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2019 (10) TMI 674 - SC - Indian LawsTermination of contract - non-performance of the contract - It was the specific case on behalf of the original claimants that the termination was absolutely illegal and not being in according with the terms of the contract - HELD THAT - On appreciation of evidence and considering the various clauses of the contract, the learned Arbitral Tribunal has observed and held by giving cogent reasons that the termination of the contract was illegal and contrary to the terms of the contract and without following due procedure as required under the relevant clauses of the contract. The said finding of fact recorded by the learned Arbitral Tribunal is on appreciation of evidence. The said finding of fact has been confirmed in the proceedings under Sections 34 and 37 of the Arbitration Act. Thus, there are concurrent findings of fact recorded by the learned Arbitral Tribunal, First Appellate Court and the High Court that the termination of the contract was illegal and without following due procedure as required under the relevant provisions of the contract. In the present case, the categorical findings arrived at by the Arbitral Tribunal are to the effect that the termination of the contract was illegal and without following due procedure of the provisions of the contract. The findings are on appreciation of evidence considering the relevant provisions and material on record as well as on interpretation of the relevant provisions of the contract, which are neither perverse nor contrary to the evidence in record - as such, the First Appellate Court and the High Court have rightly not interfered with such findings of fact recorded by the learned Arbitral Tribunal. Once the finding recorded by the learned Arbitral Tribunal that the termination of the contract was illegal is upheld and the claims made by the claimants have been allowed or allowed partly, in that case, the counterclaim submitted by the petitioners was liable to be rejected and the same is rightly rejected. SLP dismissed.
Issues Involved:
1. Legality of the termination of the contract. 2. Validity of the arbitral award and its confirmation by the First Appellate Court and the High Court. 3. Claims and counterclaims under the consultancy agreement. 4. Scope of judicial review under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. Detailed Analysis: 1. Legality of the Termination of the Contract: The core issue in this case was the termination of a consultancy agreement related to the construction of a six-lane Divided Carriage Way on parts of Ranchi Ring Road. The contract was terminated by the petitioners (State) via a letter dated 09.02.2012, effective from 12.03.2012, citing deficiencies under Clause 2.9.1(a) and (d) of the General Conditions of Contract (GCC). The respondents (consultants) contended that the termination was illegal and not in accordance with the contractual terms. The Arbitral Tribunal, after reviewing the evidence, found that the termination was indeed illegal and did not follow the required procedures. This finding was upheld by both the First Appellate Court and the High Court. 2. Validity of the Arbitral Award and its Confirmation: The Arbitral Tribunal awarded the respondents a sum of ?2,10,87,304 under various heads, including unpaid bills, loss of profit, and other consequential claims. The Tribunal dismissed the counterclaims of the petitioners, which amounted to ?6,00,78,736, citing unsatisfactory performance by the respondents. The First Appellate Court confirmed the arbitral award under Section 34 of the Arbitration Act, and the High Court further upheld this decision under Section 37. The Supreme Court noted that the findings of the Arbitral Tribunal were based on a thorough appreciation of evidence and were neither perverse nor contrary to the evidence on record. 3. Claims and Counterclaims under the Consultancy Agreement: The respondents claimed a total of ?5,17,88,418 under 13 different heads, excluding interest, primarily for unpaid amounts for work executed, loss of profit, and overhead charges. The Arbitral Tribunal allowed claims amounting to ?2,10,87,304, disallowing some claims and partly allowing others. The Tribunal's detailed assessment included specific amounts for unpaid bills, design of bridges, and loss of profit, among others. The petitioners' counterclaims were dismissed as the Tribunal found the termination of the contract to be illegal. 4. Scope of Judicial Review under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996: The Supreme Court emphasized that the scope of judicial review under Sections 34 and 37 of the Arbitration Act is limited. The Court reiterated that findings of fact by the Arbitral Tribunal, which are based on evidence and are reasonable, should not be interfered with unless they are perverse or contrary to public policy. The Court cited precedents, including Associate Builders v. DDA and NHAI v. Progressive-MVR, to support this view. The Supreme Court found that the concurrent findings of the Arbitral Tribunal, First Appellate Court, and High Court were based on a plausible and reasonable view of the evidence. Conclusion: The Supreme Court dismissed the special leave petition, upholding the findings of the Arbitral Tribunal, First Appellate Court, and High Court that the termination of the contract was illegal and that the arbitral award was valid. The Court found no grounds to interfere with the concurrent findings of fact and the application of the relevant contractual provisions.
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