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TMI Blog2022 (1) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved by the impugned judgment. 2. Though several grounds have been taken by UHL in its appeal to assail the impugned judgment, Mr. Jaideep Gupta, learned senior counsel for UHL has confined his grievance to the disallowance of the pre-claim interest i.e., interest from the date when expenses were incurred by UHL, till the date of lodging the claim. It may be noted that in terms of the award dated 05th June, 2005, the learned Sole Arbitrator had awarded a sum of Rs.26,08,89,107.35p. (Rupees Twenty six crores eight lakhs eighty nine thousand one hundred and seven and thirty five paise) in favour of UHL towards expenses claimed along with pre-claim interest capitalized annually, on the expenses so incurred. Further, compound interest was awarded in favour of UHL @ 9% per annum till the date of claim and in the event the awarded amount is not realized within a period of six months from the date of making the award, future interest was awarded @ 18% per annum on the principal claim with interest. 3. Dissatisfied with the award, when the State of H.P. filed a petition under Section 34 of the Arbitration Act, vide judgment dated 16th December, 2008, the learned Single Judge disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arbitral Tribunal may award interest on the sum directed to be paid by the award, meaning a sum inclusive of principal sum adjudged and the interest, and this has been done by Parliament in plain language." [emphasis supplied] 5. While giving a concurring opinion in the aforesaid case, Justice Sapre made the following pertinent observations: "31. Coming now to the post-award interest. Section 31(7)(b) of the Act employs the words, "A sum directed to be paid by an arbitral award ... ". Clause (b) uses the words "arbitral award" and not the "Arbitral Tribunal". The arbitral award. as held above, is made in respect of a "sum" which includes the interest. It is, therefore, obvious that what carries under Section 31 (7)(b) of the Act is the "sum directed to be paid by an arbitral award" and not any other amount much less by or under the name "interest". In such situation. it cannot be said that what is being granted under Section 31(7)(b) of the Act is " interest on interest ". Interest under clause (b) is granted on the " sum " directed to be paid by an arbitral award wherein the "sum" is nothing more than what is arrived at under clause (a)." [emphasis supplied] 6. As the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigations of the UHL-III Hydro - electric Project of 100 MW capacity and located in District Mandi, Himachal Pradesh (hereinafter referred to a "Project") and has submitted, within the stipulated period from the date of signing of the MOU, a Detailed project Report (DPR)." 9. Further, the definition of different words used in the Implementation Agreement form a part of Clause (2). The term "Agreement" has been defined in Clause 2.2 as follows: "CLAUSE 2 DEFINITIONS For all purposes of this Agreement, the. various terms shall have the following meanings, except where the context otherwise requires, definitions and other terms expressed in the singular shall, include the plural and vice versa. 2.1 xxx xxx xxx 2.2 "Agreement" shall mean this Agreement together with all its appendices and annexures and any amendments thereto made in accordance with the provisions herein contained." 10. The very fact that the State admits to having executed the MoU with UHL on 10th February, 1992 and the said MoU has been mentioned as "Appendix A" in the second recital of the Implementation Agreement, as reproduced above, itself demolishes the plea taken by the State that the Arbitral Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. All the points of dispute between the parties regarding performance of the contractual obligations including claims for damages and expenses incurred by UHL either arising from the MoU dated 10th February, 1992, or under the Implementation Agreement dated 22nd August, 1997, were referable to arbitration in accordance with Clause 20 forming a part of the Implementation Agreement. 12. The second plea taken by the learned Additional Advocate General the State is that the Appellate Court has erred in setting aside the order of the learned Single Judge and restoring the findings of the Sole Arbitrator on the aspect of pre-mature termination of the Implementation Agreement on the part of the State well before expiry of the prescribed period. For examining this point, Clause 4 of the Implementation Agreement gains significance. The said clause prescribes the starting date of the project and states as follows: "CLAUSE 4 STARTING DATE OF PROJECT. 4.1 Within one year from the Effective Date, the Company shall start the construction of the Project after meeting the major requirements, e.g.:- a) Obtain techno economic clearance from CEA. b) Obtain environmental clearance from G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is turned down. When the parties to the Implementation Agreement were ad idem that the period of one year available to UHL to commence the construction activity was to be reckoned after the major requirements prescribed in Clause 4.1 could be obtained, then any argument sought to be advanced to segregate the obligations under different sub-heads of Clause 4.1 only to lay the blame at the door of UHL when the requisite clearances were to be obtained by the State Government from the Central Government and Centralized Authorities, is devoid of merits, besides being completely unreasonable and illogical. 14. This Court also accepts as correct, the view expressed by the Appellate Court that the learned Single Judge committed a gross error in re-appreciating the findings returned by the Arbitral Tribunal and taking an entirely different view in respect of the interpretation of the relevant clauses of the Implementation Agreement governing the parties inasmuch as it was not open to the said Court to do so in proceedings under Section 34 of the Arbitration Act, by virtually acting as a Court of Appeal. 15. As it is, the jurisdiction conferred on Courts under Section 34 of the Arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission of misconduct by the arbitrator which can find manifestation in different forms including exercise of legal perversity by the arbitrator." 17. It has also been held time and again by this Court that if there are two plausible interpretations of the terms and conditions of the contract, then no fault can be found, if the learned Arbitrator proceeds to accept one interpretation as against the other. In Dyna Technologies (P) Ltd. V. Crompton Greaves Ltd. (2019) 20 SCC 1, the limitations on the Court while exercising powers under Section 34 of the Arbitration Act has been highlighted thus: "24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act." 20. An identical line of reasoning has been adopted in South East Asia Marine Engg. & Constructions Ltd.[SEAMAC Limited] V. Oil India Ltd. (2020) 5 SCC 164 and it has been held as follows: "12. It is a settled position that a court can set aside the award only on the grounds as provided in the Arbitration Act as interpreted by the courts. Recently, this Court in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1 : 2019 SCC OnLine SC 1656] laid down the scope of such interference. This Court observed as follows : (SCC pp. 11-12, para 24) "24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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