TaxTMI 
TaxTMI 
2024 (7) TMI 294
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....laimant. Details of the contracts awarded and the amount paid by the petitioner to respondent-claimant are as under:- Table - I Sl. No. Date Description Total Amount (Rs.) VAT and GST Difference (Rs.) Amount paid to Respondent by petitioner (Rs.) Balance Amount (Rs.) 1. 01.12.2016 Material Contract 7,19,18,129 75,32,312 5,67,45,108 2,27,05,333 2. 01.12.2016 Project 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 ....
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....said Supplementary Agreement dated 01.06.2017, the petitioner was entitled for compensation and damages apart from setting-off the amounts directly payable to the sub-contractors of the respondent-claimant. 10. It is further submitted that the respondent-claimant has also not let in evidence before the Arbitral Tribunal. Therefore, on this count also, there is perversity in the impugned Award passed by the Arbitral Tribunal and the Arbitral Tribunal has committed a grave error in awarding the aforesaid amount to the respondent-claimant. 11. The learned counsel for the petitioner would also submit that the Arbitral Tribunal has also failed to note that the respective GST Acts came into force with effect from 01.07.2017 whereas, the respondent-claimant has raised invoices for the month of March, April and May 2017 with GST. It is therefore submitted that there was a patent illegality in the impugned Award. 12. That apart, it is submitted that the Arbitral Tribunal has 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 Comp....
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....he petitioner and the respondent. I have also perused the impugned Award passed by the Arbitral Tribunal. 19. The learned Arbitrator after perusing the pleadings and documents had framed 18 issues as detailed below:- 1) Whether the 7 contracts executed between the Claimant and the Respondent are inter-linked or they are separate contracts ? 2) Whether time was the essence of the two contracts dated 01.12.2016 and whether the claimant completed the two contracts dated 01.12.2016 within the stipulated time? 3) Whether the act of the respondent in awarding three additional contracts on 12.04.2017, 17.04.2017 and 27.04.2017 to the Claimant amounts to extension of time for performance of the four contracts awarded to the Claimant by the respondent prior to April 2017? 4) Whether the Force-majeure clause is applicable to the delay on account of detention of the containers by the Special Intelligence and Investigation Branch? 5) Whether the Claimant abandoned the contractual project in the beginning of July 2017? 6) Whether the sales contract dated 10.01.2017 is pertaining to supply of second-hand equipment and whether the Claimant ....
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....the Award goes to the root of the matter. It is further held that finding of erroneous application of law by an Arbitral Tribunal or the re-appreciation of evidence by the Court under Section 34(2-A) of the Arbitration and Conciliation Act, 1996 is not available. 23. 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. 24. The Hon'ble Supreme Court in "Patel Engineering Limited Vs. North Eastern Electric Power Corporation Limited", (2020) 7 SCC 167 further held that patent illegality as one of the grounds for setting aside an Award. It is available only if the decis....
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....free to determine for themselves what primary obligations they will accept. They may state these in express words in the contract itself and, where they do, the statement is determinative; but in practice a commercial contract never states all the primary obligations of the parties in full; many are left to be incorporated by implication of law from the legal nature of the contract into which the parties are entering. But if the parties wish to reject or modify primary obligations which would otherwise be so incorporated, they are fully at liberty to do so by express words. ........ These secondary obligations of the contract breaker and any concomitant relief of the other party from his own primary obligations also arise by implication of law - generally common law, but sometimes statute, as in the case of codifying Statutes passed at the turn of the century, notably the Sale of Goods Act 1893. The contract, however, is just as much the source of secondary obligations as it is of primary obligations; and like primary obligations that are implied by law, secondary obligations too can be modified by agreement between the parties, although, for reasons to be mentioned later,....
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....the speedy resolution of dispute. 35. When we consider the requirement of a reasoned order, three characteristics of a reasoned order can be fathomed. They are: proper, intelligible and adequate. If the reasonings in the order are improper, they reveal a flaw in the decision-making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to ....
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....desh", (2022) 4 SCC 116, the Hon'ble Supreme Court has reiterated the view in "Dyna Technologies Private Limited case" (cited supra) and held as under:- "18. 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. [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 : (SCC p. 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 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. Secti....
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....n by this Court in NHAI v. ITD Cementation India Ltd. [NHAI v. ITD Cementation India Ltd., (2015) 14 SCC 21 : (2016) 2 SCC (Civ) 716] , SCC para 25 and SAIL v.Gupta Brother Steel Tubes Ltd. [SAIL v.Gupta Brother Steel Tubes Ltd., (2009) 10 SCC 63 : (2009) 4 SCC (Civ) 16] , SCC para 29." 35. An identical line of reasoning has been adopted in South East Asia Marine Engg. & Constructions Ltd. (Seamec Ltd.) Vs. Oil India Ltd. [South East Asia Marine Engg. & Constructions Ltd. (Seamec Ltd.) Vs. Oil India Ltd., (2020) 5 SCC 164 : (2020) 3 SCC (Civ) 1] 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] laid down the scope of such interference. This Court observed as follows : (SCC p. 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....
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.... Damani, (2018) 11 SCC 328 : (2018) 5 SCC (Civ) 106], [Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd., (2021) 7 SCC 657] of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the Uncitral Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the "limited remedy" under Section 34 is coterminous with the "limited right", namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996." 37. 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/- as detailed in Table-1 to this order. Out of the aforesaid amount, the petitio....
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....iability by pointing out the above inconsistency which is not material. There is a possibility of the excess amount being awarded to the respondent-claimant on account of the above factor. However, the petitioner who is responsible to such lapses as it failed to assist the Arbitral Tribunal. Instead of pointing of the excess claim being charged post-facto on account of GST, the petitioner has merely denied the liability since the respondent-claimant was entitled to pass on the tax liability to the petitioner. 45. While deciding and making the impugned Award, an Arbitral Tribunal shall in all cases has to take into account the terms of the contract and trade usages applicable to the transaction under Section 28(3) of the Arbitration and Conciliation Act, 1996. 46. In this case, about 7 different contracts were originally signed between the parties. In my view, the Arbitral Tribunal has considered the terms of contract and has award the amounts to the respondent-claimant. 47. Thus, infraction of Section 28(3) of the Arbitration and Conciliation Act, 1966 cannot be inferred to warrant interference. As far as the first contract i.e., Material Contract dated 01.12.2016 is conce....
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....rding the amounts claimed. Therefore, on this account it cannot be stated that the Award passed by the learned Arbitrator was perverse or amounts to any patent illegality to warrant interference. 55. The challenge to the impugned Award on the ground that the Contract Nos.1 to 7 were not stamped and therefore not binding on the petitioner cannot be countenanced in the light of the fact that the parties have acted upon them and only a part of payment fell due from the petitioner to the respondent-claimant which was subject matter of arbitration. 56. That apart, the Hon'ble Supreme Court in In Re : Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, 2023 SCC Online SC 1666, has answered the issue on account of under stamping/ non-stamping of the contract. Therefore, the impugned Award does not call for any interference. 57. As far as the contract dated 27.04.2017 for a sum of Rs. 1,70,000/- is concerned and the argument that neither the Contract was signed nor stamped is concerned, it is noticed that an amount of Rs. 1,49,940/- had been paid by the petitioner to the respondent-claimant and the claim was....