TaxTMI 
TaxTMI 
2024 (7) TMI 294
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....nd 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 11. Six Containers 7,08,000 0 7,08,000 12. All Materials and Equipment in Site 47,20,000 0 47,2....
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.... 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 Company 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 Engineerin....
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....ed 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 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)Whe....
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.... 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 decision of the Arbitrator is found to be perverse or so irrational that no reasonable person 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 con....
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....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, they cannot, in my view, be totally excluded. In the instant case, the only secondary obligations and concomitant reliefs that 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 ....
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....d 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 have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier 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 ....
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....tions 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. 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." 19. In Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. [Parsa Ken....
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.... "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 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. 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 in....
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....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 petitioner had earlier paid a sum of Rs. 6,94,36,884/- to the respondent-claimant. 38. The respondent-claimant claimed the balance Rs. 14,80,58,207/- [Rs. 11,19,22,870/- +Rs. 3,61,35,337/-]. An amount of Rs. 3,61,35,337/- allegedly borne by the respondent-claimant towards miscellaneous expenses incurred by the respondent-claimant 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-cl....
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.... 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 concerned, the goods and equipments were imported by the respondent-claimant and Bills of Entry were filed for clearing them. However, they could not be cleared as the Special Intelligence and Investigation Branch (SIIB) of the Custom Department delayed the clearance. 48. The Arbitral Tribunal has not attributed the delay on the respondent-claimant. Ultimately, 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....