Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
nd
% Date of Judgment: 22 May, 2019
+ FAO(OS) (COMM) 117/2019
UNION OF INDIA ..... Appellant
Through: Mr. Ashok Singh, Advocate
versus
M/S SIKKA ENGINEERING COMPANY ..... Respondent
Through: None
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
HON'BLE MS. JUSTICE JYOTI SINGH
G.S. SISTANI, J. (ORAL)
CM APPLs.24703-04/2019 (Exemption)
Allowed, subject to all just exceptions.
CM.APPL.24705/2019 (delay)
There is delay of 21 days in filing the accompanying appeal.
Heard.
The application is allowed and the delay of 21 days in filing the appeal
is condoned
The application stands disposed of.
CM.APPL.24706/2019 (delay)
There is delay of 06 days in re-filing the accompanying appeal.
FAO(OS) (COMM) 117/2019 Page 1 of 7
Heard.
The application is allowed and the delay of 06 days in re-filing the
appeal is condoned
The application stands disposed of.
FAO(OS) (COMM) 117/2019
1. Present appeal under Section 37 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as „the Act‟) arises out of two orders
passed by the learned Single Judge of this Court while deciding the
th
objections to the Award filed by the appellant herein dated 6 December,
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2018 and 19 December, 2018. While the first order decides the objections
pertaining to Claim No.1 and the matter was adjourned to enable the
appellant to seek instructions in the matter with respect to lifting of surplus
material from the Udhampur Depot in according with Clause 1.2.53 of the
Contract read with Clause 32 of the General Conditions of Contract, the
second order, which is in continuation of the first order, decides Claims
No.8, 10 and 21.
2. Mr. Ashok Singh, learned counsel appearing for the appellant, very
fairly submits that he has instructions not to press the Claims No.8, 10 and
21. The Claim No.1 in this case comprises of six bills submitted by the
respondent and a final bill in the total sum of Rs.1,54,25,671/-. Mr. Singh
submits that the learned Arbitrator as also the learned Single Judge has failed
to take into account the sample check report in respect to the measurement of
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actual weight of steel; the joint checks of steel structure dated 29
th
September, 2016 and the joint inspection report dated 6 April, 2017 as also
FAO(OS) (COMM) 117/2019 Page 2 of 7
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the communication addressed by the respondent to the appellant dated 25
November, 2016. It is the case of the appellant here that payment of six bills
could not have been allowed by the Arbitrator for the reason that the steel
supplied by the vendor was underweight and accordingly, the respondent
could not have been given benefit for the material which was substandard
and not in accordance with the specifications.
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3. Mr. Singh has placed strong reliance on a communication dated 25
November, 2016 to buttress his submission that the respondent had
unconditionally admitted the fact that the material was underweight and had
also agreed to replace the same with fresh material. However, we find that
the appellant has not argued and pressed this point before the learned Single
Judge. Hence, it is not open for the appellant to press this issue before us at
this stage.
4. The learned Single Judge has declined the prayer of the appellant
herein in view of the fact that as per the terms of the Contract, M/s. Jain
Steel Industries was one of the approved vendors of the appellant itself. The
learned Single Judge has noticed that as per one of the conditions of the
Contract, the respondent was to procure material from one of the approved
vendors of appellant. Moreover, it was mandatory for the respondent to
obtain certification with respect to the quality of the material from RITES, an
agency nominated by the appellant itself. Another factor, which has
prevailed upon the learned Single Judge, is the fact that the appellant did not
complain with regard to the defective material during the currency of the
work or even thereafter. We may also note that the nature of the work
required supply of different types of fabricated and galvanized items, which
FAO(OS) (COMM) 117/2019 Page 3 of 7
were to be used by the respondent and accordingly, the names of the vendors
were provided by the appellant.
5. In addition to the three factors, which we have noticed in the
paragraph No.4 aforegoing, being (i) that M/s. Jain Steel Industries was one
of the approved vendors; (ii) the material was certified from RITES and (iii)
both the agencies were nominated by the appellant itself, we cannot ignore
that during the currency of the work, no protest was made by the appellant
herein. We find no reason to take a different view than the view taken by the
learned Single Judge for the reasons foregoing.
6. Mr. Singh submits that he is also aggrieved by the finding returned by
the learned Single Judge pertaining to Claim No.7. However, reading of the
order of the learned Single Judge would show that the said Claim was not
pressed and thus, there is no finding on the same by the learned Single
Judge.
7. No other claim is pressed.
8. Moreover, the law stands crystallized that the scope of interference in
an appeal under Section 37 of the Arbitration and Conciliation Act is
narrower. The Division bench of this Court in the case of MTNL vs.
Fujitshu India Private Limited reported at 2015 SCC OnLine Del 7437,
held in para 19 as under:
“19. The extent of judicial scrutiny under section 34 of the Act
is limited and scope of interference is narrow. Under section
37, the extent of judicial scrutiny and scope of interference is
further narrower. An appeal under section 37 is like a second
appeal, the first appeal being to the court by way of objections
under section 34. Where there are concurrent findings of facts
FAO(OS) (COMM) 117/2019 Page 4 of 7
and law, first by the Arbitral Tribunal which are then
confirmed by the court while dealing with objections under
section 34, in an appeal under section 37, the Appellate Court
would be very cautious and reluctant to interfere in the
findings returned in the award by the Arbitral Tribunal and
confirmed by the court under section 34.”
9. Furthermore, this court time and again in its earlier judgments titled as
M/S. L.G. Electronics India Pvt. Ltd. Vs. Dinesh Kalra reported at 2018
SCC Online Del 8367 , FAO(OS)(COMM) 55/2018 titled as M L Lakhanpal
vs. Darshan Lal & Anr. and ADTV Communication Pvt. Ltd Vs. Vibha
Goel & Ors. , reported at 2018 SCC Online Del 8843 reiterated the limited
scope of intervention in an appeal under Section 37 of the Arbitration and
Conciliation Act and held as under:-
“It has been repeatedly held that while entertaining appeals
under Section 37 of the Act, the Court is not actually sitting as
a Court of appeal over the award of the Arbitral Tribunal and
therefore, the Court would not re-appreciate or re-assess the
evidence. In the case of State Trading Corporation of India
Ltd. v. Toepfer International Asia Pte. Ltd, reported at
2014(144) DRJ 220(DB), in para 16 it has been held as under:
"16. The senior counsel for the respondent has in this
regard rightly argued that the scope of appeal under
Section 37 is even more restricted. It has been so held
by the Division Benches of this Court in Thyssen
Krupp Werkstoffe Vs. Steel Authority of India
MANU/DE/1853/2011 and Shree Vinayaka Cement
Clearing Agency Vs. Cement Corporation of India
147 (2007) DLT 385. It is also the contention of the
senior counsel for the respondent that the argument
made by the appellant before the learned Single
Judge and being made before this Court, that the
particular clause in the contract is a contract of
indemnification, was not even raised before the
Arbitral Tribunal and did not form the ground in the
FAO(OS) (COMM) 117/2019 Page 5 of 7
OMP filed under Section 34 of the Act and was raised
for the first time in the arguments."
In the case of Steel Authority of India v. Gupta Brothers Steel
Tubes Limited, (2009) 10 SCC 63, the Supreme Court has laid
down that an error relatable to interpretations of the contract
by an Arbitrator is an error within his jurisdiction and such
error is not amenable to correction by Courts as such error is
not an error on the face of the award. The Supreme Court has
further laid down that the Arbitrator having been made the
final arbiter of resolution of disputes between the parties, the
award is not open to challenge on the ground that the
Arbitrator has reached a wrong conclusion. The courts do not
interfere with the conclusion of the Arbitrator even with regard
to the construction of contract, if it is a plausible view of the
matter.
The Apex Court in J.G. Engineers (P) Ltd. v. Union of India,
reported at (2011) 5 SCC 758, demarcated the boundary while
explaining the ambit of section 34(2) of the Act. The Court in
the aforesaid judgement relied upon the pronouncement of
ONGC Ltd. Vs. Saw Pipes , in paragraph 19 , held as under:-
"27. Interpreting the said provisions, this Court in
ONGC Ltd. v. Saw Pipes Ltd.
[MANU/SC/0314/2003 : (2003) 5 SCC 705] held
that a court can set aside an award Under Section
34(2)(b)(ii) of the Act, as being in conflict with the
public policy of India, if it is (a) contrary to the
fundamental policy of Indian law; or (b) contrary to
the interests of India; or (c) contrary to justice or
morality; or (d) patently illegal. This Court
explained that to hold an award to be opposed to
public policy, the patent illegality should go to the
very root of the matter and not a trivial illegality. It
is also observed that an award could be set aside if
it is so unfair and unreasonable that it shocks the
conscience of the court, as then it would be opposed
to public policy."”
FAO(OS) (COMM) 117/2019 Page 6 of 7
10. Thus, in view of the law under Section 37 of the Act, we find no
ground to entertain this appeal.
11. The appeal is accordingly dismissed.
CM APPL.24707/2019 (stay)
The application also stands dismissed in view of the order passed in
the appeal.
G.S. SISTANI, J
JYOTI SINGH, J
MAY 22, 2019
s
FAO(OS) (COMM) 117/2019 Page 7 of 7