Delhi District Court
Municipal Corporation Of Delhi vs City Sweep Services Llp on 8 August, 2025
-1-
DLCT010201402024
IN THE COURT OF SH. VIDYA PRAKASH
DISTRICT JUDGE (COMMERCIAL COURT)-01
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI
CNR NO.: DLCT010201402024
OMP (COMM.)/109/2024
IN THE MATTER OF:-
MUNICIPAL CORPORATION OF DELHI
THROUGH COMMISSIONER
DR. S P MUKHERJEE CIVIC CENTRE
MINTO ROAD
NEW DELHI-110002
... PETITIONER
VERSUS
CITY SWEEP SERVICES LLP
THROUGH ITS AUTHORIZED REPRESENTATIVE
MR. GAURAJ RAJORIYA
8644,8699, 2ND FLOOR, WARD NO. XII
SUBZI MANDI. ROSHANARA ROAD
NEW DELHI- 110007
... RESPONDENT
DATE OF INSTITUTION (e-filing) : 21-12-2024
DATE OF RESERVING ORDER : 19-07-2025
DATE OF PRONOUNCEMENT OF ORDER : 08-08-2025
ORDER
1. Vide this order, I shall decide the present objection
petition under S. 34 of Arbitration & Conciliation Act,
1996 (hereinafter referred to as the ‘Act of 1996’ in short)
filed by the petitioner for setting aside arbitral award dated
OMP (COMM.)/109/2024 Page 1 of 54
-2-
14-09-2024 passed by learned sole arbitrator in Arbitration
Case No. 863 of 2021 titled as ‘City Sweep Services LLP
v. Municipal Corporation of Delhi.’
2. Brief relevant facts, as culled out from the pleadings of
parties along with relevant documents including impugned
arbitral award filed therewith, are as under:-
2.1 It is stated that the Petitioner/MCD is a civic body
having responsibility of monitoring, upgrading and
developing civic amenities in its Central and
Najafgarh Zones.
2.2 The respondent is a Limited Liability Partnership
Company.
2.3 It is stated that in response to bid (notice inviting
tender) for implementation of work of “Sweeping of
Roads having Right of Way (ROW) >60 Feet and
<100 fee, within jurisdiction of MCD, by deploying
Mechanical Sweeper(s) of required capacity
(Group-2)” [hereinafter referred to ‘the contract
work’] floated by MCD/ petitioner, the respondent
had participated. The MCD had accepted the bid of
the respondent, being the lowest bid and the
respondent was declared as Lowest Bidder (L-1).
Thus, MCD issued the Letter of Intent dated
18-02-2011 in favour of respondent, which was
accepted by the respondent vide its letter dated
23-02-2011. Subsequently, a contract agreement
OMP (COMM.)/109/2024 Page 2 of 54
-3-
dated 03-06-2011 was executed between the parties
for the aforesaid contract work, wherein the contract
fee was fixed as ₹1,030/- per km. per day for roads
having Central Verge (CV) and ₹828/- per km. per
day for roads without Central Verge (CV) as per the
Article 3 of said agreement.
2.4 It is further stated that the stipulated contract period
was 07 years from the commencement date i.e. the
date of agreement, which is 03-06-2011, as per
Article 2.3 thereof.
2.5 During currency of the said agreement, dispute
arose between the parties and hence, the respondent
invoked the arbitration proceedings. It is stated that
the claim of the respondent pertains to the claims for
period of January, 2017 to June, 2018 only under
the Contract Agreement, which is as under:-
2.5.1 Claim for interest at the rate of 15% on
delayed payments towards monthly Contract
fee / bills for the months of January, 2017 to
June 2018 in Central and Najafgarh Zone
amounting to ₹12,28,902/-(₹11,17,135/- +
₹1,11,767/-);
2.5.2 Claim for a sum of ₹21,88,850/-
(₹16,83,428/- + ₹5,05,422/-) on account of
unjustified penalties and unsubstantiated
deductions on monthly bills Contract fees;
OMP (COMM.)/109/2024 Page 3 of 54
-4-
2.5.3 Claim for a sum of ₹72,22,308/-
(₹12,93,659/- + ₹59,28,649/-) on account of
unpaid Contract fee / monthly bills for the
month of October 2017 (Najafgarh Zone) and
for July 2017 to June 2018 (Central Zone);
2.5.4 Claim for a sum of ₹4,81,73,924/-
(₹3,67,18,996/- + ₹1,14,54,928/-) on account
of idling charges for the assets, workforce and
machineries and other assets procured by the
Claimant for the implementation of the
contract for period of January 2017 to June
2018.
2.5.5 Claim for a sum of ₹85,87,129/- on account of
supplementary bills raised by the Claimant
towards revised wages of manual workforce
as mandated by Labour Department for the
period of April 2017 to June 2018.
2.5.6 A sum of ₹6,00,000/- towards litigation cost
in relation to the proceedings under Section
11 and the present Arbitral proceedings.
2.6 By way of impugned arbitral award dated
14-09-2024, Ld. Arbitrator has partly allowed the
claims of the respondent, in the following terms:-
2.6.1 Partly allowed the claim of respondent for
principal amount to the extent of ₹70,69,384/ –
(₹8,99,470/- + ₹2,41,265/- + ₹59,28,649/-);
OMP (COMM.)/109/2024 Page 4 of 54
-5-
2.6.2 Granted pre-award interest of 9% per annum
i.e., from the date of cause of action till the
initiation of present Arbitration Proceedings
(30.11.2021) amounting to ₹41,21,334/-
(₹11,52,144/- + ₹4,81,865/- + ₹3,43,015/- +
₹97,843/- + ₹20,46,467/-);
2.6.3 Granted pendent-lite interest @ 9% per
annum on the principal awarded amounts of
Claim No. 2 and 3;
2.6.4 Granted post-award interest of 9% per annum
i.e., from the date of the Impugned Award till
actual realization, if the awarded amounts are
not paid within three (3) months; and
2.6.5 Granted costs of ₹4,00,000/- towards
litigation cost in relation to the Arbitration
proceedings.
2.7 Hence, the present objection petition has been
preferred by the petitioner/MCD seeking setting
aside of the impugned arbitral award dated
14-09-2024.
3. The case of the petitioner, in nutshell, is as under:-
3.1 It is stated that the determination of nature of the
Contract is of utmost importance in present case, as
the present contract happened to be a cleaning
services contract in running stage and thus, thereOMP (COMM.)/109/2024 Page 5 of 54
-6-was no opportunity to rectify the unsatisfactory
work done by the respondent.
3.2 It is further stated that the amount deducted and
penalties imposed were done in accordance with the
terms of contract, due to defaults of respondent and
also that the respondent is estopped by its own
acceptance of the said deductions/ penalties in
measurement books. Therefore, by virtue of the
nature of contract and the services involved therein,
the show cause notices and the written
communications were for the purpose of informing
and warning the respondent to perform their
functions properly, going forward as to prevent the
repetition of unsatisfactory work.
3.3 It is further stated that it is an admitted position that
the mechanical sweepers operate during the night
hours, whereas, manual cleaning was required to be
done during day time to deploy 1.5 labour per
kilometre and once the work has not been done i.e.
work has been unsatisfactorily or not done at all, the
losses were to be incurred by the petitioner (MCD)
immediately, since the cleaning for the next day
would be paid for in any case unlike a standard
construction contract.
3.4 Under Clause 3 of the Contract Agreement, the
respondent was entitled for monthly payments
towards Contract Fee. Accordingly, the respondentOMP (COMM.)/109/2024 Page 6 of 54
-7-raised monthly bills from the time of
implementation of works i.e. 01.01.2017 till
30.06.2018.
3.5 The mechanism/ process of payment in the present
agreement was that the respondent has to submit the
monthly bill and after the settlement/ verification of
the said bill by both the parties i.e. the Measurement
Book being prepared by the petitioner after actual
inspection/ verification and the said entry in
Measurement Book was duly confirmed and signed
by the respondent to acknowledge as well as to
accept that the said verification of work and amount
towards said work. Subsequently, after above said
exercise of verification/ settlement of bills and
actual work by both parties, the due payment was
made/ released by the petitioner (MCD).
3.6 The respondent itself has submitted unjustified and
excessive bills seeking exaggerated amounts in its
monthly bills from the petitioner (MCD). Further,
the respondent has also submitted bills for the
concerned roads in Central Zone where in
Mechanical Sweeper had not even been deployed as
is also evident from the GPS Maps.
3.7 It is further stated that that the respondent since start
of the contract work, had lackadaisical and apathetic
approach regarding submission of bills, for
instances, the respondent often use to submit aOMP (COMM.)/109/2024 Page 7 of 54
-8-rough bill without any breakup or detailed
information of the work done i.e. bill just merely
containing the quantity of work done multiplied
with rate of work. Thus, these randomly estimated
bills/ rough bills submitted by the respondent in
contravention to the terms of Agreement, had to be
re-submitted by the respondent on requests and
reminders of the petitioner (MCD) in proper format.
As such the reasons for delay in release of payment
are attributable to the respondent itself.
3.8 It is further stated that the purpose of the log sheets
being signed by the SI/ASI (Sanitary Inspector or
Assistant Sanitary Inspector) was to ensure the fact
that there was movement of the mechanical
sweepers on the prescribed roads as prescribed
speed. The factum of satisfactory work was to be
inspected by the Sanitary Superintendent as well as
the JE/ AEIEE (Junior Engineer/Assistant Engineer/
Executive Engineer) during regular inspections. It is
for this purpose that the signature of the Sanitary
Superintendent was necessary on the log sheets.
Further, the log sheets by itself cannot be said to be
indicative of work having been completed in a
satisfactory way. The log sheets were to be seen
together with the GPS sheets and reports coupled
with the actual on-site inspections by the Sanitary
Superintendent or the JE/AE/EE which are borne
OMP (COMM.)/109/2024 Page 8 of 54
-9-
out from the Measurement Book/Log Sheets and
reflected in the correspondences between the parties
to get a complete picture.
3.9 It is averred that the fact that respondent was time
and again apprised of the shortcomings, which led
to deductions and penalties by the authorized
representative of the petitioner (MCD) and the same
can be corroborated with the fact that said
deficiencies/ shortcomings were duly entered in the
Measurement Bill. Further, the respondent has duly
accepted the said entry in Measurement book
without any protest or demur at the time of
finalization of the bill but has belatedly, as an
afterthought, refused / disputed the same.
3.10 It is further averred that even when the bills were
received by petitioner (MCD), more often than not,
the bills were found to be incomplete i.e. to say that
the relevant/mandatory documents which were
supposed to be submitted along with bills, used to
be missing. Thus, even after receipt of bill at
petitioner’s Office, the officers of petitioner (MCD)
had to write to the respondent regarding missing
documents. Once said documents were submitted
and bill was complete in all sense, it used to be
entered into the Measurement Book, wherefrom the
verification used to be done of the actual work
which was represented to respondent and thereafter,
OMP (COMM.)/109/2024 Page 9 of 54
-10-
in accordance with actual work executed, the
payment used to be released to the respondent.
3.11 Hence, monthly payment of bills of the respondent
was mainly dependent upon the date wherein the
respondent had actually submitted the documents
with the petitioner (MCD) for commencement of
processing of bill. The delay in submission of
monthly bill along with all supporting documents
like GPS reports in hard-copy, was solely
attributable to the respondent.
3.12 It is also stated that even the GPS link use to expire
within 30 days i.e. when the bills used to be
submitted to the petitioner (MCD). The respondent
first failed to submit hard copies of GPS reports
along with his monthly bill and secondly even the
GPS link use to expire by the time the monthly bills
were actually handed over to the Petitioner (MCD).
3.13 The petitioner (MCD), vide its various letters,
including but not limited to letters dated 08.04.2016,
18.04.2016, 19.06.2017, 22.08.2017 and
03.07.2017, had requested the respondent to submit
the missing requisite documents supporting the bill.
3.14 Hon’ble Arbitral Tribunal has failed to consider that
such correspondences are an irrefutable evidence of
the fact that the delay, if any in payment of bills was
solely attributable to the respondent herein.
OMP (COMM.)/109/2024 Page 10 of 54
-11-
3.15 Furthermore, the respondent was not entitled to any
Claims whatsoever, as the deductions and penalties
were solely attributable to the respondent especially
considering the incomplete and unsatisfactory work
(as has also been admitted by the respondent itself)
and the discrepancies in bill (in lack of required
documents which were to be submitted along with
bill by the respondent) or lack/absence of any
verification/ entry in Measurement Book
(determination of actual work).
3.16 The respondent had duly accepted the payment
made by the petitioner without any protest or demur
after having completed the verification exercise as
detailed hereinabove.
3.17 There is no clause/ article in the contract agreement
between the parties, which stipulates that the
respondent would have a right to claim interest on
the delayed payments made by the petitioner
(MCD). Furthermore, admittedly the bills were
submitted to the petitioner in a delayed manner
without complete supporting/ required documents
like log sheets, GPS sheet, etc.
3.18 Petitioner (MCD) has, after due process and
consideration, rightly imposed reasonable penalties
on respondent as per the terms of the Agreement
between the parties and for said purpose, the
petitioner has reproduced the Article 3 of the
OMP (COMM.)/109/2024 Page 11 of 54
-12-
Conditions of Contract, which stipulate the
mechanism of imposing penalty and the extent of it,
in sub-para (t) to Para 15 of the petition.
3.19 The petitioner (MCD) has imposed penalty as per
above said provision of the Agreement wherein the
respondent has failed to perform the Contract in
many aspects as stipulated in Article 3 of Conditions
of Contract. The failures of respondent have forced
the Petitioner (MCD) to impose the penalty as per
provision of Article 3.1 i.e. deduction/ penalty at the
rate double the amount payable to respondent; for
not cleaning of bell mouth, penalty was imposed as
per Article 3.3; for cloud formation during
sweeping, the penalty was imposed as per Article
3.2.; for times when GPS was found to be not
working, penalty was imposed as per Article 3.4.
3.20 It is further stated that the monthly bills were
released after due verification and imposition of
penalties as per the terms of contract, the same was
duly entered in the measurement book and was duly
accepted by the respondent without any protest or
demur whatsoever. It is pertinent to mention herein
that all the deductions/ penalties imposed by the
petitioner (MCD) have been done in accordance
entries / details of Measurement Book after due
inspections conducted by the petitioner (MCD). The
petitioner (MCD) has calculated the amount of
OMP (COMM.)/109/2024 Page 12 of 54
-13-
actual work done and deducted only the said amount
as stipulated in contract terms after considerations.
The fact that the respondent had accepted the entries
made in the measurement book and amount released
during the settlement of the bill without any
objection/demur, provides ample clarity that the
present claim is at best an after-thought.
3.21 At times, the log books submitted by the respondent
regarding the details of road length swept by
mechanical sweeper during a period were found to
be contradictory to the specification and technical
details like total kilometers of the road cleaned with
the mechanical sweeper were not matching with the
time period the machine had worked with prescribed
speed limit required to clean the road as per
technical specifications of the contract agreement.
The submitted length of road can only be cleaned in
such time only when the mechanical sweeper had
been run at more speed than the prescribed
maximum sweeping speed i.e. 15km/hr. under
Article 5.0 of the contract agreement. These
technical aspects are important and cannot be
ignored.
3.22 It is stated that the fact that the respondent without
any protest and objections have accepted the
measurement and deductions made by the Petitioner
(MCD) on a regular basis in itself is an admission of
OMP (COMM.)/109/2024 Page 13 of 54
-14-
breaches/ unsatisfactory work by respondent and
evinces falsity of the averments made by it before
Hon’ble Arbitral Tribunal. The issue of economic
duress raised by the respondent in their submission
is nothing but fallacious allegation and afterthought.
There was no duress on the respondent of any type
as alleged or otherwise. The Hon’ble Arbitral
Tribunal has failed to consider that the respondent
has taken this plea for the very first time in its
Statement of Claims and the same has never been
raised by the respondent in any of its
communication/correspondence, before initiation of
arbitral proceedings.
3.23 It is not the case of respondent that Article 3 of
Conditions of Contract stipulating penalty terms, is
arbitrary or otherwise bad. The penalty amounts are
just pre-estimated damages, which have been agreed
between the parties. Further, the important point to
note is that in the present case, the services rendered
by the respondent was meant for the general public,
that is to say that the respondent was carrying out a
public utility services to maintain and preserve a
clean environment.
3.24 Further, a mere perusal of said deductions made by
the Petitioner (MCD) would amply clarify that the
same were imposed after due inspection wherein it
was found that the respondent has failed to
OMP (COMM.)/109/2024 Page 14 of 54
-15-
mechanically sweep the roads, cloud formation,
running the mechanical sweeper at higher speed
than the prescribed maximum sweeping speed,
choking of bell mouths and gully gratins etc.
3.25 In view of foregoing, it is clear that all the
deductions/ penalties have been made based on
contemporaneous documentary evidence and were
duly accepted by respondent before commencement
of the above-captioned arbitration. Further, no
evidence/ document whatsoever has been filed by
the respondent to suggest/ proof/ show that any
deductions was either factually incorrect or beyond
terms of the Agreement.
4. The impugned arbitral award has been challenged by the
petitioner mainly on the following grounds:-
4.1 The impugned arbitral award is against public
policy and is also against the law of the land.
4.2 The Ld. Arbitral Tribunal has grossly erred in partly
allowing the claims of the Respondent herein
without considering the utmost crucial, vital and
fundamental issues and argument raised by the
Petitioner despite having taken a note of the same
and thus same suffers from the vice of perversity
and is vitiated by ‘patently illegal’ in terms of
S. 34(2A) of the Act of 1996.
4.3 Further, it is stated that Ld. Arbitral Tribunal has
OMP (COMM.)/109/2024 Page 15 of 54
-16-failed to consider clear, categorical and unequivocal
terms of the agreement between the Parties and
evidence adduced, during the arbitration
proceedings.
4.4 The most fundamental issue raised by the petitioner
was to consider the nature of the Contract – as to
whether the work which done by the respondent can
even be termed as ‘Satisfactory’ or in accordance
with the Contract, especially in light of several
detailed show cause Notice(s) issued by the
petitioner to the respondent which time and again
set out in detail, the lapses and inadequacies in
performance of the respondent, giving them an
adequate warnings to “maintain satisfactory
sanitary” and seeking a “show cause that why
appropriate action should not be initiated against the
respondent as per relevant clauses of the agreement”
as per and in accordance with the Contract. A table
reflecting/ mentioning the details of various Show
Cause notices issued by petitioner to the respondent
from February 2017 onwards was recapitulated in
Para 1.8.4 & Para 2.11.5 of its Statement of
Defence, despite that, same were not considered and
rather blatantly ignored by the Ld. Arbitral Tribunal
while passing the Impugned Award.
4.5 It is further stated that another fundamental issue
raised by the petitioner was that the Claimant hasOMP (COMM.)/109/2024 Page 16 of 54
-17-filed misconstrued and miscalculated tables in order
to exaggerate its claim, which even otherwise
unfounded and not maintainable. Several
discrepancies, contradictions and miscalculations in
the Claims of the respondent made in table at page
340-345 & at Page 556 were brought to the notice
and attention of the Ld. Arbitral Tribunal by way of
its Statement of Defence, however, same were
ignored by Ld. Arbitral Tribunal while passing the
impugned award.
4.6 There has been complete non-adjudication of the
extremely vital and crucial issues, forming core of
the dispute between the parties, which in fact goes
to the very roots of the dispute in the present matter,
however, the Ld. Sole Arbitrator, as is apparent, has
failed to adjudicate or even give a finding to that
effect. In this regard, it is stated that it is an
established position of law through a catena of
Judgments passed by the Hon’ble Supreme Court
and different High Courts that have consistently
held that the complete ignorance of submissions of a
party would lead to non-enforceability of the
Arbitral Award, as is the case in the present matter.
4.7 It is further stated that Ld. Arbitral Tribunal has
failed to consider that the present respondent i.e.
M/s City Sweep Service LLP had no locus standi to
claim as sought for against the petitioner/MCD inOMP (COMM.)/109/2024 Page 17 of 54
-18-respect of Contract Agreement dated 03-06-2011,
to which, the respondent herein was not the party.
It is stated that Ld. Arbitral Tribunal has failed
to consider that the contract agreement
dated 03-06-2011 was signed between MCD and
M/s City Sweep Services Pvt. Ltd. which was a joint
venture firm of M/s Lion Services Limited,
M/s Metro Waste Handling Private Limited and
M/s Ram Engineering & Construction Co.,
however, the instant statement of claim has been
filed by M/s City Sweep Services LLP on the basis
of conversion of City Sweep Service Private
Limited to City Sweep Services LLP sometime in
2021. It is further stated that Ld. Arbitral Tribunal
has failed to consider that the conversion of joint
venture of M/s City Sweep Services Pvt. Ltd. to
M/s City Sweep Service LLP has been allegedly
done after the contract had expired. It is an admitted
fact that the stipulated contract period of the
agreement between the parties was seven years from
the commencement of date. The contract was
expired back on 2018, whereas, the contractor was
allegedly converted into an LLP only in 2021.
4.8 It is stated that scant and superficial reasoning
provided by the Ld. Sole Arbitrator is merely based
on conjectures and surmises. Ld. Arbitral Tribunal,
by adopting a conjectural, presumptive andOMP (COMM.)/109/2024 Page 18 of 54
-19-assumptive approach in the impugned award,
has erred in going beyond the four corners of the
agreement/ contract entered into between the
parties, which is impermissible under the law.
It is stated that parties herein are governed by the
agreement/ contract, and Ld. Arbitral Tribunal and
the arbitration proceedings are creatures of the
contract and thus, they cannot traverse beyond what
has been contemplated in the contract between the
parties. Ld. Arbitral Tribunal has construed/
interpreted the terms and conditions of the
agreement/ contract in a manner, which defeats the
very essence of the same i.e. the defined obligations
of each party. It is, thus, stated that impugned
arbitral award is patently illegal, perverse and
consequently, is liable to be set aside.
5. Notice of the petition was issued to the respondent. The
respondent put its appearance through counsel and has
filed written reply on record.
6. In its reply, the respondent has contested the objection
petition by taking various preliminary objections
mentioning, inter alia, this Court lacks territorial
jurisdiction to try and entertain the present objection
petition and present petition is barred by limitation.
7. By way of ‘Parawise Reply’, the respondent controverted
and denied the averments made in the plaint, while stating,
inter alia:-
OMP (COMM.)/109/2024 Page 19 of 54
-20-
7.1 The purported show-cause notices issued by the
petitioner are unilateral communications issued by
the petitioner and are further not in consonance with
the mechanical and manual log-sheets that recorded
the quantum and quality of works executed on each
day under the said Contract Agreement.
Further, there is no provision in the said Contract
Agreement for “unsatisfactory work”. In this regard,
it is stated that Clause 3 of the Conditions of
Contract is very specific in providing the instances
for which the petitioner can inflict recoveries from
the respondent. Clause 3 of the Conditions of
Contract does not provide for any recovery on
account of “unsatisfactory work”. The purported
instances of non-performance as contained in
petitioner’s show cause notices are in contradiction
to the log-sheets that have been executed by
Petitioner’s own SIs and ASIs and thus, petitioner’s
show cause notices are not sustainable.
7.2 There was no occasion for the petitioner to convey
deficiency in the bills after receipt of the same. The
deficiency, if any, had to be noted in the works
being executed and not in the bills. The bills were in
accordance with the joint notings as contained in the
jointly executed log-sheets. Further, the bills raised
by respondent themselves, mention that the
log-sheets, GPS reports and all other supportingOMP (COMM.)/109/2024 Page 20 of 54
-21-documents are attached with the bills. As far as GPS
report is concerned, the same was available with the
respondent from the server of Map my India. It is
stated that the Respondent was not under any
obligation to provide GPS reports to the Petitioner
on account of the petitioner already having access to
the detailed GPS. The petitioners issued letters with
malafide intent and in order to generate false
records. It bears mention that the petitioner has
admitted on record that the jointly signed log-sheets
and GPS reports were independently available to the
petitioner.
7.3 It is stated that work of Mechanical Sweeping of
Roads was duly executed on Ring Road (Vikas
Marg upto Ring Road) in the months of July, 2017
and August, 2017. A copy of the GPS reports that
duly reflects the execution of Mechanical Sweeping
in July 2017, August 2017 and September 2017
already form part of the arbitral record. Even the
jointly executed log-sheets reflect the execution of
works. As far as Indraprastha Marg is concerned
same is a road having RoW of more than 100 Feet
and no work was supposed to be executed on the
said road under the contract agreement which forms
subject matter of the present proceedings.
Accordingly, it is stated that the contention of the
petitioner as contained in its letters datedOMP (COMM.)/109/2024 Page 21 of 54
-22-11.10.2017 and 17.10.2017 is incorrect. Even
otherwise, the said letters were not received by the
Respondent at any point of time and the Petitioner
has failed to prove these purported letters in the
arbitral proceedings.
7.4 Similarly, while denying the allegation of petitioner
that mechanical sweeping machines were not
deployed on any of the roads on 2nd January, 2017
in Petitioner’s Central Zone, it is stated that the
mechanical sweeping of roads on 2nd January, 2017
was carried out by vehicle bearing registration
number DL 1GB 7452. Similar is the case for the
dates of 3rd January 2017, 6th January 2017, 7th
January 2017 (work was carried out by vehicle
bearing no. DL1GB7497), 8 January 2017, 10
January 2017, 11 January 2017, 12 January 2017
and 13º January 2017. On 19 May 2017, 20 May to
25 May 2017, 31 May 2017 and 1 June, 2017, the
work of Mechanical Sweeping was executed by
vehicles bearing numbers DLIGB7428,
DL1GB7686, DL1GB7686 and DL1GB7686
respectively. On 2 June 2017 and 3″ June 2017, the
work of mechanical sweeping was carried out by
vehicles bearing nos. DL1GB7686. GPS records of
all these dates, was duly placed on record of the
Arbitral proceedings. In reply to Petitioner’s
contention that work was not done on DelhiOMP (COMM.)/109/2024 Page 22 of 54
-23-Secretariat Road during the period of January, 2017
to June, 2017, it is stated that such contention of the
Petitioner is unfounded. In this regard, it is relevant
to state that the work of Mechanical cleaning of
roads was to be carried on at the stretch of Vikas
Marg upto Ring Road (a stretch of 2.4 Kms.). The
GPS record placed on record by Petitioner itself
reflected that the work of mechanical sweeping was
executed on the stretch of Vikas Marg upto Ring
Road. Thus, the Petitioner’s contention that work
was not purportedly executed on the roads as stated
in its letter dated 17.11.2017 is incorrect. Work on
each of the date from January, 2017 to June, 2017
have been carried out and the same is also being
reflected from the jointly signed log-sheets. It is
further stated that 13 March, 2017 was the festival
of Holi and hence work was not carried out on 13
March, 2017. The Petitioner was required to
reimburse the Claimant for 13ª March, 2017.
7.5 In this regard, it is stated that it was understood that
the bill for the days on which the festival of Holi
fell, was to be raised and the same is evident from
the fact that Najafgarh Zone in its Measurement
Book for March, 2014, has made an entry for work
done on 17.03.2014. This is on account of the fact
that the festival of Holi is a prominent festival in the
city of Delhi and the same was to be treated asOMP (COMM.)/109/2024 Page 23 of 54
-24-holiday and the Petitioner was not to deduct
respondent’s fees for that day. Without prejudice to
the foregoing, it is stated that the Petitioner’s letter
dated 17.11.2017 was not even received by the
Respondent at any point of time.
7.6 Similarly, while denying the contents of letter dated
13.07.2018, it is that the purported excess amount of
₹27,38,360/- is based on the unilateral entries made
by Petitioner in its Measurement Book.
Accordingly, the deduction of ₹27,28,360/-effected
by Petitioner is wrongful. Even otherwise, the
Petitioner’s letter dated 13.07.2018 was not received
by Respondent at any point of time and the
Petitioner failed to prove the same before the
Arbitral Tribunal.
7.7 The petitioner used to make payments for the
services on ‘monthly basis’, which is absolute and
unconditional. Further, the respondent was
instructed by petitioner that for the purpose of
monthly invoices, the daily log-sheets verified by
ASI/SI should be further authenticated by SS.
The monthly invoices were submitted by the daily
log sheets authenticated by SS. There was no
justification in this direction of the Petitioner/MCD.
Further, the SS delayed authenticating the daily log
sheets, thereby preventing the Respondent from
submitting the monthly invoices on 1st day ofOMP (COMM.)/109/2024 Page 24 of 54
-25-succeeding month. There is no gain to the
Respondent in delaying the submission of the
monthly invoices. Since delay in submission of
monthly invoices was caused due to the SS, the
Respondent has reckoned the liability of the
Petitioner to pay interest from 30 day from the date
of monthly invoices.
7.8 While denying that the respondent has no
locus-standi, it is stated that the said Contract
Agreement was executed between City Sweep
Services Pvt. Ltd. and the Petitioner. However,
with effect from 21.04.2021, City Sweep Services
Pvt. Ltd. has been converted into a Limited Liability
Partnership (i.e. City Sweep Services LLP).
Upon such conversion, in terms of Section 58(4) of
the LLP Act, 2008, all the assets, interests, rights,
liabilities and obligations of City Sweep Services
Pvt. Ltd. have devolved upon City Sweep Services
LLP. Further, in terms of Clauses 10 and 11 of
Third Schedule of the LLP Act, 2008, the City
Sweep Services LLP has substituted City Sweep
Services Pvt. Ltd. as a party to the Contract
Agreement. Accordingly, City Sweep Service LLP
(i.e. Respondent herein) was made the claimant in
the Arbitral proceedings. It is further stated that in
fact the petitioner has consented to substitution of
City Sweep Services Pvt. Ltd. with the RespondentOMP (COMM.)/109/2024 Page 25 of 54
-26-before Ld. Sole Arbitrator. Reference in this regard
is made to order dated 10.07.2021 passed in case
no.676 of 2016, which was also between the same
parties.
8. Similarly, by way of ‘Parawise Reply to Grounds’, it is
stated that the impugned arbitral award is detailed,
well-reasoned & just and therefore, the present
objection petition is not maintainable. Further, it is not
open for this Court under S. 34 of the Act of 1996 to
re-appreciate reasonableness of the reasons in the arbitral
award.
9. It may be noted that the petitioner/ MCD has not filed any
rejoinder in this matter.
10. I have already heard Ld. counsels for both the sides.
I have also duly considered the respectful submissions
made on their behalf in the light of material available on
record, the written submissions filed on behalf of both the
sides and the authorities cited at the Bar.
SUBMISSIONS OF PETITIONER/ OBJECTOR
11. Ld. Counsel of petitioner advanced arguments on the
similar lines as raised by way of grounds of challenge to
the impugned award, as already noted above.
Ld. Counsel drew attention of this Court to the relevant
Clauses of the agreement, documents filed along with the
objection petition, as also to the relevant portions of the
impugned arbitral award, in order to bring home his pointOMP (COMM.)/109/2024 Page 26 of 54
-27-that the impugned arbitral award is unsustainable under
the law.
12. He further submitted that the findings given by Ld. Sole
Arbitrator by allowing part claims of the respondent
herein, on the face of it, are perverse because the same
were awarded without considering the evidence and
submissions made on behalf of petitioner.
13. He argued that the respondent had agreed to the terms and
conditions of the agreement with open eyes and had signed
the same with its own volition after duly reading and
understanding its terms and conditions whereby it had
agreed to pay certain amount on account of penalty to the
petitioner/ MCD in the event of breach of said agreement.
14. He further argued that by virtue of nature of contract and
services involved therein, show cause notices and written
communications were sent to the respondent thereby
informing and warning it to perform functions properly in
order to avoid repetition of unsatisfactory work, however,
Arbitral Tribunal failed to consider the said documents
while passing the impugned arbitral award. He also argued
that Arbitral Tribunal failed to consider the fact that
mechanical sweeper used to operate during night hours,
whereas, manual cleaning was required to be done during
day time to deploy 1.5 labour per kilometer and also that
losses were to be incurred by petitioner/ MCD due to
non-completion of work awarded to the respondent in
satisfactory manner.
OMP (COMM.)/109/2024 Page 27 of 54
-28-
15. He further argued that Arbitral Tribunal failed to
appreciate that mechanism/ process of payment was agreed
between the parties in contract agreement, whereby the
respondent was to submit monthly bill and after
settlement/ verification thereof by both the parties i.e.
measurement book being prepared by petitioner/ MCD
after actual inspection/ verification and said entry of
measurement book being confirmed and signed by the
respondent towards acknowledgment of the verification of
said work and amount mentioned therein, due payment
used to be released by the petitioner/MCD. Based on these
submissions, it is contended that the impugned arbitral
award suffers from patent illegality.
16. Ld. Counsel of petitioner further argued that the
respondent itself had submitted unjustified and excessive
bills seeking exaggerated amounts in its monthly bills
from the petitioner / MCD, which fact has not been
considered by Arbitral Tribunal while passing the
impugned award.
17. It is further argued that Ld. Arbitral Tribunal failed to
appreciate that the respondent was time and again apprised
about the short comings which led to deduction and
penalty by various representatives of petitioner/ MCD and
the petitioner/ MCD had filed all the relevant documents in
support thereof during arbitration proceedings, but same
were not appreciated by Ld. Arbitral Tribunal in correct
perspective. Further, he argued that deduction and penaltyOMP (COMM.)/109/2024 Page 28 of 54
-29-imposed by MCD, was solely attributable to the
respondent on account of incomplete and unsatisfactory
works and moreover, the respondent had duly accepted the
payment made by petitioner/ MCD without any protest or
demur and hence, there was no occasion for allowing any
of the claims, albeit partially in favour of respondent by
Arbitral Tribunal.
18. It is further submitted that Arbitral Tribunal was not
justified in awarding interest in favour of respondent in the
impugned award.
19. In support of his aforesaid submissions,
Ld. Counsel of petitioner has relied upon the following
judgments:-
19.1 ‘PSA SICAL Terminals (P) Ltd. v. Board of
Trustees of V.O. Chidambranar Port Trust Tuticorin
and Others‘, reported as (2021) SCC OnLine SC
508;
19.2 ‘Associate Builders v. Delhi Development
Authority‘, reported as (2015) 3 SCC 49;
19.3 ‘Delhi Airport Metro Express Pvt. Ltd. v. Delhi
Metro Rail Corporation Ltd.‘, reported as 2021 SCC
OnLine SC 695;
19.4 ‘State of Chhattisgarh and Another v. Sal Udyog
Private Limited‘, reported as (2022) 2 SCC 27519.5 ‘Divyam Real Estate Pvt. Ltd. v. M2K
OMP (COMM.)/109/2024 Page 29 of 54
-30-Entertainment Pvt. Ltd.‘ reported as 2024 SCC
OnLine Del 3786;
19.6 ‘Delhi Metro Rail Corporation Limited v. Delhi
Airport Metro Express Pvt. Ltd.‘ reported as (2024)
6 SCC 357SUBMISSIONS OF RESPONDENT:
20. Ld. Counsel of respondent, on the other hand, supported
the impugned award by submitting that Ld. Arbitrator has
duly considered all the material, including the evidence led
by both the sides, and has duly dealt with all the grounds
as are raised in the present objection petition, while
passing the impugned arbitral award. He further submitted
that the findings of Ld. Arbitrator are well reasoned, just
and based on records, which are duly supported by facts,
law, the terms of the contract, available evidence and
circumstances of the case and thus, this Court should not
interfere therein, being not sitting in appeal over the same.
21. Further, he submitted that the present petition has been
filed challenging the findings of facts as well, despite well
settled position of law that the findings of facts recorded
by Arbitral Tribunal on the basis of appreciation of
evidence, cannot be challenged unless the same are
patently illegal, perverse or without any material. There is
nothing on record to even indicate that the findings
rendered by the Arbitral Tribunal are without any evidence
or perverse.
OMP (COMM.)/109/2024 Page 30 of 54
-31-
22. It is also submitted that the objections filed under Section
34 are not to be treated as Regular Appeal and
re-appreciation of evidence, as sought by the petitioner, is
not permissible. Thus, the present petition is not
maintainable, as the same has been filed on grounds
beyond the scope of Section 34 of the Act of 1996.
23. It is further submitted that the scope of objections under
Section 34 of Act of 1996 is very limited and confined
only to the grounds as specifically stated in Section 34.
However, in the present case, the petitioner has failed to
make out any ground to contend that the award is bad on
any of the grounds as stipulated under Section 34 of the
Arbitration & Conciliation Act.
24. Based on the documents and the evidence led by both the
sides before Ld. Sole Arbitrator, Ld. Counsel of
respondent argued that the impugned award has been
passed on due and proper application of the relevant facts
and the evidence available on record and hence, the
findings returned by Ld. Sole Arbitrator do not call for any
interference by this Court, the present being a petition
under S. 34 of the Act of 1996 which provides very limited
scope of interference and that too on the limited ground as
provided therein. He, therefore, urged that the objection
petition is liable to be dismissed with exemplary costs.
25. In support of his aforesaid submissions, Ld. Counsel of
respondent has relied upon following judgments:-
OMP (COMM.)/109/2024 Page 31 of 54
-32-
25.1 P. R. Shah Shares and Stock Brokers Pvt. Ltd. v. B.
H. H. Securities Pvt. Ltd. & Ors, reported as (2012)
1 SCC 594;
25.2 M/s Telecommunication Consultants India Ltd. v.
M/s Catvision Ltd. reported as 2017 SCC OnLine
Del 9235;
25.3 Union of India v. M/s Track Innovations (India) Pvt.
Ltd. (2014 SCC OnLine Del 3393;
25.4 ‘UHL Power Company Ltd. v. Statement of
Himachal Pradesh’, reported as (2022) 4 SCC 116;
25.5 Pan Development Pvt. Ltd. v. State of West Bengal
& Anr. reported as (2024) 10 SCC 715;
25.6 Oriental Structural Engineers Pvt. Ltd. v. State of
Kerala, reported as (2021) 6 SCC 150;
25.7 M/s Mahesh Construction v. Municipal Corporation
of Delhi, reported as 2023: DHC: 3728; and25.8 Secretary, Irrigation Department, Govt. of Orissa v.
G. C. Roy & Ors, reported as (1992) 1 SCC 508.
ANALYSIS & CONCLUSION:
26. Before proceeding to deal with rival submissions made
on behalf of both the sides touching upon merits
of the present case, it may be noted that the
respondent had taken categorical objections in its reply
to the objection petition that this Court lacksOMP (COMM.)/109/2024 Page 32 of 54
-33-territorial jurisdiction to entertain the present
objection petition, as also that the present
objection petition is barred by limitation. However, it
may be noted that no argument has been
advanced on behalf of either of the sides on both the said
objections.
27. Be that as it may, both the said objections, being legal ones
and going to the root of the matter, need to be decided by
the Court. Indisputably, the disputes between the parties
arose out of contract agreement dated 03-06-2011
executed between the parties. Copy of said contract
agreement is appearing from page nos. 97 to 136 of the
paper book filed by the petitioner/ MCD. Clause 12
thereof reads as under:-
“xxxx
12. DISPUTE RESOLUTION
12.1 Mediation
xxxxxxx
12.2 Arbitration
xxxx
The place of arbitration shall be New Delhi.
The language to be used in the arbitral proceedings
shall be English. The dispute, controversy or
claim shall be decided in accordance with the Indian
Law.
xxxx”
28. Thus, it is evident from above reproduced portion of
arbitration agreement existed between the parties that the
place of arbitration was agreed to be New Delhi (emphasis
provided).
OMP (COMM.)/109/2024 Page 33 of 54
-34-
29. Moreover, it is the own case of petitioner, as mentioned in
Para no. 20 of the objection petition, that as per agreement/
contract, the seat of arbitration is at New Delhi (emphasis
provided).
30. Apart from above, a bare perusal of the impugned
arbitral award, as available on record, would go to
show that the entire arbitration proceedings were
conducted before Ld. Sole Arbitrator at New Delhi
(emphasis provided).
31. The law on the subject is well settled now. Hon’ble Apex
Court in case of Indus Mobile Distribution Private Limited
v. Datawind Innovations Private Limited, (2017) 7 SCC
678, has summarized the law as under:-
19. A conspectus of all the aforesaid provisions shows that
the moment the seat is designated, it is akin to an exclusive
jurisdiction clause. On the facts of the present case, it is clear
that the seat of arbitration is Mumbai and Clause 19 further
makes it clear that jurisdiction exclusively vests in the
Mumbai courts. Under the Law of Arbitration, unlike the
Code of Civil Procedure, which applies to suits filed in
courts, a reference to ‘seat’ is a concept by which a neutral
venue can be chosen by the parties to an arbitration clause.
The neutral venue may not in the classical sense have
jurisdiction – that is, no part of the cause of action may have
arisen at the neutral venue and neither would any of the
provision of Section 16 to 21 of CPC be attracted. In
arbitration law however as has been held above, the moment
‘Seat’ is determined, the fact that the seat is at Mumbai would
vest Mumbai courts with exclusive jurisdiction for purpose
of regulating arbitral proceedings arising out of the
agreement between the parties.
32. Later on, Hon’ble Apex Court in the case titled as ‘ BGS
SGS Soma JV v. NHPC Limited‘ reported as (2020) 4
SCC 234, has categorically held as under:-
OMP (COMM.)/109/2024 Page 34 of 54
-35-
“xxxx
82. On a conspectus of the aforesaid judgments, it may
be concluded that whenever there is the designation of a
place of arbitration in an arbitration clause as being the
“venue” of the arbitration proceedings, the expression
“arbitration proceedings” would make it clear that the
“venue” is really the “seat” of the arbitral proceedings, as
the aforesaid expression does not include just one or
more individual or particular hearing, but the arbitration
proceedings as a whole, including the making of an
award at that place. This language has to be contrasted
with language such as “tribunals are to meet or have
witnesses, experts or the parties” where only hearings are
to take place in the “venue”, which may lead to the
conclusion, other things being equal, that the venue so
stated is not the “seat” of arbitral proceedings, but only a
convenient place of meeting. Further, the fact that the
arbitral proceedings “shall be held” at a particular venue
would also indicate that the parties intended to anchor
arbitral proceedings to a particular place, signifying
thereby, that place is the seat of the arbitral proceedings.
This, coupled with there being no other significant
contrary indicia that the stated venue is merely a “venue”
and not the “seat” of the arbitral proceedings, would
then conclusively show that such a clause designates a
“seat” of the arbitral proceedings…..
xxxx”
33. The aforesaid view has been reiterated by Hon’ble Apex
Court in its subsequent decision in the case of ‘ BBR
(India) Private Limited v. S. P. Singla Constructions
Private Limited‘ reported as (2022) 19 S.C.R. 977.
34. Recently, Hon’ble Delhi High Court in the case of ‘Delhi
Tourism and Transportation Development Corporation v.
M/s Satinder Mahajan’ bearing OMP (COMM.)/337/2021,
decided on 01.05.2024, has held as under:-
“xxxx
16. It would be appropriate at this stage, to deal with the
two judgments of the Division Bench of this Court, relied
upon by Mr. Tripathy, which have considered the
question of jurisdiction for the purposes of Section 34 ofOMP (COMM.)/109/2024 Page 35 of 54
-36-the Arbitration Act, in the context of arbitrations under
the MSME Act. In Indian Oil Corporation Supra (note 3),
the arbitral proceedings were conducted by the
Maharashtra Facilitation Council at Thane. The Division
Bench nevertheless held that this Court had jurisdiction
to entertain the petition under Section 34 the Arbitration
Act, in view of an exclusive jurisdiction clause contained
in the agreement between the parties therein, which was
read as providing for exclusive jurisdiction of the Courts
at New Delhi. The reasoning of the Division Bench is
contained in the following paragraphs:
“20. In the present case, both the VENUE as well
as the SEAT (by way of the jurisdiction clause)
has been agreed to be at New Delhi. We,
therefore, have no hesitation to say that the Courts
at Delhi would have the jurisdiction to entertain
the petition challenging the award passed by the
MSME Council. Since the parties agreed to
confer exclusive jurisdiction to Courts at New
Delhi, notwithstanding the fact that the purchase
order in question dated 10th March 2016, was
issued by the Petitioner from its Vadodra Office
to the Respondent at Navi Mumbai, and even if
no cause of action has arisen in Delhi, the Courts
of Delhi would have jurisdiction to entertain the
petition under Section 34 of the Arbitration Act.
This is pertinently because in Indus Mobile
(supra) as noted in para 19 of the judgement, the
Court has held that Section 16 to 21 of CPC
would not be attracted. Thus notwithstanding the
fact that cause of action may not have arisen in
New Delhi, since the Seat has been agreed to be
in Delhi, the courts here would have the
jurisdiction to entertain the petition under section
34 of the Arbitration Act.
xxxx”
35. Thus, it is trite law that in the absence of any seat of
arbitration being separately agreed between the parties,
the place of arbitration shall be akin to the seat of
arbitration.
36. In the aforesaid backdrop of the facts and circumstances of
the present case, the question arising for consideration
OMP (COMM.)/109/2024 Page 36 of 54
-37-
before this Court, is as to whether this Court would have
territorial jurisdiction to entertain and decide the present
objection petition. The facts of the present case are
squarely covered by above referred decisions of Hon’ble
Apex Court and Hon’ble Delhi High Court and thus, this
Court is of the considered view that the present petition is
not maintainable before this Court for want of territorial
jurisdiction, the parties having agreed the seat of
arbitration to be “New Delhi”. It is so held accordingly.
37. This brings me down to next objection raised by
respondent as regards the present objection petition being
barred by limitation. As already noted above, the
impugned award is dated 14-09-2024. It is a matter of
record that the present objection petition has been e-filed
on 21-12-2024. Needless to say that the period of
limitation for filing objection petition under S. 34 of Act of
1996 is 3 months from the date of receipt of signed copy
of arbitral award, in terms of sub-section (3) of S. 34 of the
Act of 1996. It is nowhere the case of petitioner/ MCD that
it had received signed copy of impugned arbitral award on
any other day subsequent to 14-09-2024. In fact, MCD/
petitioner has nowhere disclosed the date of receipt of
signed copy of impugned award by them. Hence, it is
taken that signed copy of the impugned award would have
been received by MCD/ petitioner on 14-09-2024 itself.
Thus, the prescribed period of 3 months, while computing
the period of limitation from 14-09-2024, would have
OMP (COMM.)/109/2024 Page 37 of 54
-38-
expired on or about 13-12-2024. It is an admitted position
on record that the petitioner/ MCD has not filed any
application in terms of proviso attached to sub-section (3)
to S. 34 of Act of 1996, seeking condonation of delay in
filing the present objection petition. In the absence of any
prayer seeking condonation of delay in filing the present
objection petition by MCD/ petitioner, this Court is not
inclined to condone such delay in filing the same.
Hence, it is held that the petition deserves rejection, being
barred by limitation.
38. Even, if it be presumed for the sake of convenience that
this Court has got territorial jurisdiction to entertain and
try the present objection petition, as also that delay in
filing the objection petition is liable to be condoned, still,
this Court is of the considered view, on the basis of
material available on record and the findings rendered by
Ld. Sole Arbitrator, that the present objection petition is
liable to be rejected.
39. On a panoramic appreciation of the judicial precedents on
the point in issue, as manifested by various decisions
ranging from “Renu Sagar Power Company Ltd. v.
General Electric Company” reported as 1994 Supp. (1)
SCC 644 to “Associated Builders v. DDA” reported as
(2015) 3 SCC 49, Hon’ble Delhi High Court in the case of
“NHAI v. Hindustan Construction Company Ltd“
MANU/DE/2699/2017, has delineated the following
propositions:-
OMP (COMM.)/109/2024 Page 38 of 54
-39-
(i) The four reasons motivating the legislation of the Act, in
1996, were:
(a) to provide for a fair and efficient arbitral procedure,
(b) to provide for the passing of reasoned awards,
(c) to ensure that the arbitrator does not transgress his
jurisdiction, and
(d) to minimize supervision, by courts, in the arbitral
process.
(ii) The merits of the award are required to be examined only
in certain specified circumstances, for examining whether
the award is in conflict with the public policy of India.
(iii) An award would be regarded as conflicting with the public
policy of India if
(a) it is contrary to the fundamental policy of Indian law,
or
(b) it is contrary to the interests of India,
(c) it is contrary to justice or morality,
(d) it is patently illegal, or
(e) it is so perverse, irrational, unfair or unreasonable
that it shocks the conscience of the court.
(iv) An award would be liable to be regarded as contrary to the
fundamental policy of Indian law, for example, if
(a) it disregards orders passed by superior courts, or the
binding effect thereof, or
(b) it is patently violative of statutory provisions, or
(c) it is not in public interest, or
(d) the arbitrator has not adopted a “judicial approach”,
i.e. has not acted a fair, reasonable and objective
approach, or has acted arbitrarily, capriciously or
whimsically, or
(e) the arbitrator has failed to draw an inference which,
on the face of the facts, ought to have been drawn, or
(f) the arbitrator has drawn an inference, from the facts,
which, on the face of it, is unreasonable, or
(g) the principles of natural justice have been violated.
(v) The “patent illegality” had to go to the root of the matter.
Trivial illegalities were inconsequential.
(vi) Additionally, an award could be set aside if
(a) either party was under some incapacity, or
(b) the arbitration agreement is invalid under the law, Or
(c) the applicant was not given proper notice of
appointment of the arbitrator, or of the arbitral
proceedings, or was otherwise unable to present his
case, or
(d) the award deals with a dispute not submitted to
arbitration, or decides issues outside the scope of the
dispute submitted to arbitration, or
(e) the composition of the Arbitral Tribunal was not in
accordance with the agreement of the parties, or inOMP (COMM.)/109/2024 Page 39 of 54
-40-accordance with Part I of the Act, or
(f) the arbitral procedure was not in accordance with the
agreement of the parties, or in accordance with Part I
of the Act, or
(g) the award contravenes the Act, or
(h) the award is contrary to the contract between the
parties.
(vii) “Perversity”, as a ground for setting aside an arbitral
award, has to be examined on the touchstone of the
Wednesbury principle of reasonableness.
(A reasoning or decision is Wednesbury unreasonable (or
irrational) if it is so unreasonable that no reasonable
person acting reasonably could have made it (Associated
Provincial Picture Houses Ltd v Wednesbury Corporation
(1948) 1 KB 223).
It would include a case in which
(a) the findings, in the award, are based on no evidence,
or
(b) The Arbitral Tribunal takes into something irrelevant
to the decision arrived at, or
(c) the Arbitral Tribunal ignores vital evidence in
arriving at its decision.
(viii) At the same time,
(a) decision which is founded on some evidence, which
could be relied upon, howsoever compendious,
cannot be treated as “perverse”,
(b) if the view adopted by the arbitrator is a plausible
view, it has to pass muster,
(c) neither quantity, nor quality, of evidence is open to
re- assessment in judicial review over the award.
(ix) “Morality” would imply enforceability, of the agreement,
given the prevailing mores of the day. “Immorality”,
however, can constitute a ground for interfering with an
arbitral award only if it shocks the judicial conscience.
(x) For examining the above aspects, the pleadings of the
parties and materials brought on record would be relevant.
(xi) The court cannot sit in appeal over an arbitration award.
Errors of fact cannot be corrected under Section 34. The
arbitrator is the last word on facts.”
40. After recent amendment in the year 2016 to the Act of
1996, Hon’ble Supreme Court has taken into account the
impact of the amendment and has laid down as to what is
the scope of interference by the Court in the arbitral award,
in the case titled as Ssangyong Engineering &
OMP (COMM.)/109/2024 Page 40 of 54
-41-
Construction Co. Ltd. v. National Highway Authority of
India (NHAI) (2019) 15 SCC 131, to quote:-
23. What is clear, therefore, is that the expression
public policy of India, whether contained in Section
34 or in Section 48, would now mean the
fundamental policy of Indian law as explained in
paragraphs 18 and 27 of Associate Builders (supra),
i.e., the fundamental policy of Indian law would be
relegated to the Renusagar understanding of this
expression. This would necessarily mean that the
Western Geco (supra) expansion has been done away
with. In short, Western Geco (supra), as explained in
paragraphs 28 and 29 of Associate Builders (supra),
would no longer obtain, as under the guise of
interfering with an award on the ground that the
arbitrator has not adopted a judicial approach, the
Courts intervention would be on the merits of the
award, which cannot be permitted post amendment.
However, insofar as principles of natural justice are
concerned, as contained in Sections 18 and 34(2)(a)
(iii) of the 1996 Act, these continue to be grounds of
challenge of an award, as is contained in paragraph
30 of Associate Builders (supra).
24. It is important to notice that the ground for
interference insofar as it concerns interest of India
has since been deleted, and therefore, no longer
obtains. Equally, the ground for interference on the
basis that the award is in conflict with justice or
morality is now to be understood as a conflict with
the most basic notions of morality or justice. This
again would be in line with paragraphs 36 to 39 of
Associate Builders (supra), as it is only such arbitral
awards that shock the conscience of the court that can
be set aside on this ground.
25. Thus, it is clear that public policy of India is now
constricted to mean firstly, that a domestic award is
contrary to the fundamental policy of Indian law, as
understood in paragraphs 18 and 27 of Associate
Builders (supra), or secondly, that such award is
against basic notions of justice or morality as
understood in paragraphs 36 to 39 of Associate
Builders (supra). Explanation 2 to Section 34(2)(b)(ii)
and Explanation 2 to Section 48(2)(b)(ii) was added
by the Amendment Act only so that Western Geco
(supra), as understood in Associate Builders (supra),
and paragraphs 28 and 29 in particular, is now done
OMP (COMM.)/109/2024 Page 41 of 54
-42-
away with.
26. Insofar as domestic awards made in
India are concerned, an additional ground is
now available under sub-section (2A), added by
the Amendment Act, 2015, to Section 34.
Here, there must be patent illegality appearing on the
face of the award, which refers to such illegality as
goes to the root of the matter but which does not
amount to mere erroneous application of the law.
In short, what is not subsumed within the
fundamental policy of Indian law, namely, the
contravention of a statute not linked to public policy
or public interest, cannot be brought in by the back
door when it comes to setting aside an award on the
ground of patent illegality.
27. Secondly, it is also made clear that
re-appreciation of evidence, which is what an
appellate court is permitted to do, cannot be permitted
under the ground of patent illegality appearing on the
face of the award.
30. What is important to note is that a decision which
is perverse, as understood in paragraphs 31 and 32 of
Associate Builders (supra), while no longer being a
ground for challenge under public policy of India,
would certainly amount to a patent illegality
appearing on the face of the award. Thus, a finding
based on no evidence at all or an award, which
ignores vital evidence in arriving at its decision
would be perverse and liable to be set aside on the
ground of patent illegality.
emphasis supplied
41. Further, after amendment of the Act of 1996, the patent
illegality appearing on the face of arbitral award has
become one of the grounds for setting aside the arbitral
award as held in the judgment of Hon’ble Supreme Court
in the case titled as “National Highway Authority of India
v. P. Nagaraju alias Cheluvaiah & Anr.” 2022 SCC
OnLine SC 864. It is worthwhile to quote observations of
Hon’ble Supreme Court contained in Para no.19, which
has succinctly observed the law on the subject in following
OMP (COMM.)/109/2024 Page 42 of 54
-43-
terms:
19. In that background, the award passed by the
Arbitrator is to be examined keeping in view the
limited scope available under Section 34 of Act, 1996
to interfere with an award. The learned Additional
Solicitor General while attacking the award has
sought to contend that the award suffers from patent
illegality which is a ground to interfere with an award
as provided under Section 34(2A) of Act, 1996, yet
the District Judge and High Court has failed to
interfere. To contend with regard to the facets, which
could be considered as patent illegality, reliance is
placed on the decision in the State of Chhattisgarh vs.
Sale Udyog Private Ltd. (2022) 2 SCC 275 with
specific reference to paragraphs 14,15, 16 and 24
therein. The same is as hereunder:
“14. The law on interference in matters of
awards under the 1996 Act has been
circumscribed with the object of minimizing
interference by courts in arbitration matters.
One of the grounds on which an award may
be set aside is “patent illegality”. What would
constitute “patent illegality” has been
elaborated in Associate Builders v. DDA
[Associate Builders v. DDA, (2015) 3 SCC
49: (2015) 2 SCC (Civ) 204], where “patent
illegality” that broadly falls under the head of
“Public Policy”, has been divided into three
sub-heads in the following words:
“42. In the 1996 Act, this principle is
substituted by the “patent illegality” principle
which, in turn, contains three sub-heads:
42.1 (a) A contravention of the substantive
law of India would result in the death knell of
an arbitral award. This must be understood in
the sense that such illegality must go to the
root of the matter and cannot be of a trivial
nature. This again is really a contravention of
Section 28(1)(a) of the Act, which reads as
under:
28. Rules applicable to substance of dispute –
(1) Where the place of arbitration is situated
in India,-
(a) In an arbitration other than an international
OMP (COMM.)/109/2024 Page 43 of 54
-44-
commercial arbitration, the Arbitral Tribunal
shall decide the dispute submitted to arbitration
in accordance with the substantive law for the
time being in force in India;’
42.2. (b) A contravention of the Arbitration Act
itself would be regarded as a patent illegality –
for example if an arbitrator gives no reasons for
an award in contravention of Section 31(3) of the
Act, such award will be liable to be set aside.
42.3 (c) Equally, the third sub-head of patent
illegality is really a contravention of Section
28(3) of the Arbitration Act, which reads as
under:
’28. Rules applicable to substance of dispute- (1)-
(2) * * *(3) In all cases, the Arbitral Tribunal shall decide
in accordance with the terms of the contract and
shall take into account the usages of the trade
applicable to the transaction.’This last contravention must be understood with a
caveat. An Arbitral Tribunal must decide in
accordance with the terms of the contract, but if
an arbitrator construes a term of the contract in a
reasonable manner, it will not mean that the
award can be set-aside on this ground.
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.”
15. In Ssangyong Engg. & Construction Co. Ltd. v.
NHAI, (2019) 15 SCC 131: (2020) 2 SCC (Civ.)
213], speaking for the Bench, R.F. Nariman, J. has
spelt out the contours of the limited scope of judicial
interference in reviewing the arbitral awards under
the 1996 Act and observed thus :
xxx
37. Insofar as domestic awards made in India are
concerned, an additional ground is now available
under sub-section (2-A), added by theOMP (COMM.)/109/2024 Page 44 of 54
-45-Amendment Act, 2015, to Section 34. Here, there
must be patent illegality appearing on the face of
the award, which refers to such illegality as goes
to the root of the matter but which does not
amount to mere erroneous application of the law.
In short, what is not subsumed within “the
fundamental policy of Indian law”, namely, the
contravention of a statute not linked to public
policy or public interest, cannot be brought in by
the backdoor when it comes to setting aside an
award on the ground of patent illegality.
38. Secondly, it is also made clear that
re-appreciation of evidence, which is what an
appellate court is permitted to do, cannot be
permitted under the ground of patent illegality
appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC 49:
(2015) 2 SCC (Civ.) 204], namely, a mere
contravention of the substantive law of India, by
itself, is no longer a ground available to set aside
an arbitral award. Para 42.2 of Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC 49:
(2015) 2 SCC (Civ.) 204], however, would
remain, for if an arbitrator gives no reasons for an
award and contravenes Section 31 (3) of the 1996
Act, that would certainly amount to a patent
illegality on the face of the award.
40. The change made in Section 28 (3) by the
Amendment Act really follows what is stated in
paras 42.3 to 45 in Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49: (2015) 2
SCC (Civ.) 204], namely, that the construction of
the terms of a contract is primarily for an
arbitrator to decide, unless the arbitrator
construes the contract in a manner that no
fair-minded or reasonable person would; in short,
that the arbitrator’s view is not even a possible
view to take. Also, if the arbitrator wanders
outside the contract and deals with matters not
allotted to him, he commits an error of
jurisdiction. This ground of challenge will now
fall within the new ground added under Section
34 (2-A).
OMP (COMM.)/109/2024 Page 45 of 54
-46-
41. What is important to note is that a decision
which is perverse, as understood in paras 31 and
32 of Associate Builders {Associate Builders v.
DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ.)
204], while no longer being a ground for
challenge under “public policy of India”, would
certainly amount to a patent illegality appearing
on the face of the award. Thus, a finding based on
no evidence at all or an award which ignores vital
evidence in arriving at its decision would be
perverse and liable to be set aside on the ground
of patent illegality. Additionally, a finding based
on documents taken behind the back of the
parties by the arbitrator would also qualify as a
decision based on no evidence inasmuch as such
decision is not based on evidence led by the
parties, and therefore, would also have to be
characterised as perverse.”
16. In Delhi airport Metro Express (P) Ltd. [Delhi
Airport Metro Express (P) Ltd. v. DMRC, (2022) 1
SCC 131] referring to the facets of patent illegality,
this Court has held as under:
29. Patent Illegality should be illegality, which goes
to the root of the matter. In other words, every error
of law committed by the Arbitral Tribunal would not
fall within the expression “patent illegality”.
Likewise, erroneous application of law cannot be
categorised as patent illegality. In addition,
contravention of law not linked to public policy or
public interest is beyond the scope of the expression
“patent illegality”. What is prohibited is for courts to
re-appreciate evidence to conclude that the award
suffers from patent illegality appearing on the face
of the award, as Courts do not sit in appeal against
the arbitral award. The permissible grounds for
interference with a domestic award under Section 34
(2-A) on the ground of patent illegality is when the
arbitrator takes a view which is not even a possible
one, or interprets a clause in the contract in such a
manner which no fair- minded or reasonable person
would, or if the arbitrator commits an error of
jurisdiction by wandering outside the contract and
dealing with matters not allotted to them. An arbitral
award stating no reasons for its findings would make
itself susceptible to challenge on this account. The
conclusions of the arbitrator, which are based on no
evidence or have been arrived at by ignoring vital
OMP (COMM.)/109/2024 Page 46 of 54
-47-
evidence are perverse and can be set- aside on the
ground of patent illegality. Also, consideration of
documents, which are not supplied to the other party
is a facet of perversity falling within the expression
“patent illegality”.
24. The patent illegality committed by the arbitrator
was to apply the 2016 Guidelines, which came into
force after the issuance of the Section 3A
notification, contrary to the mandate of Section
3G(7)(a) of the NH Act read with the proviso to
Section 26(1) and Section 11 of the LA Act, 2013.
In the seventh SLP bearing SLP(C) No.2503/2022,
the 2018 Guidelines have been applied showing
complete arbitrariness and whimsicality on the part
of the arbitrators, resulting in wide inconsistency
and uncertainty in the process relating to a common
acquisition.”
42. The law, which has been quoted above, shall be the
guiding light for deciding the present objections. It is no
more permissible for the Court to interfere with the award
unless there is patent illegality in the arbitral award and
patent illegality must be such which goes to the root of the
matter, but which does not amount to mere erroneous
application of the law. Further, it is also well settled that
re-appreciation of evidence, which is what an Appellate
Court is permitted to do, cannot be permitted under the
ground of patent illegality appearing on the face of
the award.
43. It is no more res-integra that even erroneous interpretation
of contractual clauses cannot be a ground for setting aside
of an arbitral award. In this regard, reference with
advantage can be made to the cited judgment of Hon’ble
Apex Court in the case of UHL Power Company Ltd.
(supra).
OMP (COMM.)/109/2024 Page 47 of 54
-48-
44. Now adverting back to the facts of the present case.
45. Although, it is vehemently argued on behalf of petitioner /
MCD that Ld. Arbitral Tribunal has ignored the material
as was placed on record from their side and there has been
non-application of mind on the part of Ld. Arbitral
Tribunal, however, very fact that Ld. Arbitral Tribunal has
partially rejected claims raised by the claimant/ respondent
herein while partially allowing certain claims, would go to
show that factual matrix was discussed and there has been
due application of mind to the facts of the present case on
the part of Ld. Arbitral Tribunal. In fact, the findings of
Ld. Arbitral Tribunal on all the relevant claims which have
been partially allowed in favour of respondent herein,
would show that there has been thread-bare analysis of all
the facts of the case, as also the evidence oral as well as
documentary led by both the sides by Ld. Arbitral Tribunal
and there is due appreciation of such evidence in the light
of relevant terms and conditions appearing in the contract
in question by Ld. Arbitral Tribunal. Thus, this Court is
entirely in agreement with the submissions made on behalf
of respondent that there is no scope at all for
re-appreciation of evidence by this Court, being not
permissible under the law.
46. Further, having gone through the findings rendered by
Ld. Arbitral Tribunal in the light of the pleadings of the
parties and the evidence led by them during arbitration
proceedings, this Court is of the considered view that all
OMP (COMM.)/109/2024 Page 48 of 54
-49-
the contentions raised by petitioner/ objector, by way of
grounds of challenge raised in the present objection
petition, have already been duly considered by Ld. Sole
Arbitrator while passing the impugned award. Ld. Sole
Arbitrator is also found to have discussed the relevant
terms and conditions of the Agreement and has also taken
into consideration the evidence led by both the sides. The
petitioner/ objector has failed to show that the findings
given by Ld. Sole Arbitrator suffers from any patent
illegality by showing that such findings are either not
based on any evidence or same are perverse in any manner
whatsoever. Rather, the view taken by Ld. Sole Arbitrator
is found to be quite justified and in accordance with the
settled cannons of law and the principles laid down by
Hon’ble Apex Courts and by various Hon’ble High Courts
in plethora of judgments as refereed to hereinabove.
47. Hon’ble Supreme Court in the case of Associate Builders
(supra), has clearly delineated jurisdiction of the Court u/s
34 of the Act of 1996 in the following words: –
“33. It must clearly be understood that when a court is
applying the “public policy” test to an arbitration award, it
does not act as a court of appeal and consequently errors of
fact cannot be corrected. 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 when he delivers his arbitral award. 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 [Very often an arbitrator is a
lay person not necessarily trained in law. Lord Mansfield, a
famous English Judge, once advised a high military officer in
Jamaica who needed to act as a Judge as follows:
OMP (COMM.)/109/2024 Page 49 of 54
-50-
“General, you have a sound head, and a good heart: take
courage and you will do very well, in your occupation, in a
court of equity. My advice is, to make your decrees as your
head and your heart dictate, to hear both sides patiently, to
decide with firmness in the best manner you can; but be
careful not to assign your reasons, since your determination
may be substantially right, although your reasons may be
very bad, or essentially wrong/”
It is very important to bear this in mind when awards of lay
arbitrators are challenged.]. Once it is found that the
arbitrators approach is not arbitrary or capricious, then he is
the last word on facts. In P.R. Shah, Shares & Stock Brokers
(P) Ltd. v. B.H.H. Securities (P) Ltd. [(2012) 1 SCC 594:
(2012) 1 SCC (Civ) 342], this Court held: (SCC pp. 601-02,
para 21)
“21. A court does not sit in appeal over the award of
an Arbitral Tribunal by reassessing or reappreciating
the evidence. An award can be challenged only under
the grounds mentioned in Section 34(2) of the Act.
The Arbitral Tribunal has examined the facts and
held that both the second respondent and the
appellant are liable. The case as put forward by the
first respondent has been accepted. Even the minority
view was that the second respondent was liable as
claimed by the first respondent, but the appellant was
not liable only on the ground that the arbitrators
appointed by the Stock Exchange under Bye-law 248,
in a claim against a non-member, had no jurisdiction
to decide a claim against another member. The
finding of the majority is that the appellant did the
transaction in the name of the second respondent and
is therefore, liable along with the second respondent.
Therefore, in the absence of any ground under
Section 34(2) of the Act, it is not possible to
re-examine the facts to find out whether a different
decision can be arrived at.”
34. It is with this very important caveat that the two
fundamental principles, which form part of the fundamental
policy of Indian law (that the arbitrator must have a judicial
approach and that he must not act perversely) are to be
understood.
Xxxxx
42. In the 1996 Act, this principle is substituted by the
“patent illegality” principle, which, in turn, contains three
subheads:
xxx
OMP (COMM.)/109/2024 Page 50 of 54
-51-42.3. (c) Equally, the third subhead of patent illegality is
really a contravention of Section 28(3) of the Arbitration
Act, which reads as under:
“28. Rules applicable to substance of dispute. (1)-(2) (3) In
all cases, the Arbitral Tribunal shall decide in accordance
with the terms of the contract and shall take into account the
usages of the trade applicable to the transaction.”
This last contravention must be understood with a caveat. An
Arbitral Tribunal must decide in accordance with the terms
of the contract, but if an arbitrator construes a term of the
contract in a reasonable manner, it will not mean that the
award can be set aside on this ground. 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.
43. In Mc Dermott International Inc. v. Burn Standard Co.
Ltd., (2006) 11 SCC 181 this Court held as under: (SCC pp.
225- 26, paras 112-13)
“112. It is trite that the terms of the contract can be
expressed or implied. The conduct of the parties
would also be a relevant factor in the matter of
construction of a contract. The construction of the
contract agreement is within the jurisdiction of the
arbitrators having regard to the wide nature, scope
and ambit of the arbitration agreement and they
cannot be said to have misdirected themselves in
passing the award by taking into consideration the
conduct of the parties. It is also trite that
correspondences exchanged by the parties are
required to be taken into consideration for the
purpose of construction of a contract. Interpretation
of a contract is a matter for the arbitrator to
determine, even if it gives rise to determination of a
question of law. [See Pure Helium India (P) Ltd. v.
Oil and Natural Gas Commission, (2003) 8 SCC
593:2003 Supp. (4) SCR 561 and D.D.Sharma v.
Union of India.](2004) 5 SCC 325.
113. Once, thus, it is held that the arbitrator had the
jurisdiction, no further question shall be raised and
the court will not exercise its jurisdiction unless it is
found that there exists any bar on the fact of the
award.”
44. In MSK Projects (1) (JV) Ltd. v. State of Rajasthan,
(2011)10 SCC 573: 2012 3 SCC (Civ) 818, the Court held:
(SCC pp. 581-82, para 17)
OMP (COMM.)/109/2024 Page 51 of 54
-52-“17. If the arbitrator commits an error in the construction
of the contract, that is an error within his jurisdiction. But if
he wanders outside the contract and deals with matters not
allotted to him, he commits a jurisdictional error. Extrinsic
evidence is admissible in such cases because the dispute is
not something, which arises under or in relation to the
contract or dependent on the construction of the contract or
to be determined within the award. The ambiguity of the
award can, in such cases, be resolved by admitting extrinsic
evidence. The rationale of this rule is that the nature of the
dispute is something, which has to be determined outside and
independent of what appears in the award. Such a
jurisdictional error needs to be proved by evidence extrinsic
to the award. (See Gobardhan Das v. Lachhmi Ram, AIR
1954 SC 689, Thawardas Pherumal v. Union of India, AIR
1955 SC 468, Union of India v. Kishorilal Gupta & Bros.,
AIR 1959 SC 1362, Alopi Parshad & Sons Ltd. v. Union of
India, AIR 1960 SC 588, Jivarajbhai Ujamshi Sheth v.
Chintamanrao Balaji, AIR 1965 SC 214 and Renusagar
Power Co. Ltd. v. General Electric Co. (1984) 4 SCC 679:
AIR 1985 SC 1156)”
45. In Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram
Saran, (2012) 5 SCC 306, the Court held: (SCC pp. 320-21,
paras 43-45)
“43. In any case, assuming that Clause 9.3 was
capable of two interpretations, the view taken by the
arbitrator was clearly a possible if not a plausible one.
It is not possible to say that the arbitrator had
travelled outside his jurisdiction, or that the view
taken by him was against the terms of contract. That
being the position, the High Court had no reason to
interfere with the award and substitute its view in
place of the interpretation accepted by the arbitrator.
44. The legal position in this behalf has been
summarized in para 18 of the judgment of this Court
in SAIL v. Gupta Brother Steel Tubes Ltd. [(2009) 10
SCC 63: (2009) 4 SCC (Civ.) 16] and which has been
referred to above. Similar view has been taken later
in Sumitomo Heavy Industries Ltd. v. ONGC Ltd.
[(2010) 11 SCC 296: (2010) 4 SCC (Civ.) 459] to
which one of us (Gokhale, J.) was a party. The
observations in para 43 thereof are instructive in this
behalf.
45. This para 43 reads as follows: (Sumitomo case
[(2010) 11 SCC 296: (2010) 4 SCC (Civ.) 459], SCC
p. 313)
43…. The umpire has considered the fact situation
OMP (COMM.)/109/2024 Page 52 of 54
-53-
and placed a construction on the clauses of the
agreement, which according to him was the correct
one. One may at the highest say that one would have
preferred another construction of Clause 17.3 but that
cannot make the award in any way perverse. Nor can
one substitute one’s own view in such a situation, in
place of the one taken by the umpire, which would
amount to sitting in appeal.As held by this Court in
Kwality Mfg. Corpn. v. Central Warehousing Corpn.
[(2009) 5 SCC 142: (2009) 2 SCC (Civ.) 406] the
Court while considering challenge to arbitral award
does not sit in appeal over the findings and decision
of the arbitrator, which is what the High Court has
practically done in this matter. The umpire is
legitimately entitled to take the view, which he holds
to be the correct one after considering the material
before him and after interpreting the provisions of the
agreement. If he does so, the decision of the umpire
has to be accepted as final and binding.”
48. There is no substance in the argument advanced on behalf
of petitioner/ MCD that award of interest by Ld. Arbitral
Tribunal in favour of respondent, is against the principle of
law and thus, the impugned arbitral award suffers from
patent illegality on such ground. It is well settled law that
even in the absence of any provision in the contract
regarding payment of interest, the Arbitral Tribunal is well
within its right to award interest by virtue of S. 31(7) of
the Act of 1996. While saying so, this Court is also
fortified by the decisions of Hon’ble Apex Court in the
cited cases of Pam Developments Pvt. Ltd. (supra),
Oriental Structural Engineers Pvt. Ltd. (supra) and M/s
Mahesh Construction (supra).
49. It is quite crystal clear that all the grounds of challenge
raised in the present objection petition, do not fall within
the ambit of the limited grounds of challenge as provided
OMP (COMM.)/109/2024 Page 53 of 54
-54-
in S. 34 (2) of the Act of 1996. Rather, all these grounds
would require this Court to re-appreciate the evidence led
before Ld. Sole Arbitrator and to return its findings on the
facts, which, in the opinion of this Court and in view of the
settled legal positions laid down in above referred
decisions, is impermissible under the law. Hence, this
Court is of the considered view that the impugned arbitral
award dated 14-09-2024 does not suffer from any illegality
or perversity and does not call for any interference by this
Court.
50. For the foregoing reasons and the discussion made
hereinabove, the objection petition is devoid of any merit.
Consequently, the objection petition is hereby dismissed.
No order as to cost.
51. Arbitral Record, if any, be sent back along with copy of
this order, as per the rules.
52. File be consigned to record room, after due compliance.
Digitally signed
by VIDYA
Announced in the open Court VIDYA PRAKASH
Date:
On 08th Day of August, 2025 PRAKASH 2025.08.08
17:32:11
+0530
(VIDYA PRAKASH)
DISTRICT JUDGE (COMMERCIAL COURT)-01
CENTRAL DISTRICT/THC/DELHI.
OMP (COMM.)/109/2024 Page 54 of 54
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