Union Of India v. B.Engineers And Builders
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 02.03.2020
CORAM
THE HONOURABLE MR.JUSTICE M.SUNDAR Union of India, represented by Chief Engineer, MTP (Railways), Egmore, Chennai - 600 088.
...
Petitioner Vs
1. B.Engineers & Builders Limited, 72-A, Maheswar Industrial Estate, Bhubaneswar, 751 101.
2. T. Jayam
3. B.Srinivasan
4. B.N.S.Chalam, Senior Divisional Engineer / South, Southern Railway, Madurai (Arbitrator) ....
Respondents (R2 to R4 deleted vide this order) Original Petition filed under Section 34 of the Arbitration and Conciliation Act to set aside the award dated 07.04.2011 as confirmed by the order in the application under Section 33 of the Act, dated 18.05.2011 made in relation to disputes arising out of Agreement dated 20.06.2000 bearing No.MTP/Civil/357/2000 in so far 1/15
as that portion of the award disallowing the claims of the petitioner and the award in relation to claims 3 and 8 are concerned. For petitioner : Mr.P.T. Ramkumar Standing Counsel For respondents : Mr. A. Manoj Kumar Mr.M.Balaji for R1 R2 to R4 - deleted
ORDER
Mr.P.T.Ramkumar, learned Standing counsel for Southern Railways on behalf of petitioner and Mr.Manoj, learned counsel for the first respondent are before this Court.
2. To be noted, respondents 2 to 4 are three individuals who constituted a three member Arbitral Tribunal which made an Arbitral Award dated 21.01.2010 (hereinafter 'impugned award' for the sake of brevity and clarity) which has been called in question in the instant Original Petition (hereinafter 'OP' for brevity).
3. It is made clear that challenge to an Arbitral award under 2/15
Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)' {'A and C Act' for the sake of brevity} is neither an appeal nor a revision. It is a mere challenge to an award within the contours of the eight pigeon holes set out in Section 34 of 'A and C Act'.
4. With the aforesaid prefatory note, this Court proceeds to examine instant OP, which was presented in this Court nearly a decade ago. To be precise, instant OP was presented on 08.09.2011 and ultimately a number was assigned only in 2015. In this regard, this Court deems it appropriate to refer to the observation made by Hon'ble Supreme Court in the case of State of Bihar vs. Bihar Rajya Bhumi Vikas Bank Samiti reported in (2018) 9 SCC 472. Though Bhumi Vikas Bank is an authority for the broad proposition under Sub section
(5) of Section 34 of the Act which is directory and not mandatory, it was observed in Paragraph 26 of Bhumi Vikas Bank case law that every Court hearing applications/petitions under Section 34 shall make an endeavour to dispose of petitions under Section 34 of A and C Act within one year, time frame prescribed in sub-section (6) of Section
34. This means that one year time frame for disposal of petitions under Section 34 has immense sanctity. For the sake of convenience and clarity sub section (6) Section 34 of A and C Act is extracted and 3/15
reproduced infra.
34. Application for setting aside arbitral award. - (1).....
(2) .....
(3) .........
(4) ......
(5) .....
(6) An application under this Section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.
It has become necessary to refer to Bhumi Vikas Bank case and observation therein, in the light of instant OP being presented in this Court in 2011 numbered in 2015 and ultimately being heard out in 2020.
5. Be that as it may, owing to the scope of Section 34 (alluded to supra) instant OP has to be tested by perambulating within the contours and confines of Section 34 of A and C Act and the proceedings in instant OP is a summary procedure as laid down by Hon'ble Supreme Court in the case of Fiza Developers case Fiza Developers and Inter-Trade Private Limited vs AMCI (India) Private Limited reported in (2009) 17 SCC 796. Fiza Developers 4/15
principle is to effect that petitions under Section 34 are to be disposed of by adopting summary procedures as Section 34 is a special remedy under a special enactment and expeditious disposal in Alternative Dispute Resolution (ADR) is one of the pillars of ADR mechanism. To be noted, this Fiza Developers principle was reiterated by Hon'ble Supreme Court subsequently in Emkay Global Financial Services Limited Vs. Gindhar Sondhi reported in (2018) 9 SCC 49. In Emkay Global, Hon'ble Supreme Court held that Fiza Developers principle is a step in the right direction.
6. This Court now straight away embarks upon the exercise of examining instant OP. Instant OP, as alluded supra, is one challenging an Arbitral Award dated 21.01.2010. The fulcrum of the arbitration proceedings is a contract (hereinafter 'said contract' for the sake of convenience and clarity), which is described as follows :- "Contract Agreement No.MTP/Civil/357-2000 dt.20.6.2000 executed the parties hereto for the work of "MRTS - Phase II - Thirumylai-Velachery Stations Building Works - Pile foundation and General RCC works in columns, beams, slabs etc., of the station buildings at Thiruvanmiyur"
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7. Certain disputes arose between the Contractor and the Railways qua said contract resulting in arbitration clause being invoked and the same culminated in the impugned award. A careful perusal of the impugned award reveals that both contractor i.e., first respondent before this Court as well as Southern Railways i.e., petitioner before this Court had made 9 claims before the Arbitral Tribunal. Two claims made by the Contractor were allowed and 5 claims made by the Railways were allowed. Instant OP is directed against the four claims of Railways that were negatived and the two claims of the contractor that were allowed.
8. A summary of the award which is culled out from the impugned award reads as follows :
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9. A perusal of the summary of the impugned award reveals that claims Nos.3 & 8 of the contractor / first respondent have been allowed and the claims 3 to 6 of the Railways have been negatived. The reason for either allowing or negativing the same and the quantum have been given in a tabular form in the award and relevant portions with regard to the claims 3 & 8 of the contractors, which were allowed can be usefully extracted and it reads as follows :-
10. To be noted, 7 columns are captioned likewise with regard to four claims of Railways, which were negatived namely claims 3 to 6 single arrow page 10- 6 8/15
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11. Having perused the most relevant claims which constitute the crux and gravamen of the instant OP, this Court now embarks upon the exercise of examining if challenge to impugned award falls under any one of the eight pigeon holes under Section 34. A careful perusal of the relevant claims which constitute the crux of instant OP leaves this Court with the considered view that it does not fall under any of the 8 pigeon holes. To be noted, it is nobody's case that sufficient opportunity was not given or any of the party was under any incapacity qua arbitral tribunal. Likewise, it is nobody's case that the 10/15
arbitration agreement is not valid, with regard to public policy, three juristic principles, culled out by Hon'ble Supreme Court in Western Geco case was noticed. To be noted, for testing an Arbitral Award qua public policy, Hon'ble Supreme Court culled out three juristic principles in Western Geco case being ONGC Limited Vs. Western Geco International Limited reported in (2014) 9 SCC 263. Those three juristic principles are a) judicial approach, b) natural justice principles (NJP) and c) irrationality / perversity. Not only did the Hon'ble Supreme Court cull out three distinct juristic principles, but it also laid down the touch stone on which these three juristic principles have to be tested in a Section 34 OP.
With regard to judicial approach, the touch stone is fidelity of judicial approach; With regard to NJP, the acid test, is audi alteram partem and with regard to irrationality / perversity the litmus test is time honoured Wednesbury principle of reasonableness. To be noted Western Geco and Associates builders cases were rendered by Hon'ble Supreme Court prior to 23.10.15 i.e. prior to the date on which the term 'public policy' was statutorily explained in A and C vide Explanation 1 to Section 34 (2) (b) (ii). Associate Builders case is Associate Builders vs. Delhi Development Authority reported in (2015) 3 SCC 49. However, post 23.10.
stone acid test and litmus test laid down by Hon'ble Supreme Court in Western Geco and reiterated in Associates Builders case was reaffirmed by Hon'ble Supreme Court in Centro trade Minerals and Metal Inc Vs. Hindustan Copper Limited reported in (2017) 2 SCC 228. Therefore, these three juristic principles hold the field when it comes to testing an arbitral award qua public policy.
12. This Court on a careful perusal of instant case file finds that the instant OP is more in the nature of a regular first appeal under Section 96 of 'The Code of Civil Procedure, 1908' ('CPC' for brevity) and it does not bring the challenge to the arbitral award within the ambit of any of the eight pigeon holes adumbrated in Section 34 of A and C Act and/or elucidative principles laid down by Hon'ble Supreme Court in this regard.
13. Before parting with this case, it becomes necessary to notice that the nature of OP as well as the arguments advanced before this Court makes it clear that no malafides whatsoever have been alleged against the three Arbitrators, who constituted the three member Arbitral Tribunal, which made the impugned award. Therefore, adopting the well established principle laid down in decision of 12/15
Division Bench of Delhi High Court dated 03.09.2008 in LPA No.313 of 2007. Respondents 2 to 4 stand deleted from the array of parties
14. In the light of the narrative thus far, instant OP is dismissed but considering the nature of the submissions advanced, parties are left to bear the respective costs.
15. After order was dictated, learned counsel for petitioner made a request qua post award interest. A perusal of the impugned award brings to light that the Arbitral Tribunal has awarded Simple Interest at the rate of 12%. This is articulated in penultimate paragraph of the impugned award which reads as follows: This award shall be honored by both the parties within 45 days from the date of this award failing which simple interest at the rate of 12% is applicable for both the parties for their respective award payments.
16. Mr.P.T. Ramkumar, learned standing counsel for petitioner / Railways made a request that considering the length of time between the impugned award and the date of disposal i.e., today (02.03.2020), this Court may consider holding the rate of interest alone to be 9% 13/15
instead to 12%. Reacting to this, on instructions from Mr.P.Sankara Narayanan, Director, Projects, B.Engineers & Builders Ltd. / first respondent Company, who is present in Court, learned counsel for the first respondent submitted that the first respondent consents for this scaling down of interest to 9% subject to this order of this Court not being subjected to further challenge. In other words, if this order is carried in appeal, it should be left open to first respondent to insist on 12% interest. Therefore, by consent, interest of 12% awarded qua impugned award will now stand scaled down to 9% subject to aforementioned rider.
02.03.2020 Index: Yes/ No Internet: Yes/No Speaking Order/Non-speaking Order vsi2 14/15
M.SUNDAR, J.
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