitation Act has no applicability to
the facts of the present case and the invoices that were beyond the
period of three years from the date of reference of arbitration were
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time-barred as the payment was from invoice to invoice. It was
submitted that the invoices were not proved by respondent no.1. The
petitioner also stated that the learned tribunal did not take into account
that payment of Rs.2,52,75,603.27 was made by the petitioner as a
full and final settlement of the account. However, the perusal of the
record indicates that the payments made by the petitioner did not
commensurate with the services provided by the respondent vide
specific invoices, but as per Quadrant’s own convenience. It has to be
taken into account that though the payments were required to be made
by Quadrant within seven days of raising the invoices as per the MSA,
but, the petitioner made the part payments towards unpaid invoices.
The dealings between the parties continued and did not terminate with
providing one service. There is force in the contention of the
respondent that the services got united with one another and formed
one continuous demand which kept on being carried forward from
year to year till the last invoice was raised. and Thus, it all formed one
cause of action and cannot be fragmented. The court does not find
any defect in the finding of the learned tribunal that the period of
limitation commenced in January 2017 when the last payment of
Rs.2.52 crore was made. In this regard reference can also be made to
the supplementary agreement dated 12.09.2013 Annexure 3 of the
said supplementary agreement which contains detail of the current
outstanding relating to the IP Fees and PF. It is also pertinent to refer
to the communication dated 13.09.2017 sent by the petitioner to the
Deputy Director, Ministry of Corporate Affairs which is for shifting
of registered office from Maharashtra to Punjab. In its
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communication, the petitioner stated that the claim of the respondent
of Rs.16.36 crores up to 31.12.2016 is the same pending for
reconciliation between both companies and can be taken up
separately. Thus court considers that the learned tribunal has passed
the reasoned award regarding this issue and there is not reason to
interfere in the same. The finding regarding issue no. 2, 3 and 7
regarding build interest and unbuild interest are consequential and the
perusal of the finding indicates that the same has been passed with due
reasons.
(iv) The finding of the tribunal regarding issue no. 4 regarding exit
charges is the most contentious issue being raised by the parties.
Perusal of the impugned award indicates that the learned tribunal has
taken into account the various clauses of the WTTIL MSA. It was
noted that under clause 3 (iv) it was specifically agreed that the
respondent would not seek any further recover of lock in charges on
account of premature exit of respondent no.2 from sites of the
claimant in future. It was noted that even after signing the MOU the
respondent failed to make timely payments as a result of which by
31.09.2012 the outstanding due was Rs.70.88 crores. In 2013 the
respondent sought a premature exit from 1107 sites for which the
demand note towards lock-in charges for Rs.86.06 crores was raised.
This led to the signing of the supplementary agreement dated
12.09.2013 to resolve the outstanding issue between the parties. In the
SA, the outstanding amount of INR 70.88 Crores is under the
Agreements on account of IP Fees and bills for power and fuel
reimbursement. It was agreed to extend the lock-in period since
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31.03.2013, in consideration of which the respondent claimant agreed
to waive off claims for lock-in charges for 1107 sites exited by
Respondent No. 2. However, the claimant exited from all the sites of
the petitioner on 06.03.2017. It was noted under the SA that the
petitioner agreed to extend the lock-in period till 31.03.2020. The
contention of the claimant was that respondent no.1 had exited from
the site not because their license was not extended but because of
financial problems. It was noted that the license was expiring on
29.09.2017 whereas the petitioner decided to discontinue GSM
service in Punjab in January 2017 itself. The contention of the
claimant that clause 2.4 would have become relevant only if the
petitioner’s license was not renewed, however he discontinued its
business much before the license expiration date. Learned tribunal
after taking into account the contention of the claimant/respondent
and the law laid down in Nabha Power Ltd. (Supra), Cavendish
Square Holding BV (Supra); and Construction and Design Services
vs. Delhi Development Authority (2015) 14 SCC 263 allowed the
claim. The contention of the claimant was also dealt with in detail
besides taking into account clause 10 of the MSA clauses 2.2, 2.3 and
2.4 of the SA. The learned tribunal also relied upon the judgment in
Indiabulls Property P. Ltd. v. Treasure World Developers P. Ltd.
2014 SCC OnLine Bom 4768, Food Corporation of India & Ors. v.
Babulal Agrawal (2004) 2 SCC 712 and inter-alia held an under:
“218. The nature of the agreement between the parties
embedded in the MSA, as shown by the language of Clause 10
extracted above, is clearly that of a commercial bargain and
understanding. This is foundational to the MSA and essentiallySignature Not Verified
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operates as a commercial bargain on the part of the Claimant
obligating the Respondent to fulfil its promises. Respondent
No. 1 does not deny that there is a provision for the payment of
lock-in charges, which is also a relevant factor. ” 219.
Additionally, it is important to recall the circumstances in
which the lock-in charges came about in the first place. The
SA was executed in the backdrop of a large outstanding
amount due on the part of Respondent No. 1 and Respondent
No. 1, which was piling up over the months. 6oth the
Respondents had consistently failed to perform their
obligations under the MSAS. and outstanding towards IP Fees
and bills for power and fuel reimbursement had piled up. The
Respondents then approached the Claimant in September 2013
to enter into the SA, to modify some of the terms and
conditions of the MSAs. In that SA, they undertook to pay all
the agreed outstanding due to the Claimant, while
categorically acknowledging that an outstanding was due.
Respondents also acknowledge liability towards the lock in
charges of Rs.80.Q6 crores in view of premature exit of VTL
from 1107 Sites.
220. The final SA that took shape involved an agreement
whereby the Respondents agreed to make part payments of the
total outstanding amount to Claimant on a monthly basis over
six (6) months and also agreed to clear other dues. The
Claimant also agreed to forego the amount towards the lock-in
charges in consideration of the Respondents providing the
Tenancy Commitment and increase in lock-in Period (under
Cl. 2.1 & 2.2 of the SA).
221. The Tribunal especially notes the construction of the
clauses in the SA, and the fact that Clause 2.3 of the SA was
contingent upon or related in any way to Clause 2.4 of the SA.
A plain reading of this shows that the liability of the
Respondents regarding increase in lock in period and
providing additional tenancy was absolute, and was not
related to the circumstance of QTL obtaining the extension of
its license.
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222. Here, the decision of The Union of India v. D.N. Revri &
Co. and Ors.: (1976) 4 sec 147, is relevant, where the court
said:
“7. It must be remembered that a contract is a commercial
document between the parties and it must be interpreted in
such a manner as to give efficacy to the contract rather than to
invalidate it. It would not be right while interpreting a
contract, entered into between two lay parties, to apply strict
Rules of construction which are ordinarily applicable to a
conveyance and other formal documents. The meaning of such
a contract must be gathered by adopting a common sense
approach and it must not. be allowed to be thwarted by a
narrow, pedantic and legalistic interpretation ….. ”
223. It is important that there must be some business sense in
the interpretation of a commercial contract, and any such
interpretation must be purposive, rather than anything to the
contrary. Here, the „five condition test’ is relevant. In Nabha
Power Limited vs. Punjab State Power Corporation Limited
and Anr. [supra], the Supreme Court referenced this test,
which says that for an implied condition to be read into the
contract including the ‘business efficacy’ test, the following
conditions are required to be satisfied: (1) reasonable and
equitable; (2) necessary to give business efficacy to the
contract; (3) it goes without saying, i.e., The Officious
Bystander Test; (4) capable of clear expression; and (5) must
not contradict any express term of the contract.
224. Applying these conditions to the present case, the
Tribunal finds that it is only reasonable and equitable for lock-
in charges to be applied by the Claimant, especially in view of
the past performance of the Respondents. The lock-in charges
were important and necessary to give business efficacy to the
contract, as without these, the Claimant would be left without
any remedy, and a large outstanding date against their
account, to their loss. To anyone reading the contract, a lock-
in makes logical sense, to protect the Claimant’s interests. The
clause was clearly worded, as accepted by the Respondent No.
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1, and did not contained any other term of the contract. Thus,
in this context, the lock-in charges remain valid.
225. It is also useful to consider why lock-in charges are
important in the first place. They are not arbitrary demands
made by one party against another. Besides acting as a
security of sorts for a premature exit, the lock-in charges also
cover the costs that are invested by parties. In the present
case, the Claimant invested both time and money to prepare
the sites and make them ready for use by the Respondents. The
sites had to be technically and structurally suited for
installation, and all taxes and dues pertaining to the land had
to be paid to various authorities before they could actually be
used by the Respondents. The Claimant had to undertake a
host of measures to ensure that the Respondents could enjoy
uninterrupted and peaceful use of the sites, for the duration of
the agreement. Therefore, lock-in charges are essential to
cover all these costs that the Claimant has previously already
incurred in anticipation of the use of the sites by the
Respondents.
226. Respondent No. 1 contends that the lock-in charge is
effectively a payment for a breach of the MSAs, but the
Tribunal disagrees and finds that the lock-in is in fact a
payment that becomes due on the occurrence of an event other
than a breach of contract. Support for this is found in
Cavendish Square Holding BV v. Tala El Makdessi [supra],
where it was held:
” …… if the contract does not impose (expressly or impliedly)
an obligation to Perform the act, but simply provides that, if
one party does not perform, he will pay the other party a
specified sum, the obligation to pay the specified sum is a
conditional primary obligation and cannot be a penalty.”
227. Similarly, in Amalgamated Electricity Company Ltd. v.
Jalgaon Borough Municipality [supra], it was held that:
“where a minimum guaranteed charge was stipulated in the
contract, it had to be viewed in the context of the contractual
arrangement and enforced.”
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228. Both these judgements clearly establish that this lock-in
charge was provided for payment due upon non-performance
of an act. It is not in the nature of a penalty, but is a minimum
guaranteed charge stipulated as such in ‘the contract. The
Claimant is claiming for nothing other than what it is due
under the contract.
229. Further, the Tribunal notes that the agreement is
constructed in a way such that if it is terminated before it was
due to be terminated, it leads to a loss for the Claimant. The
decision of the Delhi High Court in Satya Narain Sharma
HUF v. Ashwani Sarees Pvt. Ltd. [supra] is relevant, where it
was held:
“29 . … … Since this agreement contains three years lock-in
period clause, I am of the view that the defendant cannot be
allowed to terminate the lease before expiry of the lock-in
period of three years provided in the lease agreement. Hence
the termination of the lease by the defendant through its reply
dated 05.06.2008 is invalid and the same is not sustainable in
law. In case the defendant wants to vacate the suit premises
before the expiry of the lock-in period then it is under a
contractual obligation to pay the rental for the period until the
expiry of lock-in period i.e. upto 14.11.2010. The defendant, in
my view, has rendered itself liable to pay rent in respect of the
suit premises to the plaintiff.
… Since the defendant admittedly did not pay any rent after
March, 2008, it is liable to pay rent at the agreed rate of Rs 3
lakh per month plus taxes and interest for the delayed period
as agreed in the lease agreement till the expiry of the three
years lock-in period provided in the lease agreement.”
230. Even if it is assumed that the claim is one for damages
and compensation, there are some damages that are
impossible to prove. This was held in both ONGC vs. SAW
Pipes [supra]and Construction and Design Services vs. DDA
[Supra], where the Court said that are certain contracts where
loss may be presumed, even without proof; and burden would
be on the party in breach to show how no loss has resulted
from the breach. The Tribunal notes that the case at hand is
one such case, and finds that the Respondent, being the party
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in breach, has not led any evidence to show that no loss has
resulted. On the other hand, the Claimant has led evidence, on
its part, to demonstrate that it could not find any new
tenancies, even after making considerable efforts for the same.
The market for tower operators being a niche market, makes it
difficult to find readily-available customers, as stated by CW-
3. The demand for telecom tower depends on the larger
business plans of telecom operators which involves a complex
network of roll-out plans and decisions of market focus, etc. If
there is any sluggishness in the demand of telecom operators,
there is a direct impact on the revenue growth potential of
tower companies. The Claimant, it has been shown, even
offered heavy discounts to telecom operators, but was unable
to secure tenancies on vacated sites. and the towers remained
unoccupied.
231. Respondent No. 1 has also tried to argue that the lock-in
charges were akin to a penalty, and that Clause 10.5 of the
WTTIL MSA/Clause 2.2 of SA was penal in nature. The
argument is that the lock-in charge was inserted to discourage
the Respondent from terminating the contract. However, the
Claimant argues that the lock-in was to cover a situation of
·early termination, not a breach of contract, as contended by
Respondent No. 1. Thus, the lock-in charge was due to be paid
upon the occurrence of premature termination, not the breach
of the MSA. The circumstance of premature termination is,
according to the Tribunal, clearly a circumstance other than
the breach of the contract.
232. The Tribunal believes that Respondent No. 1 is merely
attempting to find a way out of · genuine and legitimate
liability under the lock-in charge, despite repeatedly, and on
multiple different occasions, admitting and acknowledging that
the lock-in charge existed. Indeed, under Clause 3(a) of the
MoU of 12
December 2011, the Respondent explicitly sought a one-time
waiver of the lockin charge for 705 sites, and specifically
agreed that it would not seek or request a further waiver of
lock-in charges in the future. It also agreed that any further
request for such a waiver, if made at all, would be in the strict
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and limited context of the exit clause of the agreements. Again,
under Clause 1.3 of the SA, the Respondent agreed that an
outstanding of Rs 86.06 crore was due as lockin charge
against their early exit from 1107 sites, but this claim was
waived in (In lieu of tenancy commitment and increase in lock-
in period under Clause 2.2 and 2.3 of the SA.
233. In the context of these circumstances, therefore, the
Tribunal is clear that the agreements, and the provision on
lock-in charges especially, were negotiated on an arms-length
basis, between parties who were of equal standing, and
properly advised, as a genuine pre-estimate· of loss, and that it
is not in the nature of a penalty, contrary to the argument of
Respondent No. 1.
234. In K.P. Subbarama Sastri v. K.S. Raghavan [supra], the
Supreme Court has held that clauses for liquidated damages
that are “in terrorem” are not enforceable. These clauses are
“in terrorem” when “the real purpose for which the stipulation
was incorporated in the contract was that by reason of its
burdensome or oppressive character it may operate in
terrorem over the promiser so as to drive him to fulfil the
contract, then the provision will be held to be one by way of
penalty.” In Such cases, the sum provided for in the clause has
no connection with the damages likely to be sustained on a
breach. Other cases
that make the same point include Ultratech Cement Ltd. vs.
Sunfield Resources Pty. Ltd., (2017) 7 Born CR 133, and
Hindusthan Paper Corp. vs. M/s Wellbrines Chemicals Pvt.
Ltd.., (2002) 3 Cal LT 114, in which it was held that “the
essence of the liquidated damages is a genuine and reasonable
pre-estimated damages. In order to acquire the character of
penalty, the sum stipulated must be proved to be extravagant
and unconscionable.”
235. In the light of this discussion, the Tribunal finds that the
provision for lock-in charges was inserted and provided for as
a matter of business efficacy, and by way of an additional
protection. As the Claimant has contended Clause 2.4 was
entered by the Claimant to have an additional safeguard to
protect its interest in giving up huge amount of Rs. 80.66
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Crores. There is nothing in the Agreement to suggest that QTL
was to be absolved from payment of lock-in charges if it failed
to obtain the telecom license by 29.09.2017. If that were the
intention, a clause to that effect would have been added by the
Parties. Indeed, it is clear from the background of the case
that any waiver of the lock-in charges was possible only upon
an explicit request and agreement to that effect. Therefore, the
Tribunal finds that the lock-in charges are very much valid,
and applicable in favour of the Claimant, and payable by
Respondent No. 1.
236. Accordingly, the Tribunal finds Issue No. 4 in favour of
the Claimant. Interest is claimed from 1 February 2017 @15%
per annum, but this is granted instead @ 12% per annum.”
51.The petitioner has challenged this finding on the ground that the
learned arbitrator has not taken into account clause 7 of QTIL MSA
and clause 1.6. Clause 7 of the Master services agreement dated
20.11.2007 and clause 1.6 of the passive infrastructure sharing
agreement dated 1.11.2008. Learned senior counsel has also
submitted that learned arbitrator took into account clause 10 of master
infrastructure provisioning agreement dated 14.8.2009 but
surprisingly only clause 10.1 to 10.5 were taken into account and
clause 10.6 was totally ignored which provided that there would be no
liability if the parties cease to carry out its business on account of
Datacom failure/inability to obtain an extension of its operating
license in violation of clause 2.4 which provided that notwithstanding
clause 2.2 in case QTIL’s license is not renewed by the license
expiration date. The tenancy of QTIL’s then-existing sites which had
been taken from VIOM shall cease to continue from the license
expiration date aggregate unexpired portion of the lock-in period (all
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in one) of the then-existing tendency of the QTIL shall be observed by
the WTTL (R2) based on mutual agreement between the parties, by
addition of new tendency or by extending the lock-in period of all or
agreed selected sites or by both. The plea of the petitioner is that thus
in clause 2.4 it was acknowledged that the petitioner’s license was to
expire on 29.9.2017 and post such expiration the petitioner’s tendency
shall cease to continue and such tendency were to be brought by
respondent no. 2 and not the petitioner. It was submitted that therefore
clause 2.4 was to prevail over clause 2.2. It was submitted that
business efficacy test was wrongly applied by the learned arbitrator.
52.The findings, as discussed above, makes it clear that the learned
tribunal has taken into account various clauses of agreement between
the parties. It may be reiterated at the cost of brevity that the arbitrator
is the final arbitor of the facts and is entitled to interpret the terms of
the contract. The interpretation of a contract falls within the domain of
the arbitrator, and such an interpretation can only be set aside if such
is patently illegal or perverse. The question is as to whether the court,
while hearing the challenge against the impugned award under section
34 of the act, can go into a threadbare examination of the various
clauses of the agreement between the parties so as to find out whether
the finding arrived on by the learned arbitrator is correct or not. I
consider that such an extensive exercise by this court in the present
jurisdiction is not permissible. The court has to only see whether the
interpretation as on arrived by the arbitrator could be arrived by any
prudent person or just not perverse. It may also be reiterated while
interpreting the term of a contract, the court cannot substitute its own
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view with the view of the arbitrator if it based upon logic and reason.
53.However, in order to satisfy the judicial conscience, this court has
gone through the various clauses of the agreement between the
parties. Clause 10.5 of WTTIL MSA provides that petitioner would
not be liable to pay the lock-in charges only in case of the termination
due to default or breach on the part of the claimant ATC. Similarly,
clause 15.2 of WTTIL MSA vested the absolute liability upon the
petitioner to pay for the lock-in charges in case of early exit as it
provided that in no case Datacom shall be relieved from its obligation
under clause 10.5 of this agreement. The contention of the respondent
that in fact petitioner exited due to within court “financial unviability”
and not because of expiration of license cannot be brushed aside on
the ground that the petitioner exited in January 2017 whereas the
license was valid till 29.9.2017. Clause 2.4 also provides that in case
of premature exit, the claim of the respondent does not vanish or
extinguish. It was merely agreed upon by the parties that the same
will be absorbed by respondent no. 2. Thus, it can also be termed as
joint and several liability.
54.It is also to be noted against respondent no.2, IBC proceedings have
been initiated, and in such a case, the claimant cannot be left high and
dry. Commercial contracts are entered into between the parties for the
purpose of business, and such terms of the contract have to be
interpreted in sync with the business efficacy rules. It is also to be
noted that terms of terms are to be read in conjunction with each other
and no term can be read in isolation. In the statement of claim filed by
respondent, the respondent claimant filed the calculation showing the
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lock-in charges in terms of clause 10.5 for each of the site as annexure
C22 it is relevant to see that in cross examination of CW1 conducted
on 31.8.2018, there is no question put as to C22 for the correctness of
the same. Only a question was put to CW1 that did the claimant have
the right to respondent no. 2 to absorb the aggregate unexpired portion
of the lock-in period in months of the then existing tenancy of QTL.
CW1 replied that since respondent no. 2 already closed its business by
selling its spectrum to Airtel in 6 circles in May 2016, no such
communication was sent. Similarly, in the cross examination of CW2
Sachin Jain no cross-examination was done regarding this issue. As
per the cross-examination CW3 conducted on 10 September 2018, the
respondent continued to have a lot of towers unoccupied within for
long time despite the efforts by the company to get new tenants. It is
also a matter of record that there is no clause which could absolve the
petitioner form lock-in charges in case it fails to obtain telecom
license by 29 September 2017. There is nothing on record to suggest
that learned arbitrator has not considered the material before it or has
considered the material which not on the record. This court does not
have power to review or reappreciate the factual matrix of the case or
correctness of the interpretation of the terms of the contract between
the parties. It is also a settled proposition that in commercial contract
between the parties, the court should not interfere into the same unless
any finding of the learned Arbitrator is excessive. The Court considers
that the finding arrived on learned tribunal does not call for any
interference. The contention of the learned senior counsel for the
petitioner that clause 10.6 has not been considered is also not
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sufficient to set aside a reasonable award. Even at the cost of brevity,
it can be reiterated that all the terms have to read ejusdem generis.
55.Learned tribunal has also awarded the cost in favour of the
claimant. Counter claim being raised by the petitioner were
rejected with a detailed and speaking order. It is also
pertinent to mention here that the petitioner had not led any evidence
to show that no loss has resulted whereas the claimant respondent has
pleaded that it could not find any new tenancy even after making
considerable efforts for the same. Thus, the discussion made herein
above demonstrates that the award is based on a judicial approach,
fairness, reasonableness and objectivity. The arbitrator being the
ultimate master of the fact and key evidence and it is the settled
proposition that the findings based on facts and evidence cannot be
disturbed under section 34 of the act. It may also be reiterated that the
construction of the term of a contract falls within the exclusive
domain of the arbitrator. This court considers that the real test while
deciding the petition under section 34 of the A&C Act is that if on
perusal of the impugned award the court finds that it has been passed
on no evidence or is patently illegal or it is irrational or irrelevant
factor has been taken into account, while ignoring vital evidence only
then the court should interfere into the award. If the award is logical
based on the reliable evidence, then there is no jurisdiction to interfere
into the same. Under the concept of “patent illegality” the interference
can be made only if there is a contravention of substantive law, failure
to provide reason for the award and misinterpretation of contractual
terms. However, the court considers that in the present case none of
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theconditionsis present. Thus, in view of the discussion made herein
above, the petition is dismissed.
56.No order as to costs.
DINESH KUMAR SHARMA, J
DECEMBER 24, 2024
Rb/ht
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Signing Date:24.12.2024
16:10:09