Delhi District Court
Indian Oil Corporation vs P.P. Polyplast Private Limited on 21 January, 2025
IN THE COURT OF MS. ANURADHA SHUKLA
BHARDWAJ: DISTRICT JUDGE (COMMERCIAL
COURT)-02, SOUTH, SAKET, DELHI
OMP (Comm.) No.1/2022
1. INDIAN OIL CORPORATION LTD.
Having its office at
1, Sri Aurobindo Marg, Yusuf Sarai,
New Delhi-110016.
Through its authorized signatory
....Petitioner
Versus
1. P.P.POLYPLAST PRIVATE LIMITED
Having its office at:
84/60, Anwar Ganj, GT Road,
Kanpur-208003
Through its authorized signatory
....Respondent
Date of filing : 05.01.2022
Date of reserving order : 08.01.2025
Date of order : 21.01.2025
ORDER
OMP (COMM)1/2022 1 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
1. This is a petition under section 34 of the Arbitration
and Conciliation Act, 1996 seeking setting aside of arbitral
award dt.01.09.2021 passed by Sh. Satyakam, Advocate,
Ld. Sole Arbitrator, whereby both the claims of the
respondent (claimant in the arbitration proceedings) i.e
claim no.1 for refund of liquidated damages in the sum of
Rs.43,42,405/- alongwith interest @ 18% p.a from
23.10.2015 till the date of the award and a further interest
@ 18% from the date of the award till the date of payment
and claim no.2 for loss suffered due to withdrawal of trade
discount in the sum of Rs.33,03,456/- alongwith interest @
18% p.a from 09.07.2014 till the date of the award and a
further interest @ 18% p.a from the date of the award till
the date of payment, were allowed.
2. The present dispute pertains to supply of PP Woven
Sacks under Work Order No.PCM/L-306 dt. 27.01.2014.
The claimant is the supplier of PP Woven Sacks and
respondent is the purchaser, who issued the abovesaid
order.
3. The petitioner (respondent in the arbitration
proceedings) is a Government of India undertaking and is
inter-alia engaged in manufacture and sale of polymers
while respondent (claimant in the arbitration proceedings)
is the supplier of (PP) Woven sacks.
4. The award has been challenged by the petitioner
OMP (COMM)1/2022 2 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
claiming it to be perverse and based on no evidence and on
material which is completely irrelevant for decision.
5. The petitioner had floated inviting tender for supply
of PP Woven Sacks bearing tender no
PC-M/PT/Polymer/CONS/13-14/15 inviting electronic
bids under two bid system I.e part 1 techocommercial part
and part II price part. Respondent/claimant submitted its
bid and was declared a successful bidder. Letter of intent
(LOI) dt.16.01.2014 was issued by the petitioner in favour
of the respondent. On 27.01.2014 petitioner issued a work
order dt.27.01.2014 for supply of PP Woven Sacks as per
the categories and quantities provided in the work order.
The nominal value as per the work order for the work
performed was fixed at Rs.18,37,57,814/-. The relevant
clauses of agreement are reproduced hereunder:-
(a) Clause 3 of Special Conditions of Contract:-
3.2. “Unit rate should be as per price schedule and
should include all charges what-so-ever including all
duties, taxes, freight etc. Rates of excise duty, Sales
tax and other statutory levies should be separately
indicated. This rate shall remain firm and fixed till
the validity of the rate contract/execution of order
except for the provisions of price variation clause as
mentioned hereunder.”
3.3 “Price Variation: The rate shall remain fixed
during the contract period unless otherwise
OMP (COMM)1/2022 3 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
mentioned. For the consideration of the Basic Price
of raw material, Zonal General Trade Price (ZGTP)
of PP Raffia grade (1030RG), as per IOCL PP Price
List as applicable at Panipat (Haryana) as of 1 st day
of the previous month without taxes, duties and
freight & without any discount/incentive offered in
the price list shall be considered.”
6. The non-inclusion of discount offers was also
contained in general purchase agreement, which is as
under:-
(b) Clause 2.1 of General Purchase agreement
(GPA):-
2.1. ” The components price of Material as finalized
shall be firm for during period of contract from the
date of placement of Purchase Order except for
changes in raw material pricing/government levies.
All discounts like cash, trade and any other
discounts should not be considered for raw material
price.
(c) Schedule of rates of annexure A to the LoI:-
“the Basic cost of raw material, Zonal General
Trade price (ZGTP) of PP Raffia grade (1030RG),
as per IOCL (PP) price list as applicable at Panipat
(Haryana) as of 1st day of previous month without
taxes, duties and freight and without any
discount/incentive offered in the price list.
OMP (COMM)1/2022 4 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
Reference price has been considered as mentioned
in the price bid document which will be applicable
as per tender’s terms and conditions. ‘The above
rate is based on basic raw material cost ZGTP PP
raffia grade (1030RG) as per IOCL PP price list as
applicable at Panipat as of 01.10.2013.
(d)Bottom of Price bid:- (BoQ1)/(BoQ2):-
“Basic cost of raw material, Zonal General
Trade Price (ZGTP) of PP Raffia grade (1030RG),
as per IOCL PP Price List as applicable at Panipat
(Haryana) as of 1st day of previous month without
taxes, duties & freight and without any
discount/incentive offered in the price list.
7. Clause 7 of General Purchase agreement:-
7. DELIVERY SCHEDULE AND DAMAGES
PAYABLE BY SUPPLIER ON ACCOUNT OF THEIR
FAILURE TO ADHERE TO THE DELIVERY
SCHEDULE.
7.1 The delivery schedule shall be determined and
decided by the corporation based on the
annual/monthly requirement. The delivery schedule
shall be indicated in Purchase order to be placed
immediately after finalization of tender.
7.2 The supplier shall supply the material strictly in
accordance with the delivery schedule mentioned in
OMP (COMM)1/2022 5 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
the said purchase order.
7.3 if supplier fails to adhere to the said delivery
schedule, the following provisions shall apply:-
(a) The Corporation shall review the supply position
every month and may reallocate the quantities short
supplied by the Suppliers who are not able to meet
the Delivery Schedule as indicated in the Purchase
Order. Irrespective of reallocation of short supply,
Liquidated Damages at 5 % of Net Delivered price
shall be levied for un-delivered quantity as per the
slated delivery schedule.
(b) In the event of extension granted by Corporation
beyond the slated delivery schedule, liquidated
damages @ ½ per week of extended period or part
thereof subject to a maximum of 5 % of Net
Delivered Price will be levied.
(c) In case of failure to supply even after grant of
extension, liquidated damages as per (b) (maximum
5%) shall be payable and the Corporation shall have
the discretion to prune all such delivered quantities,
re-allocate the same to other suppliers as decided by
the corporation and recover the extra cost from the
defaulting Suppliers, if any to be borne by
Corporation while procuring such undelivered
quantities from other suppliers. Corporation’s
OMP (COMM)1/2022 6 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
decision in regard to pruning and re-allocation and
the methodology followed shall be final. The
limitation on order quantity will not be applicable
for the reallocation of pruned quantities. It is
obligatory on the part of Suppliers to accept the
pruned quantity order also and supply the same.
7.4 Notwithstanding anything to the contrary
contained in any of the provisions of the Agreement,
the Corporation from time to time shall have the
right purely at its discretion to prune the quantity of
Materials short supplied from the total contracted
quantity without prejudice to the rights of the
Corporation to determine, and claim from the Seller
by applying the principle laid down under
provisions of 7.3 above in relation to the short
delivered quantity/quantities.
7.5 It is also agreed and understood that only for the
purpose of calculation the damages recoverable, it
will be assumed that the Agreement continued to
remain in force for three months following the
expiry of the Contract period.
7.6 In case of total non-supply of Materials after
issue of the Purchase order during the contract
period, the security deposit will be forfeited.
OMP (COMM)1/2022 7 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
8. The respondent was being offered the benefit of
discount in pricing of raw material i.e PP Raffia Grade
(1030RG) as this discount was not being computed in the
fixing of price of the bags being supplied by the
respondent to the petitioner.
9. As per petitioner, on 04.09.2014, petitioner in its
capacity of seller of PP Raffia, issued a letter to the
President of All India Flat Tape Manufacturer’s
Association informing that it had revised the methodology
of pricing for PP/HDPF Raffia and accordingly the trade
discount of Rs.4,000/- per MT earlier existing both for PP
and HDPE Raffia stood withdrawn from 08.05.2014.
respondent protested the withdrawal vide letter dt.
26.05.2014 and requested the petitioner to reinstate the
trade discount, the letter was responded by petitioner vide
email dt. 19.06.2014.
10. The respondent filed a claim before the arbitrator
and interalia challenged the withdrawal of the trade
discount on the ground that the same affected his profit
margin substantially. The respondent sought an award
directing petitioner to pay a sum of Rs.33,03,456/- and
interest on the said amount alongwith costs. The plea of
respondent before the tribunal was that the bidders were
required to give their bid within price range provided by
petitioner. The price of raw material was to be considered
as per ZGTP as per price list of PP (1030RG) of petitioner
OMP (COMM)1/2022 8 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
at Panipat. It was pleaded that it was an industry practice
over the years to provide a Grade Specific Raffia Trade
Discount over and above the published price of raw
material under the IOCL PP price list, which discount was
being provided by the petitioner and other manufacturers
of Polymers. At the time of issuance of tender document
IOCL PP price list was providing a trade discount of
Rs.4000/- per MT on the raw material prices. It was
pleaded by the respondent that since the discount was an
unwritten norm, therefore, a clause was inserted in NIT
that the said discount would not be included in the raw
material price while fixing the price of bags. It was
pleaded that the condition was inserted with complete
understanding that the discount will be given to successful
bidder but for the purposes of calculation of the bids the
price was to be considered without reducing the raw
material price under the price list.
11. The other issue before the Ld. Arbitrator which was
contained in four different parts was regarding levying of
penalty/liquidated damages upon the claimant; the effect of
fire in the factory of claimant on the delay; regarding
specifications and non-compliance of same by the
respondent.
12. Ld. Counsel for petitioner has relied upon the
judgments in case titled as Food Corporation of India Vs.
OMP (COMM)1/2022 9 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
Chandu Construction & Anr. (2007) 4 SCC 697; Delhi
Development Authority Vs. R.S.Sharma and Company,
New Delhi, (2008) 13 SCC 80; Swan Gold Mining
Limited Vs. Hindustan Copper Limited, (2015) 5 SCC
739; Ssangyong Engg. & Construction Co. Ltd. Vs. NHAI,
(2019) 15 SCC 131, Delhi Airport Metro Express Private
Limited Vs. Delhi Metro Rail Corporation Limited, (2022)
1 SCC 131 & ONGC Ltd. Vs. Saw Pipes Ltd. (2003) 5
SCC 705.
13. The impugned award has been challenged inter-alia
on the grounds:-
Qua claim 1 that the sole arbitrator erred in holding
that respondent’s email dt. 10.07.14 and 23.07.14 showed
that respondent as required under clause 9 of GPA took all
necessary steps to inform petitioner of the force majure
conditions, the start as well the suggestion thereof or try to
use alternate source to mitigate the delay; Ld. Arbitrator
erred in holding that respondent was able to establish that
due to incident of fire for a period in which the machine
for printing got damaged in fire was under repair, the
respondent was unable to manufacture bags. He erred in
holding that claimant did try to mitigate the delay by
outsourcing, however, the said exercise could not fructify
due to rejection of the lot by the concerned agency of the
petitioner; the respondent had failed to prove the impact of
fire on the manufacturing of the bags.
OMP (COMM)1/2022 10 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
14. The finding of Ld. Arbitrator on the issue is at page
no. 142 of judgment. Respondent was relying upon four
documents, scanned copy of FIR emailed to respondent;
email dt. 10.07.14 intimating respondent about fire; email
dt. 23.07.14 intimating respondent about the damage
caused by fire; receipts regarding repair of printing
machine.
15. Ld. Arbitrator has taken into account the incident of
fire on the intervening night of 03.07.2014 and 04.07.2014
at the manufacturing unit of respondent which became the
reason for delay of the goods in the month of July, 2014. It
has been the claim of respondent that petitioner continued
to place orders even though the respondent was unable to
manufacture on account of the damages caused by the fire
which resulted into the delay in supply. Ld. Arbitrator has
dealt in detail the evidence regarding the fire incident to
arrive at the conclusion that because of fire accident at the
manufacturing unit of claimant, the printing machine was
badly damaged. The claimant had duly informed the
respondent about the said incident and kept apprising the
respondent of the situation and efforts made by it in terms
of clause 9.3 of the agreement. The machine was received
after repair on 23.07.2014 and on the same date the fact
was informed by the respondent to the petitioner. He
considered the cross-examination on page 148 to conclude
that respondent was able to establish that due to incident of
OMP (COMM)1/2022 11 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
fire for a period in which the machine for printing got
damaged in fire was under repair, the respondent was
unable to manufacture bags. He further observed that
claimant did try to mitigate the delay by outsourcing,
however, the said exercise could not fructify due to
rejection of the lot by the concerned agency of the
petitioner. The petitioner has not given any reason for
interfering with the finding of Ld. Arbitrator. Considering
the evidence Ld. Arbitrator arrived at the conclusion that
clause 9 of GPA would go in benefit of respondent for the
period between 04.07.2014 to 24.07.2014, which finding is
based on appreciation of evidence and the same cannot be
interfered with by the court.
16. In so far as argument of petitioner that the
respondent had failed to prove the impact of fire on
manufacturing of bags is concerned, the very fact that the
machine was under repair for a long time showed that the
work of respondent was impacted for the period during
which the machine was inoperative. The ground, therefore,
is baseless.
17. Petitioner has taken a ground that Ld. Arbitrator
committed an error in relying upon Ex.RW1/C1A to
Ex.RW1/C1E, which were the documents pertaining to
third party M/s.Samarth Fablon Pvt. Ltd. The petitioner
has not denied that the penalties imposed in the case of
M/s. Samarth Fablon Pvt. Ltd. were in fact refunded by it.
OMP (COMM)1/2022 12 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
There is no apparent error in the reliance placed by Ld.
Arbitrator on the documents which even if of third party
were exhibiting the act of petitioner in a case which as per
respondent was similar to the case of respondent. The
petitioner except for saying that the respondent failed to
show the facts were identical has not made any effort to
show as to how the facts in the two cases were distinct. In
fact petitioner itself has stated in ground K that in the said
case liquidated damages were indeed imposed by the
petitioner for late delivery. In fact, it was for the petitioner
to have exhibited before Ld. Arbitrator as to how the
reversal in the case of M/s. Samarth Fablon Pvt. Ltd. was
justified and the respondent was not entitled for such
reversal. There is no error in the finding of Ld. Arbitrator
in relying upon the documents and considering them on the
ground of parity.
18. Petitioner has taken a ground that the proof of loss
was a subsequent step and that there was no actual loss
suffered by petitioner or that the petitioner was not forced
to purchase any bag from any other agency on account of
delay in delivery of bags. It was argued that the petitioner
was not obligated to prove actual loss in view of clause 7
of the GPA. The case of petitioner was covered by ONGC
(supra) however, Ld. Arbitrator did not rely on the said
judgment. All the findings of Ld. Arbitrator have been
carved by the petitioner as grounds without specifying as
OMP (COMM)1/2022 13 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
to how these findings were incorrect or there was error in
the findings. It is stated that Ld. Arbitrator failed to
appreciate that clause 7 of GPA was never challenged by
respondent to not being a genuine pre-estimate agreed
between the parties therefore, there was no legal
requirement of the petitioner to actually lead evidence to
prove that same was a genuine pre-estimate.
19. Ld. Arbitrator has discussed in detail the aspect of
liquidated damages from page 154 till page 201 of the
judgment. It is the case of the petitioner that there were
major delays in supply of bags by the respondent.
Petitioner had sent a letter dated 24/03/15 reminding the
respondent that the delay on their part in supplying the
bags will cause huge financial loss to the petitioner.
However, on account of inaction on part of respondent the
petitioner imposed the liquidated damages (LD) on the
respondent as per Clause 7 of the General purchase
agreement.
20. It was argued by Ld. Counsel for the petitioner that
even if the petitioner has not averred anything about actual
loss, or proved the same, suffered by it as a consequence of
delay in supply of bags, the arbitral tribunal was not
justified in denying the claim of liquidated damages. Ld.
Counsel for Petitioner further argued that in view of
specific clause in the contract for liquidated damages, the
OMP (COMM)1/2022 14 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
petitioner was entitled for the same in case of breach of
contract by the respondent without proving actual loss.
21. On the other hand, Ld. Counsel for respondent
argued that the arbitral award was perfectly fine as the Ld.
Arbitrator dealt with all issues and adjudicated the same in
great detail and hence the present petition is liable to be
dismissed. It was argued that Ld. Arbitrator has rightly
held that actual loss was required to be proved.
22. The respondent in support of its contention has
relied upon following judgments:-
Deepak Chopra Vs. Flakt (India) Pvt. Ltd., 2020
SCC Online Del 103; M/s. Versatile Commotrade Vs.
Kesar Devi, AIR 2019 Del 155; Finolex Cables Ltd. Vs.
MTNL (2017) 163 DRJ 370; MTNL vs. Finolex Cables
Ltd. (2017) 166 DRJ 1; Central Government Employees
Welfare Housing Organisation Vs. Labh Construction &
Industries Ltd. 2019 (3) Arb. LR 271; Glencore
International AG Vs. Dalmia Cement (Bharat) Ltd. (2017)
4 Arb. LR 228; DMRC Vs. Traffic Media Pvt. Ltd. (2019)
263 DLT 770; IOCL Vs. Lloyds Steels Ltd. (2007) 144
DLT 659; vishal Engineers & Builders Vs. IOCL 2011
DHC 5465-DB; MMTC Ltd. Vs. Vedanta Ltd. (2019) 4
SCC 163 & NHAI Vs. M/s. Hindustan construction
Company Ltd. 2024 INSC 388.
OMP (COMM)1/2022 15 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
23. The main contention of the petitioner in challenging
this issue is that the Arbitrator failed to grant Liquidated
damages to the petitioner despite a clear clause in the
contract for Liquidated damages. At this stage it would be
apt to reproduce the decision of Delhi High Court titled
Finolex Cables Ltd V. MTNL (2017) 163 DRJ 370 :
(2017) 3 Arb LR 187 wherein it was held:-
“44. The court is therefore not able to sustain
the impugned award insofar as it holds that the
invocation of the BG by MTNL was justified and
awards MTNL a sum of Rs. 36,75,300 as LD. This
part of the award is based on no evidence
whatsoever. It is contrary to the settled legal
position as explained by the Supreme Court in
Kailash Nath Associates v. Delhi Development
Authority and NHAI v. ITD Cementation. …..”
24. The Ld. Arbitrator rejected the claim of Liquidated
Damages by petitioner on the ground that there is no
material on record in the entire evidence of the petitioner
to show that it suffered loss due to delay in supply of bags.
25. Liquidated damages are not different from ordinary
damages and hence require adjudication. It was argued by
Ld. Counsel for petitioner that the alleged loss which could
have been caused to the petitioner could have been
quantified. Relying upon illustrations (b) & (c) of section
73 of the Contract Act, it was argued that any measure of
OMP (COMM)1/2022 16 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
damages for delay in supply of goods is the difference in
price at which the purchaser could have bought the goods
from some other entity, and the price payable by the
respondent to the claimant. The petitioner to use this
illustration was required to prove by way of evidence as to
how the loss in this case could have been computed; which
could not be done as in fact no occasion for purchasing the
goods from some other purchaser ever arose or was
brought on evidence.
26. Ld. Arbitrator while appreciating the clauses of
special conditions of contract and General Purchase
Agreement (GPA) more specifically clause 7.1 & 7.3 of
GPA, clause 1.8 of Special Conditions of Contract and
clause 6.1 of GPA arrived at the conclusion that the
petitioner did not make out a case that the full supplies
were not made to it or the risk purchase was resorted to.
He further concluded that the petitioner could not show
that it had to prune the quantity to be supplied by
respondent and thus the reason for deducting money on
account of LD was only the delay in supply. Ld.
Arbitrator has distinguished the judgment of Hon’ble
Supreme Court in ONGC Ltd. Vs. Saw Pipes Ltd. (2003) 5
SCC 705. In the cited judgment the delay had taken place
in deployment of rigs and on that basis actual production
of gas from one platform had to be changed. Further in
cases of construction like laying of road or some such
OMP (COMM)1/2022 17 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
situation a presumption that the persons who were to use
those facilities suffered on account of delay in such
construction; the petitioner, however, has not been able to
show any harm or loss, direct or indirect, suffered by
anyone on the earth for the delay caused in supply of the
goods by the respondent. Ld. Arbitrator has correctly held
that the case of petitioner was not that its situation or its
business was in any way actually affected due to delay in
supply or that it had to arrange for supplies from other
sources.
27. In IOCL Vs. Lloyd Steel Industries Ltd. 2007 (4)
Arb. LR 84 (Delhi) Hon’bleHigh Court held : “In a
particular case where the defaulting party s able to
demonstrate that delay/default has not resulted in any loss
being suffered by the other party, then that party cannot
claim the damages only because in the contract there is a
stipulation regarding liquidated damages.”
28. The law in relation to LD has been explained by the
Supreme Court in its decision in Kailash Nath Associates
v. Delhi Development Authority (2015) 4 SCC 136 as:-
“Since Section 74 awards reasonable compensation
for damage or loss caused by a breach of contract, damage
or loss caused is a sine qua non for the applicability of the
Section.”
Thus it is authoritatively settled law that a party
cannot claim damages only because in the contract there is
OMP (COMM)1/2022 18 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
a stipulation regarding LD. The proof of loss is to be
shown for receiving damages.
29. In its statement of defence before the Ld. Arbitrator
the petitioner made the following contention:-
“35. That the contents of para 35 of the Statement of
claim showing details of the penalty imposed by the
respondent upon the claimant is a matter of record. The
same is in line with the contract since it is the claimant
which is solely responsible for the delays and the
respondent has rightly imposed the penalty. It is not out of
place to mention herein that due to such delays, the
respondent was likely to incur huge losses which could run
into thousands and crores of rupees to the extent that delay
in supply of bags could lead to even closure of
respondent’s bagging operation….Therefore, and in terms
of the contract, the respondent had levied liquidated
damages as a true estimate of the loss likely to be suffered
by the respondent due to delay in supply of bags by the
claimant.”
30. From a bare reading it can be seen that what is
alleged is a mere possibility of loss or a possibility of
closure of the bagging operation. Petitioner has not placed
any material on record to show any actual loss that was
caused to it by the non supply of bags. Further, clause 1.8
of the Special conditions of contract and clause 6.1 of the
General Purchase agreement clearly provide that in case of
OMP (COMM)1/2022 19 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
any default on the part of the claimant, the respondent
(petitioner herein) could divert the quantities to other
suppliers or even purchase from any other entity. However
it is not the case of the petitioner that because of non
supply of bags by the respondent, petitioner was forced to
purchase the bags from other suppliers. This shows that
non supply of bags by the respondent didn’t affect the
petitioner’s business in any manner compelling it to
procure the bags from other sources.
31. Claim no. 2 was considered in detail in two other
connected petitions filed by the petitioner. The challenge
to award in this case is on similar grounds and had been
argued together with those petitions. Petitioner has
challenged that Ld. arbitrator erred in relying upon
petitioner’s letter dated 04.09.2014, which was not only
alien to the subject matter of the contract between the
parties but was irrelevant and had no bearing on the terms
of the contract from which the arbitration proceedings
emanated; that Ld. Sole Arbitrator has grossly failed to
appreciate the basic facts and specific terms of the contract
between the parties and the impugned award has thus
resulted in absurdity; that Ld. Sole Arbitrator ignored the
express terms of contract and instructions to bidders,
special conditions of contract and letter of intent as also
the work order; that Ld. Sole Arbitrator erred in holding
that the discount offered in the price list could have been
withdrawn and adjusted in the price list were well within
OMP (COMM)1/2022 20 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
the subject contract under consideration and therefore, the
said issue required to be considered; that Ld. Sole
Arbitrator has altered and rewritten the terms of the
contract between the parties in as much as by holding that
even though the various terms of the contract prohibited
consideration of trade discount, since petitioner was given
trade discount since 2010, petitioner could not withdraw it;
and by inserting specific clauses for non-consideration of
trade discount was to ensure that the benefit of trade
discount would always be available for respondent; that
Ld. Sole Arbitrator erroneously held that trade discount
which was provided by petitioner to respondent under a
different transaction altogether of supply of raw material
had a direct bearing on present contract without
appreciating that the two have no nexus in as much as for
the purpose of supply of PP bags, respondent was
admittedly free to procure the raw material from any third
party which may or may not have offered price discount to
respondent; that Ld. Sole Arbitrator has taken into account
the letter dt.03.09.2014 written by petitioner to the
Association of Manufacturers of Flat Tape, which is
completely irrelevant to the decision that Ld.Sole
Arbitrator has arrived at and that Ld. Sole Arbitrator
ignored the vital evidence and/or contentions of petitioner
on record in arriving at its decision as such the impugned
award is completely perverse.
OMP (COMM)1/2022 21 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
32. The foremost arguments of the petitioner is that Ld.
Arbitrator has based its award on an irrelevant document
issued to third party. It was argued that the letter dt.
04.09.2014 by way of which petitioner had withdrawn the
trade discount earlier offered on the purchase of PP/HDPE
Raffia, which was being supplied by petitioner to its
customers, was erroneously linked by Ld. Arbitrator to the
arbitration holding that the said letter amounted to a
breach of contract.
33. The petitioner itself is mentioning that the letter
dt.04.09.2014 was indicating withdrawal of trade discount
to its customer. The respondent admittedly is a customer
of the petitioner as it used to purchase raw material from
petitioner, which raw material was used to produced bags
which were then supplied to the petitioner. Relevantly the
two process i.e purchase of raw material and sale of
finished product are inter linked as the price of raw
material was one of the elements to fix the price of
finished product. Therefore, to say that any change in the
price of raw material would have had no effect on the
supply of finished product would be incorrect. There was
as such, no error in Ld. Arbitrator relying upon letter dt.
04.09.2014 vide which the petitioner withdrew the trade
discount being given by it to its customers- the respondent
being one of such customers was an affected party and
therefore, was well within his rights to challenge/object
OMP (COMM)1/2022 22 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
to/rely on this document, which amounted to unilateral
change carried by petitioner in the pricing methodology as
provided for under the contract. The letter itself says that
“We have revised the methodology of pricing of PP/HDPF
Raffia.” The contents of the letter would clearly indicate
that petitioner had changed the pricing methodology based
on which the parties had entered into the contract.
34. It was argued by Ld. Counsel for the petitioner that
the respondent was free to procure the raw material i.e
PP/HDPE Raffia from anywhere. It, however, chose to
buy the same from petitioner, the respondent therefore,
could not have had any grievance since as per the contract
there was no linkage with the purchase of raw material.
Ld. Counsel for petitioner in support of her contention
relied upon the judgments of Hon’ble Supreme Court in
Delhi Development Authority Vs. R.S.Sharma and
Company, New Delhi & Swan Gold Mining Limited Vs.
Hindustan Copper Limited (supra). In Delhi Development
Authority Vs. R.S.Sharma and Company, New Delhi
arbitrator had wrongly concluded that department had
insisted upon the use of stone from a particular place. The
Hon’ble Supreme Court had relied upon the judgment in
Associate Engineering Company Vs. Govt. of A.P (1991)
4 SCC 93 wherein it was held that if the arbitrator commits
an error in the construction of contract, that is an error
within his jurisdiction but if he wonders outside the
OMP (COMM)1/2022 23 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
contract and deals with the matters not allotted to him, he
commits a jurisdictional error. …. a conscience disregard
of the law or the provisions of contract from which he has
derived his authority vitiates the award.
35. It is correct that the respondent was not under
obligation to purchase raw material from petitioner only, it
could have purchased raw material from anyone who could
provide the same on discount. The fact, however, is that
even if the goods were purchased by respondent from
someone else, it would not have changed the price fixation
of finished products i.e bags as the same was to be fixed on
the basis of price of raw material being offered by the
petitioner. Ld. Arbitrator has rightly held that the fact that
the claimant could purchase the raw material from a third
party was irrelevant since for the purposes of calculation of
price of bags to be supplied by respondent, the reference
eventually was to be made to the price list of petitioner,
which was the mandate of contract. Even if the respondent
had purchased the raw material from a third party it would
have remained entitled for the discount being offered by
the petitioner on the raw material. The entitlement of the
petitioner therefore, is coming from its right to have had
the discount excluded for all times in computation of
purchase price of raw material. It would be relevant that
the pricing methodology was changed by the petitioner
mid-way of the contract. As argued by Ld. Counsel for
OMP (COMM)1/2022 24 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
respondent, it would not have been easier for the
respondent to have entered into a contract for purchase of
raw material from a third party on urgent basis. Also, since
the time was essence in the agreement as has been pleaded
by petitioner, the delay if it would have occasioned in
entering into a contract with a third party for purchase of
raw material mid way of the contract, the same would have
had delayed supply of finished products to the petitioner.
36. The argument of Ld. Counsel for petitioner that the
issue of purchasing raw material and the contract for
supply of PP bags was wrongly mixed since the respondent
was purchasing raw material from the petitioner. Had the
respondent been purchasing raw material from someone
else, it could not have claimed a right on discount. As
stated hereinabove the two transactions were inter-linked
and what the respondent has challenged is withdrawal of
discount because of which the price of raw material came
down and sale price of finished product also came down.
For the sake of argument if the respondent was purchasing
raw material for Rs.1 from petitioner and was getting
benefit of 50 paisa on account of discount, it would have
remained entitled for the amount of 50 paisa irrespective of
what price was fixed for raw material. If the respondent
was purchasing raw material say for .75 paisa, it would
still have remained entitled for the discount of 50 paisa.
Thus, Ld. Arbitrator has correctly held that the fact that
OMP (COMM)1/2022 25 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
respondent could have purchased raw material from
someone else did not have any effect on the case since the
withdrawal of discount would have adversely affected the
respondent under all circumstances.
37. It is one of the interpretations of contract that the
specific term of contract barred the discount, other
interpretation being that the term meant that discount
would continue to flow to the respondent, which has found
favour by the Ld. Arbitrator.
The finding of Ld.Arbitrator being one of the
interpretations of the contract cannot be interfered by this
court.
38. Ld. Counsel for petitioner has relied upon the
judgment in Swan Gold Mining (supra) wherein the
Hon’ble Supreme Court was dealing with the clause where
the petitioner had undertaken liability of sales tax, service
tax and other taxes in the contract and therefore, the court
held that there was no patent illegality in the award passed
by arbitrator and that the award was not in conflict with
public policy.
In the instant matter the issue is regarding
interpretation of words “without any discount/incentive
offered in the price list” which has two possible meanings
and therefore, the arbitrator having chosen one, this court
cannot say that the interpretation chosen by Ld. Arbitrator
was incorrect. In fact, since the discount was being
OMP (COMM)1/2022 26 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
provided to the respondent since long the interpretation
given by Ld. Arbitrator would be more logical and first
interpretation. It would be relevant to note that all the
bidders were bound by the terms and conditions stated in
NIT, GPA and SCC for supply of PP Woven Sacks and
bids were offered keeping in mind the terms and
conditions. The petitioner therefore, did not consider the
discount being offered to it in the computation carried for
bid since there was a presumption that the price of raw
material whatever shall be fixed, will be considered in
price fixation of bags without the discount which was
being offered to the bidders including respondent and the
respondent will keep getting the benefit of discount, which
was being offered and was a norm in the industry.
39. It has been argued by Ld. Counsel for the petitioner
that Ld. Sole Arbitrator had grossly failed to appreciate
basic facts and specific terms of contract between the
parties and the award has resulted in absurdity. It was
argued that Ld. Arbitrator has altered and re-written the
terms of contract between the parties by holding that
though the terms of contract prohibited the consideration
of trade discount, which was being given since 2010,
petitioner could not withdraw the same. Ld. Counsel for
petitioner in this regard has relied upon the judgment in
Food Corporation of India Vs. Chandu Construction &
Anr. (Supra). In the cited judgment the Hon’ble Supreme
OMP (COMM)1/2022 27 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
Court was considering the clause of contract where filling
up of plinth with sand under the floor for completion of
project was contemplated. Relevant clause stated that the
rate would include the cost of materials and labour
involved in all the operations described above. The
claimant in the said case sought extra payment for sand
and arbitrator stated that extra payment for supply of sand
was payable. Sand being the material therefore, logically
could not be paid separately.
40. The petitioner is heavily relying upon use of words
“without any discount/incentive offered in the price list”.
There are two interpretation of this phrase unlike in the
cited judgment where there could not be two
interpretations for considering sand into the material or not
considering it in the material. Ld. Arbitrator has
elaborated the effect of withdrawal of discount in para 10
of the award and has considered the evidence of witness of
petitioner in detail. Relying upon the two he arrived at the
conclusion that the intention of parties in incorporating the
above expression in the contract meant that the trade
discount offered on the price of raw material in the price
list was not to be considered with the price in the price list
and was part of tender condition. Conversely, if such
tender condition was not there, the discount could have
been considered. Ld. Arbitrator arrived at the conclusion
that the expression was to ensure that the discount is not
OMP (COMM)1/2022 28 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
considered while considering the price of bag alongwith
the price indicated in the price list. It was to ensure that
discount remains a discount and does not merge with the
price of raw material indicated in the price list. The
methodology was to let the amount of discount pass to the
manufacturer of bag. If this clause was not there, there
would have been issues of clarity between the price of raw
material in the price list and effective price of raw
material.
Ld. Arbitrator therefore, has leaned to the
interpretation of clause to mean that benefit of discount
was to go to the respondent while calculating the price of
raw material and not that petitioner was entitled to
withdraw the discount as and when it wanted.
Admittedly, the interpretation being given by Ld.
Arbitrator to the clause is one of the probable
interpretations. It needs to be taken note of that as per
admitted case of the parties the discount was a norm in the
industry. The trade discount was made available since
2010 from the time when petitioner entered into polymer
business with the respondent. Since the discount was
continuously being given ever since the petitioner entered
into the business-the interpretation given by Ld. Arbitrator
seems more probable than what is being suggested by Ld.
Counsel for the petitioner.
41. Ld. Counsel for petitioner has relied upon the
OMP (COMM)1/2022 29 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
judgment in Ssangyong Engg. & Construction Co. Ltd. Vs.
NHAI (supra). Hon’ble Court in the cited judgment held
that “a fundamental principle of justice has been breached,
namely, that a unilateral addition or alteration of a contract
can never be foisted upon an unwilling party, nor can a
party to the agreement be liable to perform a bargain not
entered into with the other party. Clearly, such a course of
conduct would be contrary to fundamental principles of
justice as followed in this country, and shocks the
conscience of this Court.”
The Hon’ble Supreme Court had further held that
the ground was available only in very exceptional
circumstances and under no circumstance could the court
interfere with the award on the ground that justice was not
done in the opinion of the court.
In fact, the finding of the Hon’ble court applies
more to the case of respondent who was being granted
discount continuously and would have entered into
agreement on the presumption that the clause had a
beneficial interpretation and meant that the benefit of
discount being given to it will not be considered in the
computation of rate. The petitioner on the contrary gave a
different interpretation to the clause- to mean that it could
withdraw the discount at any point of time, which the
petitioner would not have thought of as the interpretation
at the time when the contract was entered.
42. Ld. Counsel for respondent has relied upon the
OMP (COMM)1/2022 30 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
judgment of Hon’ble Supreme Court in Atlanta Limited
Vs. Union of India (2022) 3 SCC 739, wherein Hon’ble
Supreme Court held that as long as arbitrator has taken a
possible view, which may be a plausible view, simply
because a different view from that taken in the award is
possible based on the same evidence, would not be a
ground to interfere with award. The Hon’ble Supreme
Court held that it is a well settled principle of law that
challenge cannot be laid to award only on the ground that
the arbitrator has drawn his own conclusion or failed to
appreciate relevant facts. Nor can the court substitute its
own view on the conclusion of law and facts as against
those drawn by the arbitrator as if it is sitting in appeal and
relied upon the judgment in State of Rajasthan Vs. Puri
Constructions Company Ltd.( 1994) 6 SCC 485, wherein it
was observed as under:-
“26. The arbitrator is the final arbiter for the dispute
between the parties and it is not open to challenge the
award on the ground that the arbitrator has drawn his own
conclusion or has failed to appreciate the facts.”
43. In Dyna Technologies Pvt. Ltd. Vs. Crompton
Greaves Limited (supra), the Hon’ble Court had held that
“in umpteen number of judgments of this Court have
categorically held that the Courts should not interfere with
an award merely because an alternative view on facts and
interpretation of contract exists. The Courts need to be
cautious and should defer to the view taken by the Arbitral
OMP (COMM)1/2022 31 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
Tribunal even if the reasoning provided in the award is
implied unless such award portrays perversity
unpardonable under Section 34 of the Arbitration Act.”
44. In UHL Power Company Ltd. Vs. State of Himachal
Pradesh, Hon’ble Court held that “the interpretation of the
relevant clause of the implementation agreement, as
arrived at by the Ld. Sole Arbitrator, are both, possible and
plausible. Merely because another view could have been
taken, can hardly be a ground for the Ld. Single Judge to
have interfered with the award.?
45. Testing the facts of the case on the guidelines laid
by the Hon’ble Supreme Court and High Courts time and
again, the Court has to consider if there is any violation or
breach of any principle to an extent that warrants
interference from the Court.
46. Coming to the interpretation of expression “without
any discount/incentive offered in the price list” being
given by Ld. Counsel, I would like to mention here that
though the interpretation is one of the interpretations,
however, since more than one interpretations were possible
and the Arbitrator chose one of the views, this court cannot
substitute the same with another view, which in the instant
matter is being proposed by Ld. Counsel for petitioner.
There is no illegality in the finding of Ld. Arbitrator that
OMP (COMM)1/2022 32 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
the expression “without any discount/incentive offered in
the price list” was included at the time when the discount
was being offered and in fact meant that the benefit of
discount, which was being offered at the time of drawing
of the contract should go to the respondent and not that the
petitioner had a right to withdraw the discount unilaterally
at any point of time.
47. Ld. Arbitrator in fact, has considered the act of
petitioner on the principle of good faith i.e the parties have
an obligation to display a behaviour towards the others
which does not harm the other and takes into account the
reasonable expectation of businessman in the shoes of
other side. Since the petitioner did not give any
justification for sudden withdrawal of discount it achieved
indirectly what could not have been achieved otherwise
within the contractual stipulation. The petitioner therefore,
did not act in good faith. To this effect Ld. Arbitrator has
relied upon the judgment of Hon’ble Delhi High Court in
Atlus Group India Private Limited Vs. Darrameks Hotel &
Developers Private Limited 248 (2018) DLT 667. The
entire relied portion is being reproduced hereunder for a
better understanding:-
“7. I have considered the submission of the learned
counsels for the parties. I would first quote the relevant
discussion on the two Clauses in the Impugned Award:
Analysis & conclusion:
OMP (COMM)1/2022 33 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
“…5.5 Perusal of the said clauses would reveal
that Clause 9(1) of the agreement provides a
right to the “owner” alone to terminate the
agreement with 30 days prior notice; clause 9(II)
provides a limited right to the respondent to
terminate the agreement only when owner fails
to pay the fee correctly within 30 days of the
receipt of the written reminder for payment. But,
it is not the respondent’s case. However, Clause
9 (IV) also provides that, “either party may,
upon thirty (30) days notice in writing to the
other party, terminate the agreement.” In sub-
clauses 9(II) and 9(IV), there is an apparent
contradiction. Therefore, we need to find out,
whether Clause 9 (IV) gives an independent
right to the respondent to terminate tine contract
any time, irrespective of the fact that 9(II) gives
only limited right of termination, namely non-
payment of fee, despite reminder.”
5.6 Guiding rules for construction of documents
are all well settled by several authoritative
pronouncements. These are:
(a) to read the document as a whole for gathering
intention of the parties; (b) to give natural,
ordinary and sensible meaning to the language
used in the document; and (c) the conflict, if any,OMP (COMM)1/2022 34 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
is first to be resolved by giving harmonious
construction to its various clauses. Thus, an
interpretation which renders any clause in the
document redundant is to be avoided. When we
apply these principles to the facts at hand, it
becomes obvious that the respondent could not
validly terminate the contract under Clause
9(IV) for the following reasons:-
(A) If it is held that clause 9(IV) is independent
and confers a right on the respondent to
terminate the contract at any point of time and
for any reason by merely serving 30 days notice,
in that eventuality Clause 9 (II), which restricts
right of the respondent for termination only in
the eventuality of their fee not being paid despite
reminder, would become redundant. It would be
against basic rule of harmonious construction, of
the various clauses of documents. In view of the
same, it is held that Clause 9(IV) of the
agreement does not provide any independent
right of termination of the contract for the
respondent. They could terminate the contract
only for non-payment of their fees or other dues,
despite reminders and not otherwise.”
“…8. A reading of the above would show that
the Arbitrator has held that there is an apparentOMP (COMM)1/2022 35 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
contradiction between Clauses 9(II) and 9(IV) of
the agreement and therefore, applying the
principal of harmonious construction of a
contract, which is to avoid interpretation which
renders any clause redundant, holds that Clause
9(IV) does not provide any independent right of
termination of the contract for the petitioner; the
petitioner can terminate the contract only for
non-payment of its fees and other dues, despite
reminder and not otherwise.”
“….14. In Associate Builders v. Delhi
Development Authority, (2015) 3 SCC 49, the
Supreme Court had cautioned the courts that in
exercise of its power under Section 34 of the
Act, if an Arbitrator construes the terms of the
contract in a “reasonable manner”, the Award
cannot be set aside; construction of the terms of
the Contract is primary for an Arbitrator to
decide, unless the Arbitrator construed the
Contract in such a way that it can be said to be
something that no fair minded and reasonable
man could do. In the present case, the arbitrator,
in the name of interpreting the contract, has in
fact, rewritten the same. Equally, in his
endeavour to harmoniously construe Clause 9 so
as to prevent 9(II) from becoming redundant, has
made 9(IV) redundant.”
OMP (COMM)1/2022 36 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
“…16. As noted by me above, in the present
case, there was no question of interpretation
involved at all. Clause 9(IV) being explicit, was
the final word on the intent of the parties. There
are two distinct rights of termination vested in
the hands of the parties in Clause 9 of the
agreement. While Clause 9(II) empowers the
petitioner to terminate the agreement for a cause,
Clause 9(IV) authorizes either party to terminate
the agreement without cause and by simply
giving notice to the other. The Arbitrator seems
to have proceeded on the basis that merely
because a right to terminate for a cause is
provided in the agreement, a separate right given
to a party to terminate the agreement without
cause would run counter to the same and
therefore, would require to be harmoniously
constructed with the right to terminate for a
cause. This was a fundamental error committed
by the Arbitrator vitiating the Impugned
Award.”
Ld. Counsel for the petitioner has vehemently
argued that sole arbitrator failed to appreciate that there
was no change in methodology indicated in letter dt.
04.09.2014 which was applicable to the respondent in the
contract inter-se the parties. It erred in holding that the
exercise if at all of the change in methodology was not
OMP (COMM)1/2022 37 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
under the subject contract.
It has been held hereinabove that Ld. Arbitrator was
not incorrect in holding that letter had an effect to this
contract as it required interpretation of words ” without
discount” and the discount was withdrawn by the
petitioner vide letter dt. 04.09.2014. The petitioner has not
explained as to what the word “methodology” mentioned
in letter dt. 04.09.2014 meant. Ld. Arbitrator has
interpreted it to mean that the petitioner wanted to take
away the discount which was being offered to the parties
on computation of price of raw material for all purposes
rather than merely withdrawing the discount.
The interpretation being given by the petitioner to
the contract clause in fact amounts to nullifying the benefit
having been assured for the bidders and therefore, the
discount could not be withdrawn unilaterally by the
petitioner.
48. Relying upon the aforesaid judgment Ld. Arbitrator
has rightly held that though the petitioner had a right to fix
the price, it could not have changed methodology of fixing
the price by withdrawing the discount. The change should
have been made in a manner that it did not take away
benefit of discount, which the claimant understood would
pass to him, at the time when it entered into the agreement
with the petitioner. The price of raw material therefore,
could not be changed in a manner that the benefit of other
OMP (COMM)1/2022 38 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
stipulation (i.e of non-computation of discount in
computation of price) was completely nullified.
There is no error in the finding of Ld. Arbitrator that
the action of petitioner by withdrawing the discount which
merged in the fixing of price of bags to be supplied by
respondent, mid-way the contract and unilaterally was not
bonafide and in fact, was detrimental to the other party. I
do not find any error and illegality in the finding of Ld.
Arbitrator that petitioner had failed to show any reason
commercial or otherwise which made them to rework the
trade discount in the middle of the contract. No
explanation was given by the petitioner why the trade
discount was removed during the period of contract and
not before or after that. In fact, Ld. Counsel for the
respondent has argued that the margin in the purchase of
raw material and the sale price of finished product is very
less and the main profit of the respondent was coming
from the discount margin which was being included in the
fixation of price of finished product. The withdrawal of
discount meant a loss to the respondent which it could not
have anticipated at the time of entering into the agreement
as giving of discount was a norm of the industry at the
relevant point of time.
Section 28 of Arbitration and Conciliation Act
otherwise provides as under:-
OMP (COMM)1/2022 39 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
28. Rules applicable to substance of dispute.
[(3) while deciding and making an award, the arbitral
tribunal shall, in all cases, take into account the terms of
the contract and trade usages applicable to the transaction]
Ld. Arbitrator therefore, was acting well within the
provisions of law while considering that there was a trade
practice of providing discount, existence of which would
have weighed in the minds of bidders at the time of
bidding and thus the interpretation given that the discount
being provided was to flow to the bidder during the period
of contract.
The Hon’ble Delhi High Court in Ircon International
Ltd. vs. Afcons Infrastructure Limited 2023 SCC Online
Del. 2350 held as under:-
“patent illegality warranting setting aside of award
should be such illegality or deficiencies at the face of
award and/ or shock the conscience of the Court in order
for it to qualify to be set aside by this Court.
49. Under section 34 of Arbitration & Conciliation Act,
the role of court is limited to considering only the aspects
mentioned in sub section 2 of the Section. It is settled law
that the court u/s. 34 of Arbitration & Conciliation Act
cannot sit in appeal and examine the reasoning given by
arbitrator with an intent of substituting the same with the
reasoning that appeals more to the court.
50. In view of above, the case of the petitioner is not
OMP (COMM)1/2022 40 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
found covered by any of the clauses provided u/s. 34 of A
& C Act. The petition is dismissed. File be consigned to
record room.
(ANURADHA SHUKLA BHARDWAJ)
District Judge (Commercial Court)-02
South, Saket/Delhi.
Announced in the open court Digitally
signed by
on 21.01.2025 anuradha
anuradha shukla
shukla Date:
2025.01.21
15:57:27
+0530
OMP (COMM)1/2022 41 of 41 Indian Oil Corporation Ltd.
Vs. P.P.Polyplast Pvt. Ltd.
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