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TMI Blog2024 (7) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The Hon'ble Supreme Court further held that the above ground is available only where the view taken by the Arbitral Tribunal is plausible while construing the Contract between the parties or where the Award of the Tribunal lacks justifiable reasons. The Hon'ble Supreme Court further held that an Award can be set aside only if an Arbitrator/Arbitral Tribunal decides the question beyond the Contract or beyond the terms of reference or if the finding arrived by the Arbitral Tribunal is based on no evidence or ignoring vital evidence or is based on documents taken as evidence without notice to the other side. This view is applicable to the facts of the case. In South East Asia Marine Engineering and Constructions Limited (SEAMEC Limited) Vs. Oil India Limited [ 2020 (5) TMI 242 - SUPREME COURT] , the Hon'ble Supreme Court has reiterated that if the interpretation of Contract by Arbitral Tribunal is perverse and is not a possible interpretation, the Award passed by the Arbitral Tribunal, is liable to be set aside. The facts on record indicate that the total value of contract inclusive of other miscellaneous expenses incurred by the respondent-claimant was Rs. 21,74,95,091 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roject Contract 2,60,41,376 47,90,630 2,05,10,140 3. 10.01.2017 Sales Contract 4,72,63,608 85,07,450 0 5,57,71,057 4. 10.01.2017 Installation Contract 60,02,750 60,02,750 0 5. 12.04.2017 Project Contract 12,00,000 1,48,580 4,74,000 9,74,680 6. 17.04.2017 Project Contract 12,74,456 12,74,456 0 7. 27.04.2017 Material Contract 1,70,000 1,49,940 20,060 8. 01.06.2017 Performance Guarantee Agreements 1,01,20,000 18,21,600 0 1,19,41,600 9. 06.01.2017 to 14.06.2017 Other Additional Items 18,51,608 0 18,51,608 10. SIIB Charges 29.50,000 0 29,50,000 11. Six Containers 7,08,000 0 7,08,000 12. All Materials and Equipment in Site 47,20,000 0 47,20,000 13. NCLT Lawyer Fees 12,39,000 0 12,39,000 14. Travelling Cost for NCLT from Taiwan to India 11,21,000 0 11,21,000 15. Interest Rate 18% 2,35,45,729 0 2,35,45,729 19,99,55,656 1,80,09,942 16. Total 21,74,95,091 6,94,36,884 14,80,58,207 Note: Sl. Nos. 1 to 3, 5,7,8 awarded. (No dispute regarding Sl.Nos.4 and 6). Sl.No. 9 to 15 rejected. 4. The challenge to the impugned Award passed by the Arbitral Tribunal is primarily on the ground that the Arbitral Tribunal has rewritten the contract by awarding tax component even though the contract at Sl.Nos.1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as rewritten the contract. In this connection, the learned counsel for the petitioner has placed reliance on the following decisions of the Hon'ble Supreme Court :- (i) Satyanarayana Construction Compan y Vs. Union of India and others , (2011) 15 SCC 101. (ii) PSA SICAL Terminals (P) Ltd. Vs. Board of Trustees of V.O.Chidambranar Port Trust, Tuticorin , (2022) 4 SCC 463. (iii) Associate Builders Vs. Delhi Development Authority , (2015) 3 SCC 49. (iv) Ssangyong Engineering and Construction Co Ltd. vs. National Highway Authority of India, (2019) 15 SCC 131. 13. That apart, the learned counsel for the petitioner would further submit that the Arbitral Tribunal has wrongly rejected the counter-claim of the petitioner for a sum of Rs. 25,79,31,371/-. 14. The learned counsel for the petitioner submitted that the Arbitral Tribunal has erred in concluding that time was not the essence of the contracts and that the contracts were inter-related. In this connection, a reference was made to the decision of the Hon'ble Supreme Court in P.Dasa Muni Reddy Vs. P.Appa Rao , (1974) 2 SCC 725. 15. Defending the impugned Award passed by the Arbitral Tribunal, learned counsel for the respondent- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales contract dated 10.01.2017 is pertaining to supply of second-hand equipment and whether the Claimant completed supply and installation of the equipment in May 2017? 7) Whether the respondent tested the equipment in June 2017? 8) Whether the respondent rescinded the contract with the Claimant ? 9) Whether the respondent is justified in not returning the six containers of the claimant containing tools and equipments worth Rs. 54,28,000/-? 10)Whether the claim of the Claimant is to be allowed or not ? 11) Whether the machines supplied by the Claimant to the respondent were defective ? 12) Whether the claimant agreed to invoke the bank guarantee ? 13) Whether the claimant permitted the respondent to encash the Performance Guarantee due to non-performance and delay in projects? 14) Whether the claimant is liable to pay damages and rental charges for the six containers left at the factory premises of the Respondent? 15)Whether all the agreed main projects/works stipulated in the contracts dated 01.12.2016 were jointly inspected by the Claimant and Respondent and if yes, then corroboration of the same? 16) Whether the Claimant has played fraud upon the Respondent/Counter Claimant by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have arrived at or the construction of the Contract is such that no reasonable person would take or that the view of the Arbitrator is not even a plausible view. I find no perversity in the impugned Award. 25. The Hon'ble Supreme Court in McDermott International Inc. Vs. Burn Standard Co. Ltd , (2006) 11 SCC 181, held that while interpreting the terms of a Contract, the conduct of the parties and correspondences exchanged between them would also be relevant factors and it is well within the Arbitrator's jurisdiction to deal with the same. This is now statutorily recognized in Section 28 of the Arbitration and Conciliation Act, 1996. 26. The Hon'ble Supreme Court in Sutlej Construction Limited Vs. Union Territory of Chandigarh , (2018) 1 SCC 718, has held that when the Award is a reasoned one and the view taken is plausible, re-appreciation of evidence is not allowed while dealing with the challenge to an Award under Section 34 of the Arbitration And Conciliation Act, 1996. It is further held that the proceedings challenging the Award cannot be treated as a First Appellate Court against the decree passed by the Trial Court. Therefore, the impugned Award does not w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at are applicable arise by implication of the common law as modified by the express words of the contract. Every failure to perform a primary obligation is a breach of contract. The secondary obligation on the part of the contract breaker to which it gives rise by implication of the common law is to pay monetary compensation to the other party for the loss sustained by him in consequence of the breach; but, with two exceptions, the primary obligations of both parties so far as they have not yet been fully performed remain unchanged. This secondary obligation to pay compensation (damages) for non-performance of primary obligations I will call the general secondary obligation . It applies in the cases of the two exceptions as well. 29. This view has been followed by the Hon ble Supreme Court in Dyna Technologies Private Limited Vs. Crompton Greaves Limited , (2019) 20 SCC 1, wherein, it has been observed as under:- 25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avalier manner. On the other hand, ordinarily unintelligible awards are to be set aside, subject to party autonomy to do away with the reasoned award. Therefore, the courts are required to be careful while distinguishing between inadequacy of reasons in an award and unintelligible awards . 30. The Hon ble Supreme Court has reiterated the above position in the case of MMTC Limited Vs. Vedanta Limited , (2019) 4 SCC 163, wherein, it has been held as under:- 14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings. 31. In South East Asia Marine Engineering and Constructions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated. 19. In Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. [Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236 : (2019) 3 SCC (Civ) 552] , adverting to the previous decisions of this Court in McDermott International Inc.v.Burn Standard Co. Ltd. [McDermott International Inc.v.Burn Standard Co. Ltd., (2006) 11 SCC 181] and Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran [Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, (2012) 5 SCC 306] , wherein it has been observed that an Arbitral Tribunal must decide in accordance with the terms of the contract, but if a term of the contract has been construed in a reasonable manner, then the award ought not to be set aside on this ground, it has been held thus : (Parsa Kente Collieries case [Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236 : (2019) 3 SCC (Civ) 552] , SCC pp. 244-45, para 9) 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated. 36. In Larsen Air Conditioning and Refrigration Company Vs. Union of India and others , 2023 SCC Online SC 982, it has been observed as under:- 15 . The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality, i.e., that illegality must go to the root of the matter and cannot be of a trivial nature ; and that the 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 [ref : Associate Builders (supra)] . The other ground would be denial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimant during supply and execution of the contracts signed between the petitioner and the respondent-claimant. 39. The Arbitral Tribunal after considering the overall facts and circumstances of the case allowed only a sum of Rs. 11,19,22,870/- to the respondent-claimant and has rejected the counter-claim of the petitioner for a sum of Rs. 2,61,35,337/- . The counter-claim of the petitioner was towards the amount paid by the petitioner to the respondent's subcontractor( s)/vendors and towards alleged damage suffered by the petitioner. 40. Thus, as against the total claim of Rs. 14,80,58,207/- [ Rs. 11,19,22,870/- +Rs. 3,61,35,337/-], the Arbitral Tribunal has awarded a sum of Rs. 11,19,22,870/- being the balance amount payable by the petitioner to the respondent-claimant in respect of the contracts signed between the petitioner and the respondent. 41. As far as the objection of the petitioner regarding the amount awarded towards GST for the supply effected prior to implementation of GST Enactment on 01.07.2017 is concerned, the Arbitral Tribunal has considered the issue in the impugned Award as follows:- With regard to the alleged fraud played by the claimant by giving false vou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely, the goods imported under the first contract i.e. Material Contract dated 01.12.2016 were cleared from the Customs Department during the month of March, 2017 and April, 2017. Pursuant to the above, the petitioner has executed the second contract i.e., Project Contract dated 01.12.2016. 49. Despite the delay in the clearance of the imported goods under the Material Contract dated 01.12.2016 and consequential delay in execution of Project Contract dated 01.12.2016, the petitioner signed five other contracts with the respondent-claimant as detailed in Sl.No.3 to 7 to Table-1 of this order. 50. It is in the above background, the learned Arbitrator has come to the conclusion that the time was not essence of the Material Contract and Project Contract both dated 01.12.2016 and Sales Contract and Installation Contract both dated 10.01.2017 ( i.e.Contracts at Sl Nos.1 to 4 to Table-1). 51. It is also evident from the fact that at a particular point of time the respondent-claimant had liquidity crunch and was unable to make payment to the sub-contractor/vendors. Therefore, the petitioner agreed to pay upto a sum of Rs. 1,01,20,000/- ( New Taiwanese Dollar 44,00,000/-) to various sub-cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion with the conclusion arrived by the Arbitral Tribunal. 59. Further, the Arbitral Tribunal is the ultimate fact finding body/authority, its conclusion on facts cannot be set aside unless there is patent illegality. In this case, I do not find any patent illegality in the impugned Award if the Hodgkinson principle recognized by the Hon'ble Supreme Court in Associate Builders Vs. Delhi Development Authority , (2015) 3 SCC 49. It has to be therefore held that the Arbitral Tribunal is the best judge with regard to quality and quantity of evidence before it. Therefore, on this count also the impugned Award does not warrant any interference under Section 34 of the Arbitration and Conciliation Act, 1996. 60. This Arbitration Original Petition is therefore liable to be dismissed. It is accordingly dismissed leaving open to the respondent-claimant to initiate appropriate proceedings to enforce the Award and Award amount to the petitioner. Since some of the contracts signed between the petitioner and the respondent are not either not-stamped or under-stamped, it is open for the Executing Court to impound these documents and determine the stamp duty and penalty payable by the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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