2020 (8) TMI 871 - HC - Indian Laws

Grant of partial grant of award by the learned Arbitrator - Section 34 of the Arbitration and Conciliation Act, 1996 - HELD THAT - The logic of the learned Arbitrator, as reflected from the award impugned herein, gives clear justification for the interest as awarded. It was entirely within the bounds of logic and reason to divide the award into several time-periods, being the pre-award, pendente lite and post-award periods, each of which would have to focus on interest on the sum due at that stage. As such, since the principal awarded carried interest for the pre-litigation period, there is no bar in considering the principal sum, for the purpose of interest pendente lite at the next stage to be the sum total of the pre-litigation interest added to the interest thereon. By similar logic, each of the stages entitled the award-holder to interest and the interest component, along with the principal, of each previous stage would be taken as the principal sum for the purpose of levying interest for the next. There is no justification in finding fault with such ratio of the arbitrator in imposing interest, all the more since the scope of interference under Section 34 is extremely limited. Corroborative evidence in support of the 5th RA Bill work being done - HELD THAT - The same cannot hold water, since the RA Bill, by its very definition and nature, is a running account bill which is raised from time to time. The amount on the 1st to 4th bills were not claimed since the same was already credited to the account of the claimant. As such, the question of abandonment of work being a basis of refusal of such amount does not arise - The TDS certificate, read in conjunction with the RA bill itself, particularly in view of the clearance of the previous RA Bills, clearly weigh the preponderance of probability in favour of amount claimed on the 5th RA Bill being justifiable. It is a fallacious argument that different yardsticks were followed in respect of refusal of the claims on the 1st to 4th RA bills while granting the 5th RA bill dues. This is for the simple reason that the 1st to 4th bill amounts were already credited by the respondent company to the claimant's account and there was no claim in the arbitral proceeding, as such, for the said amount. Any question of the claimant being not entitled to the previous bill dues would be superfluous in the context. The arbitrator sufficiently applied his mind in considering the relevant materials on record in conjunction with each other and was justified in granting the partial award, including interest, in the present case. The stringent tests of Section 34(2) of the 1996 Act are not satisfied at all in the instant case to justify interference under the said provision - petition dismissed.

Summary

Issues Involved:
1. Legality of the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996.
2. Non-consideration of material evidence by the Arbitrator.
3. Onus of proof and evidence regarding the 5th RA Bill.
4. Alleged inconsistencies and contradictions in the arbitral award.
5. Interest awarded by the Arbitrator.
6. Costs awarded by the Arbitrator.

Detailed Analysis:

1. Legality of the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996:
The petitioner challenged the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, alleging that the award was tainted by inconsistencies, was contrary to public policy, and contained glaring errors. The court examined the parameters of interference under Section 34, emphasizing that an award could only be set aside if it was perverse, ignored vital evidence, or was based on no evidence. The court reiterated that it does not act as a court of appeal and cannot correct errors of fact.

2. Non-consideration of material evidence by the Arbitrator:
The petitioner argued that the Arbitrator did not consider several documents, including Exhibit R8 (a letter dated October 16, 2007), which allegedly proved defective work. The court held that the Arbitrator's findings were based on the evidence presented and that the Arbitrator is the sole judge of the quantity and quality of evidence. The court found no justification to interfere with the Arbitrator's decision on this ground.

3. Onus of proof and evidence regarding the 5th RA Bill:
The petitioner contended that the claimant failed to provide primary evidence to support the 5th RA Bill. The court noted that the 5th RA Bill was verified by the Resident Engineer and that the TDS certificate implied that the amount was credited to the claimant's account. The court found that the Arbitrator's decision to award the amount claimed in the 5th RA Bill was justified.

4. Alleged inconsistencies and contradictions in the arbitral award:
The petitioner argued that the Arbitrator's findings were inconsistent, particularly in equating the issue of abandonment of work with defective work. The court held that the Arbitrator's findings were based on a thorough discussion of the evidence and that there was no inconsistency in the application of principles to similar facts. The court found no reason to interfere with the Arbitrator's decision on this ground.

5. Interest awarded by the Arbitrator:
The petitioner challenged the interest awarded by the Arbitrator, arguing that it amounted to interest upon interest and was contrary to law. The court noted that the Arbitrator divided the award into several time periods (pre-award, pendente lite, and post-award) and awarded interest accordingly. The court found that the Arbitrator's decision to award interest was justified and within the bounds of logic and reason.

6. Costs awarded by the Arbitrator:
The petitioner contended that the costs awarded by the Arbitrator were disproportionate to the claim awarded. The court held that the Arbitrator's decision on costs was reasonable and justified, given the circumstances of the case.

Conclusion:
The court dismissed the petition, affirming the arbitral award and holding that the stringent tests of Section 34(2) of the Arbitration and Conciliation Act, 1996, were not satisfied. The court emphasized that the scope of interference under Section 34 is extremely limited and that the Arbitrator's findings were based on a thorough consideration of the evidence presented.