Plausible View Taken By Arbitrator Based On Facts Of Case Cannot Be Interfered With U/S 34 Of Arbitration Act: Delhi High Court

The Delhi High Court bench of Justice Jasmeet Singh affirmed that once an arbitrator has taken a plausible view based on the facts of the case, such a view cannot be interfered with under section 34 of the Arbitration Act. Brief Facts This is a petition under section 34 of the Arbitration and Conciliation Act, 1996 seeking setting aside of the impugned Arbitral Award dated 04.08.2007 passed by the respondent no. 2, i.e. the learned Arbitrator. The court removed the name of the arbitrator from the array of parties. The work for “Construction of NSIT Complex (Phase-III) Part II at Sector 3, Dwarka, New Delhi-110045. SH: Extension of Library Building & Computer Centre at NSIT, Sector-3, Dwarka” was awarded by the petitioner to the respondent(which was a partnership firm at the time of entering in the contract but is now a sole proprietorship firm) vide Agreement dated 29.08.2003. Since the respondent did not adhere to provisions of the contract and the work was not completed within time (including the extended period), the contract was rescinded by the petitioner on 09.05.2005. It is stated that the work got done at the risk and cost of the respondent from M/s. Pt Munshiram & Associates (Pvt.) Ltd. The disputes between the parties were referred to arbitration before learned Sole Arbitrator. The learned Arbitrator vide Impugned Award dated 04.08.2007 allowed the claims of the respondent and rejected the counter claims of the petitioner on the ground that the rescission of the contract by the petitioner was unjust and unwarranted and that the work mainly got delayed on account of late issue of the structural drawings by the petitioner. Contentions The petitioner submitted that the work was not completed within scheduled time period due to which the contract was rescinded. It was further contended that revised drawings were issued time to time but they were in the form a minor clarifications and in no way hindered the execution of the work. It was further submitted that rather the delay was attributable to the respondent which is supported by the fact that it did not have adequate manpower due to which only one floor in three and a half months could be completed instead of four floors in five months. That the finding of the learned arbitrator that the rescission was unjust is incorrect. The site was at complete stalemate due to the inaction and delay of the contractor/respondent and therefore clause 14 of GCC which permitted petitioner to recover expenditure incurred by the petitioner from monies due to respondent/contractor was invoked That the respondents could have finished/completed the work within reasonable time, therefore there is no question of payment of loss of expected profits. The contract was rescinded on account of slow pace of work of the respondent and was done in accordance with the terms of the contract, hence the Arbitrator erred in not appreciating the non-fulfilment of obligations by the respondents and therefore an award of 2% on balance work is patently perverse. That the amount of Rs. 7,29,088/- was awarded on account of shutter finish of RCC surface against item 3.5 of BOQ (Bill of Quantity), however since the objective of shutter finish was not achieved, the extra payment could not have been made. That the claim and awarded amount for escalation in steel price is contrary to clause 10C of the GCC and the same is only permissible if the increase is a direct result of any fresh law, statutory rule or order (but not due to any change in sales tax) and such increase exceeds 10% of the price and or wage prevalent at the time of last stipulated date of receipt of tender including the extension. Per contra, the respondent submitted that the petitioner is intending to conduct a fishing and roving enquiry, which does not fall under the purview of „patent illegality,' as envisaged under the Arbitration and Conciliation Act, 1996. That the drawing register of the petitioner clearly shows that multiple revisions of drawings on various crucial aspects were made from time and time. Additionally, there is nothing on record to show that only minor clarifications were required and the same were cleared by the Engineerin-charge, present on the site, verbally and in real time. That the learned Arbitrator has rightly interpreted the term „order‟ under the clause 10C. Reliance is placed on the judgment of the Supreme Court in Consolidated Coffee Limited v Coffee Board (1980) and that interpretation of terms of contract falls within the domain of the learned Arbitrator and the principle of contra proferentum is applicable to interpret such term against the drafter of the Agreement, if the contractual term were ambiguous. That under clause 5 of the contract, the Superintending Engineer was required to take a decision on extension of time considering the reasons for delay. A bare perusal of the ...

Plausible View Taken By Arbitrator Based On Facts Of Case Cannot Be Interfered With U/S 34 Of Arbitration Act: Delhi High Court

Mohd Malik Chauhan

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