TaxTMI 
TaxTMI 
2026 (1) TMI 1006
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....ion amount. The Tribunal has also granted post Award interest @ 15% p.a. from 1 September 2024. FACTS 2) Petitioner is a State-owned oil company and a Government of India Undertaking. The Respondent is a Joint Venture of Om Construction and Nice Projects Ltd. The Petitioner issued tender for execution of civil, structural and piping work at the second-generation Ethanol Bio Refinery, Bathinda on 30 April 2021 and corrigendum dated 18 May 2021. A Joint Venture (JV) was executed between Om Construction and Nice Projects Ltd. on 31 May 2021. Om Construction is a proprietary concern of Mr. Satya Pal Yadav whereas Nice Projects Ltd. is a company registered under the provisions of Companies Act, 1956. The Joint Venture /Consortium Agreement dated 31 May 2021 was executed by Mr. Sartaj Ali in his capacity as Director of M/s. Nice Projects Ltd. The name of JV was indicated as 'Om Construction-Nice Projects Ltd.(JV)'. The JV submitted its bid in pursuance of tender notice. Respondent claims that another JV Agreement was executed on 2 July 2021, in which the share of Om Construction in the JV was indicated as 75% and of Nice Projects Ltd. as 25%. According to the Petitioner said JV Agr....
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.... directing the parties to maintain status-quo till decision on application filed under Section 17 of the Arbitration Act. Petitioner filed Statement of Defence alongwith compilation of documents on 31 July 2023. On 18 August 2023, Petitioner changed its Advocate. The Arbitral Tribunal directed both the sides to complete the process of inspection of the documents, to file list of witnesses alongwith affidavit of evidence by 15 September 2023. 6) The Petitioner claims that by end of August-2023, it discovered that the Respondent had participated in the tender process by suppression of initiation of CIRP against Nice Projects Ltd. The Petitioner addressed email dated 1 September 2023 to the learned Arbitrator seeking stay of arbitral proceedings alleging fraud and false declaration by the Respondent. It is Petitioner's case that the Tribunal prevented it from filing any further application on the issue of jurisdiction and only permitted filing of written submissions on the objection of jurisdiction. Accordingly, on 13 September 2023, Petitioner filed written submissions. On 16 September 2023, the Tribunal passed Procedural Order No. 9 rejecting Petitioner's objection of jurisdictio....
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....d four broad objections to the impugned Award viz., (i) that the purchase order, letter of Award, Arbitration Agreement and the Arbitral Award are vitiated by fraud allegedly committed by the Respondent in not disclosing initiation of CIRP against M/s. Nice Projects Ltd., (ii) that the Arbitral Tribunal erred in allowing claims of Respondent in absence of any evidence on record (iii) that the Arbitral Tribunal has denied the opportunity of leading evidence to the Petitioner and (iv) that the Arbitral Tribunal was biased against the Petitioner. 10) So far as the first ground of the Award being vitiated by fraud is concerned, Mr. Behramkamdin would submit that well before publication of tender notice dated 30 April 2021, one of the constituent partners of JV-Nice Projects Ltd. was subjected to CIRP by order dated 12 February 2021 by admission of Company Petition. That Joint Venture Agreement executed on 31 May 2021 by the director of Nice Projects Ltd. was ab initio void as the said director had no authority to execute the Agreement on behalf of the Company. That the tender notice specifically stipulated declaration about non-pendency of any ins....
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....dent legal entity. That therefore Order dated 16 September 2023 is patently illegal. He would submit that dismissal of Writ Petition No. 3553 of 2023 does not come in the way of the Petitioner challenging correctness of order dated 16 September 2023 as this Court has left the said challenge open to be raised in Section 34 Petition. 12) Mr. Behramkamdin would further submit that the alleged Memorandum of Understanding dated 31 May 2021 and two JV Agreements dated 2 July 2021 and 16 July 2021 are contrary to clause 5.3(3)(c) of Invitation for Bid, which prevented parties from effecting any changes in the JV Agreement. That, in any case, said MoU and two JV Agreements were never brought to the notice of the Petitioner. That the same are executed after award of the contract and are otherwise meaningless. He would submit that the entire contractual agreement between the parties i.e. purchase order, letter of award and the tender, being outcome of fraud, cannot be given effect to. He would rely upon judgments of the Apex Court in Avitel Post Studioz Pvt. Ltd and others V/s. HSBC PI Holdings (Mauritius) Ltd. 2021 (4) SCC 713 and A.V. Papayya Sastry and others Vs. Government of Andhra P....
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....ioner to lead evidence. 15) Mr. Behramkamdin would further submit that the learned Arbitrator clearly exhibited bias against the Petitioner. He would cite the instances of Arbitral Tribunal- (i) refusing to conduct physical hearings, (ii) passing procedural orders, (iii) not accurately capturing the transpired events, (iv) not video recording the proceedings, (v) calling upon parties to confirm in writing of provision of full opportunity and following of procedure specified in Arbitration Act (vi) not accommodating the request made by the Counsel for the Petitioner in respect of the dates for final arguments while giving leeway to the Counsel for the Respondent in the matter of fixation of dates for final arguments, (vii) suo-moto grant of extension of time for filing Statement of Claim, (viii) threatening to impose costs on the Petitioner which was payable to the Arbitrator himself, (ix) making personal remarks against Senior Advocates appearing for the Petitioner, (x) allowing Respondent to produce documents over email and by way of screen sharing, etc. He would submit that Petitioner'....
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....n under Section 16 was challenged before the Division Bench of this Court and by a detailed judgment, the Division Bench has dismissed the said petition. That the Division Bench has not accepted the objection to the jurisdiction of the Arbitral Tribunal sought to be raised by the Petitioner. That the findings of the Division Bench have attained finality. 19) Mr. Ringe would also rely upon JV Agreement dated 16 July 2021, which was executed by Resolution Professional on behalf of Nice Projects Ltd. That the said Agreement was available with the Petitioner and the Petitioner was fully aware of initiation of CIRP against Nice Projects Ltd. He would submit that in any case, tender conditions required absence of insolvency proceedings against the bidder, which in the present case was JV. That there was no requirement for submitting any declaration for pendency of insolvency proceedings against the constituent member of JV. That the Arbitral Tribunal has rightly considered this aspect for the purpose of holding that initiation of CIRP against Nice Projects Ltd. did not have any effect on either the contract or the arbitration agreement. He would submit that pendency of insolvency proc....
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....nal. That the final arguments were presented by the Petitioner's Counsel on as many as 11 dates. He would therefore submit that the allegation of bias was raised only for sabotaging the arbitral proceedings. 23) Mr. Ringe would further submit that the Arbitral Tribunal has considered the entire material on record and has thereafter rendered the Award. That the Award is well reasoned and considers the arguments submitted by both the sides. That the Arbitral Tribunal has rightly appreciated the position that Petitioner was responsible for non-completion of work within the stipulated time. That Petitioner itself had directed stoppage of work for substantial period of time and thereafter unreasonably rejected Respondents' request for extension. The Tribunal has recorded a finding of fact that Petitioner is responsible for breach of contract. Such finding of fact cannot be disturbed by Court exercising power under Section 34 of the Arbitration Act merely because another view is also possible. That insufficiency or inadequacy of reasons cannot be a ground for setting aside the Award as held in OPG Power Generations Pvt. Ltd. Versus. Enexio Power Cooling Solution India Pvt. Ltd. And An....
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....everal heads as discussed in para-83 of the Award which reads thus :- CLM Claim Description Claim Amount Award 1 Compensation for breach of contract by respondent Rs. 12,30,65,251/- 34830068 2 extra item / extra cost incurred for supply of specific quality bolts Rs 18,00,400/- 16,94,351/- 3 TMT reinforcements steel brought at site Rs. 1,91,67,852/- 1,55,50,141/- 4 Civil work items that have been executed & verified by HPCL but un-paid (S/D Hold amount from 24 RA bills) Rs. 1,23,54,283/- 1,23,54,283/- 5 Structural steel brought Rs at site, consumed in works ready for consumption in works and fresh available at site Rs. 13,19,22,009/- 6,30,59,230/- 6 Deleted NIL NIL 7 Civil works executed pending verification by HPCL Rs. 28,20,526/- 28,20,526/- 8 Idle cost on account of underutilization of staff, T&P and temporary facilities created to the extent of 50% of mobilization at site Rs. 10,77,30,164/- 1,17,49,549/- 9 Supply of NP2 hume pipes in place of NP3 Rs. 10,47,617/- 10,03,965/- 10 Supply of stone boulder Rs. 15,93,800/- 13,60,751/- 11 Supply of sa....
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....passed above against each specific claim of the claimant and each counter claim of the Respondent, the Arbitral Tribunal passes the final arbitral award as under: 1. From the facts & evidence on record, it is established that the works under the subject contract had expired on 14.07.2022 and that thereafter the letter of termination dt 26.08.2022 issued by the Respondent was not valid as respondent had not granted any time extension beyond 14.7.2022. The contract stands fore-closed on 14.7.22 by efflux of time. The parties having failed to arrive at a settlement that was mutually acceptable and to the satisfaction of both the parties, the matter was referred to Arbitration for adjudication of disputes. 2. The Arbitral Award is admitted for a payable amount of Rs. 19,92,79,827/- (Rupees Nineteen Crores Ninety two Lacs Seventynine Thousand and Eight hundred twenty seven Only) in favour of the Claimant. 3. However, the AT awards counterclaim of Rs. 10,00,226/-(Rupees Ten Lacs Two Hundred and Twenty six only) in favour of the Respondent. 4. Net arbitral award amount admitted after reducing the admitted Counter Claim is Rs. 19,82,79,601/- (Nineteen Cr....
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....refore contends that the Director of Nice Projects Ltd. could not have entered into JV agreement nor could have participated in the bidding process on behalf of the JV. It is Petitioner's contention that the JV not only suppressed NCLT's order dated 12 February 2021, but gave a false declaration of non-pendency of insolvency proceedings. 31) There is no dispute to the position that by order dated 12 February 2021, NCLT admitted Company Petition (IB) No. 3042/ND/2019 filed by Varun Shuttering Stores and passed orders under Sections 9 and 14 of Insolvency and Bankruptcy Code, 2016 appointing Interim Resolution Professional in respect of Nice Projects Ltd. The moratorium was imposed and the Board of Directors of Nice Projects Ltd. were suspended. 32) Despite CIRP being initiated against Nice Projects Ltd., JV was entered into between Om Constructions and Nice Projects Ltd. vide Consortium Agreement dated 31 May 2021, which was signed by the director of Nice Projects Ltd., Mr. Sartaj Ali. I have gone through JV/Consortium Agreement dated 31 May 2021, which contained following stipulation: "The Leading partner for the tender will be Nice Projects Ltd. and in event of allo....
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....d. was not undergoing insolvency proceedings. This is sought to be explained by Mr. Ringe suggesting that the declaration was not on behalf of JV and that the JV was not undergoing CIRP. The explanation also appears to have been accepted by the Arbitral Tribunal. However, suggestion appears to be prima-facie misplaced as JV is not a legal entity and mainly not a company capable of being subjected to CIRP. The JV was formed for limited purpose for bidding and performance of contract with joint and several liability of the consortium members. The other entity in the JV, Om Constructions is a proprietary concern and was not governed by the provisions of the Companies Act,2013 or IBC. Only Nice Projects Ltd is a limited company, who could be subjected to corporate insolvency proceedings. Therefore there was no question of pendency of CIRP against the JV and the declaration was submitted with full knowledge that the same was in respect of a lead consortium member. It thus prima-facie appears that a false declaration was made about Nice Projects Ltd not being subjected to insolvency resolution process while submitting the bid. 35) Upon further queries, the Certificate dated 18 June 20....
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.... contract in favour of JV on 15 July 2021. 39) It is an admitted position that till the contract was terminated on 26 August 2022, the JV or Nice Projects Ltd. made no efforts to intimate Petitioner-HPCL that Nice Projects Ltd. was undergoing CIRP. Long after termination of contract and when Section 11 application filed on 21 October 2022, following disclosure was made:- 31. It is submitted that the present petition is being filed by the lead partner of the JV namely the Applicant and that for the record purposes only it is stated that the 2nd partner to the JV by the name and style of M/s Nice Project Ltd is a minority partner to the JV in accordance to the JV and the MOU signed between the two partners on dated 31.05.2021, further the 2nd partner is not empowered to represent in any legal affairs and that presently Nice Projects Ltd is under CIRP. (emphasis supplied) 40) It is Petitioner's case that use of the word 'presently' in the above declaration under Section 11 application made Petitioner-HPCL believe that CIRP was initiated at the time of filing of Section 11 application. I find some force in this submission as the disclosure was not clear and the ....
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.... that the CIRP was pending against Nice Projects Ltd. even prior to issuance of tender clearly gave room to the Petitioner to contend that it discovered the said aspect only by end of August 2023. 42) Also, the issue of failure to disclose complete details of initiation of CIRP was relevant only for explaining the delay on the part of the Petitioner in raising the objection of invalidity of contract and absence of arbitration agreement. In such circumstances, instead of condemning the Respondent for failing to make full discourse, the arbitral tribunal grossly erred in holding Petitioner responsible for not making inquiries about the date of initiation of CIRP against Nice Projects Ltd. DECISION OF PETITIONER'S OBJECTION TO JURISDICTION 43) After discovery of the factum of Nice Projects Ltd. facing CIRP even before award of contract, Petitioner wrote email dated 1 September 2023 to the learned Arbitrator stating inter-alia that it discovered initiation of CIRP against Nice Projects Ltd. vide order dated 12 February 2021 after conducting investigations on the website of NCLT. The Petitioner contended that the award of tender, letter of acceptance and purchase orders issued ....
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....ereafter proceeded to pass order dated 16 September 2023 treating Petitioner's email as application under Section 16 and 32 of the Arbitration Act and rejected the objection to its jurisdiction by holding as under:- 1. While the pleadings stand completed on 31.7.23 and that the proceedings are at the stage of arguments, notwithstanding the fact that no new pleading or defence from either party other than those mentioned in the pleadings /defence through the SOD and the SOC can be taken up at this stage, the Respondent has again filed applications on 1.9.23 and dt 13.9.23 under Sec 16 and 32 of 'Arbitration Act', for terminating the present arbitration proceedings due to pending NCLT case against 'Nice Projects' as a judgment debtor, which were not a part of his pleadings/defence. 2. However, the Tribunal has extended full opportunity and time to Respondent to showcase and explain if the pleadings/issues being raised now form a part of his pleadings/defence that have been already submitted. 3. The aforesaid applications filed by the Respondent are not accepted for following reasons: 3.1 The bidder in the present contract, ie. joint....
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....ide Para-31 of his Sec 11 petition before Hon'ble BHC mentioned the fact that his JV associate is under CIRP, the Respondent cannot be allowed to claim ignorance at this stage of arguments. 3.9 The present arbitration proceeding is initiated consequent to Hon'ble Bombay High Court order. There is no 'Stay' order from any competent Court. 3.10 It is well settled law by Hon'ble Supreme Court that in terminated contracts, arbitration clause survives and disputes are arbitrable. In view of the above, both the applications of respondent are sans merit and are dismissed. The arbitration proceedings therefore shall continue. 46) Before considering the correctness of order dated 16 September 2023 rejecting Petitioner's challenge to jurisdiction, it would be necessary to note that the Petitioner was advised to file Writ Petition No. 3553 of 2023 before this Court challenging the order dated 16 September 2023. The Petition has been dismissed by the Division Bench by detailed judgment and order dated 17 October 2023. The findings recorded by the Division Bench in respect of order dated 16 September 2023 read thus:- 29. As far as the ....
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....ntion that he has no jurisdiction, only in exceptionally rare cases and for the few exceptions as mentioned above. We will therefore have to consider whether the case in the present Writ Petition is such an exceptional case which falls within one of the said exceptions. 31. As far as the exception of lack of inherent jurisdiction is concerned, it cannot be said that the Arbitrator did not have jurisdiction to pass the said Order dated 16th September 2023. As stated hereinabove, the Arbitrator was appointed by an Hon'ble Judge of this Court, under the provisions of Section 11 of the Arbitration Act, by the said Order dated 12th December 2022. Having been so appointed, the Arbitrator definitely had jurisdiction to decide an Application under Section 16 of the Arbitration Act. In fact, the said Order dated 12th December 2022 appointing the Arbitrator also mentions that the Respondent would be at liberty to raise all questions of jurisdiction, under Section 16 of the Arbitration Act, before the Arbitrator, which necessarily means that the Arbitrator had jurisdiction to decide these questions of jurisdiction. Even otherwise, in the absence of the said Order dated 12th December ....
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.... is completely perverse, i.e., that the perversity must stare in the face. In our view, the Arbitrator's finding that, since he was appointed as the Arbitrator under Section 11 of the Arbitration Act by an Order of an Hon'ble Judge of this Court, under the arbitration clause contained in the agreement between the parties, he cannot hold that he has no jurisdiction on the ground that the said agreement and the said Arbitration Clause are void, cannot be considered to be perverse so as to merit interference under Articles 226 or 227 of the Constitution of India. 35. For all the aforesaid reasons, we are of the view that the present case of the Petitioner is not one of those exceptionally rare cases where interference with an order passed under Section 16 of the of the Arbitration Act is justified under Articles 226 and 227 of the Constitution of India. For all these reasons, we are not inclined to exercise our writ jurisdiction to entertain a challenge to the said Order dated 16th September 2023 passed by the Arbitrator under Section 16 of the Arbitration Act. 47) Thus, though the Writ Petition is dismissed, this Court specifically observed that Petitioner had the remedy ....
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.... judicious approach. I proceed to discuss each of the reasons: The first reason of JV being a legal entity is against fundamental policy of India as a joint venture formed for securing the contract and for execution of work is never a legal entity in itself. Only those joint ventures, which are incorporated become legal entities. Also, the JV Agreement itself made it clear that the JV was not the legal entity as Clause 8 provides for joint and several liability of both the consortium members towards the Employer. Though the contract was awarded to JV, it was based on false declaration that the lead member (Nice Projects) was not undergoing CIRP. Also JV, by itself, cannot be subjected to CIRP as the same is not a corporate entity and therefore the declaration is applied to the only corporate entity in the JV, being Nice Projects Ltd. The second reason of Petitioner's responsibility of verifying credentials of bidders is outrageous and proceeds on an assumption that if a bidder suppressing vital facts is not caught by the Employer, he can get away under a specious plea that it was Employer's responsibility to catch him. The principle applied by the Tribunal is agai....
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....d CIRP against Nice Projects Ltd. is an irrelevant factor. The relevant issue is whether the contract would have been awarded to the JV, whose lead member was undergoing insolvency proceedings? The eighth reason of fraud being beyond jurisdiction of arbitral tribunal since it was a criminal matter indicates gross ignorance of fundamental principles of law on the part of the Tribunal. Whether contract is vitiated by fraud under the Contract Act is a civil dispute capable of being decided by the Arbitral Tribunal. The ninth reason of disclosure of CIRP in application filed under Section 11 is again recorded in ignorance of Petitioner's claim that the knowledge about the exact date of initiation of CIRP was gained by it by end of August 2023. The tenth reason of absence of stay order by any Court indicates the perfunctory manner in which the objection of jurisdiction is dealt with. This reason stems out of a fundamental error committed by the Tribunal in treating mere email for deferment of proceedings as an objection to jurisdiction. This wrong approach has resulted in mixing the issues of prayer for stay (in email) and objection to jurisdiction. T....
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....on No. 3553 of 2023 on 17 October 2023, Petitioner immediately moved the Arbitral Tribunal by sending email dated 25 October 2023. By that email, the Petitioner informed the Arbitral Tribunal that it was proposing to amend the Statement Of Defence and Counterclaim. It would be apposite to reproduce the email dated 25 October 2023, which reads thus :- Dear sir, We write under the instructions of the Respondent, Hindustan Petroleum Corporation Limited, in the subject arbitration, In reference to our email dated 20 October 2023, the Hon'ble Bombay High Court ("Court") passed a judgement in Writ Petition (L.) No. 26940 of 2023 on 17 October 2023. The Court has dismissed the writ petition strictly on the ground of maintainability without making any observations on the merits. Please note that the Respondent is considering filing an application under Section 23 (3) of the Arbitration and Conciliation Act, 1996, to supplement and amend the Statement of Defence/Counter-Claim filed by the Respondent on 31 July 2023, to bring on record the recently discovered fraud, misrepresentation and suppression of facts and documents by the Claimant/ JV in the pre....
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....already been settled vide PO-9 that there is no CIRP or IRP on the bidder 'JV'. 1.5. Since arbitration is a mechanism of speedy resolution of disputes, such request for amendment beyond the time limit stipulated in the 'Arbitration Act' defeats the very purpose of arbitration. Hence no amendment in pleading /defence from either party can be allowed at this stage. 1.6. At the stage of argument, parties are directed to restrict their submissions in accordance with the pleadings already placed on record by them. However, they are permitted to supplement their claims/counterclaims during arguments. 1.7. For all the aforesaid reasons, respondent's application dt 25.10.23 is therefore dismissed. 1.8. For the same reasons claimant's additional documents filed 25.10.23 are not taken on record. 2. Respondent requested for holding the hearings physically. Claimant wanted to hold on-line hearings. It is decided to start with on-line hearings and if difficulties are experienced, then resort to physical hearings in future. Both parties agreed that first claimant will complete his arguments on all the issues a....
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....his was already dismissed vide PO-10 dt 26.10.23. Claimant vehemently objected to this application. 2. Parties unconditionally completed pleadings by 31.7.23. Respondent was having time upto 15.8.23 for filing amendment as per PO-7 dt 20.7.23, in which he failed. For the first time he filed application before arbitrator on 25.10.23 for granting him two weeks' time for filing amendment etc, which was quite late in view of time limitations stipulated vide Sec 23(4) and Sec 29-A of 'Arbitration Act'. Hence his application was dismissed vide PO-10. 3. Further, Respondent took up the same issue before Hon'ble Bombay HC vide his WP under Art. 226/227 and prayed in the prayer clause (g) that, Quote: "to issue an appropriate writ, order or direction in the nature of Mandamus directing the Sole Arbitrator to allow the Petitioner to amend its Statement of Defence to place the additional facts on record, to file its admission and denial, to re-frame / amend the issues based on the amended Statement of Defence, to permit the Petitioner to lead evidence". Unquote: The whole WP was dismissed by the Hon'ble HC. 4. Hence for the reasons stat....
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....of contract determines the entitlement of Respondent to claim amounts from Petitioner. If the contract is declared valid, Respondent's claims towards work performed, material purchased, damages, compensation, loss of profits etc. can be adjudicated. However, if the contract is held as having been procured by suppression and misrepresentation, the whole approach towards adjudication of claims of Respondent would change and even if the termination is held to be invalid, the Tribunal would then consider and decide the issue whether a party indulging in suppression and misrepresentation can be awarded damages, loss of profits, etc. In my view therefore, the issue of suppression of initiation of CIRP against Nice Projects Ltd. having effect on validity of contract goes to the root of the matter and was one of the most vital issues which ought to have been adjudicated by the Arbitral Tribunal. Since suppression and misrepresentation about pendency of CIRP against the lead consortium member was writ large, the Tribunal has egregiously and patently erred in refusing to decide the said issue by not permitting Petitioner to amend the pleadings. The Arbitral Tribunal has erroneously closed th....
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....icious approach. DIRECTING PARTIES TO FILE EVIDENCE BEFORE FRAMMING OF ISSUES 62) After Petitioner filed its Statement of Defence on 31 July 2023, the Tribunal passed Procedural Order No. 8 dated 3 August 2023, which reads thus :- Procedural Order No. 08 dt. 3.8.23 The respondent filed Statement of Defence (SOD) on 31.7.23 together with supporting documents. With this filing, pleadings of both the parties stand concluded. Hence following directions are issued to the parties for furtherance of the proceedings. 1. Claimant to confirm within a week, whether he wants to file rejoinder, and if so, to file it by 16.8.23. 2. Both parties to confirm 'Admissions and denials' of the annexures of SOC and SOD, by 31.8.23. Such admitted documents shall be considered as valid 'Exhibits' for arguments. 3. For 'Documents Denied', parties shall be eligible for demanding inspection of original documents in possession of the other party and other party shall co-operate for such inspection. 4. Both parties to issue 'Notices to produce documents', if any, which are not in their possession, but may be available w....
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....) Whether respondent granted EOT within expiry of contract period or the extended contract period? x) Whether any party committed breach of contract and by violating which provisions of agreement or law? xi) Whether contract was terminated by respondent within the validity of the contract and lawfully as per procedure stipulated in agreement ? xii) Whether respondent was justified in getting the balance work executed at the risk and cost of claimant? xiii) Whether respondent was justified in consuming / disposing off /preventing claimant to take out his material / machineries available at site ? xiv) What claims / counterclaims are arbitrable / admissible? xv) Whether interest is admissible on claims / counterclaims ? xvi) Whether cost is admissible ? xvii) Any other valid arbitrable issue and relief admissible ? 65) Thus, the Tribunal adopted unusual course of action by directing parties to file evidence before framing of issues. After noticing that parties had not filed evidence, it then proceeded to frame issues on 16 September 2023. Thus, the parties were not given liberty to lead evidence on issues fram....
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.... hindrance free work site to enable the Claimant to plan the resources mobilization required and the dates on which each activity to be completed as per respondent's priority. I therefore hold that the Respondent failed to provide any initial execution plan, nor he can hold claimant responsible for not making front timely available to other agency of respondent. Thus, the Arbitral Tribunal has not discussed any evidence (documentary or oral) to arrive at the conclusion that the Respondent failed to provide initial execution plan. The above quoted findings of the Arbitral Tribunal are thus without evidence. 70) Issue No. 3 related to making available hindrance free work site. The only reasoning recorded by the Arbitral Tribunal are to be found as under: In accordance with the construction industry trade practice the client is required to provide hinderance free construction site to enable the contractor to perform and deliver the work as required and avoid any idle expense and utilize his mobilization most optimally to deliver the required schedule. From the records it appears that partly hindrance free work site was not made available due to land ow....
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....skilled labour etc., to suit the nature and quantum of work shown in the drawings. Hence next set of drawings is required well in advance for claimant to plan suitable adequate mobilisation of resources and to take care of required lead time for suppliers of materials etc. From the records the AT finds that, the Respondent has admittedly caused a delay in issue of various drawings including that by issuing revisions in the drawings as well, which were required to enable the Claimant to timely plan his required resources and also to avoid prolongation / rework. Structural drawings were issued only at the fag end of contract period. On the basis of records, I hold that respondent failed miserably in releasing the drawings timely and caused huge delay in issue of drawings, preventing claimant to plan / mobilise his resources suitably to complete the works smoothly within even the extended contract period. Many drawings were not even issued till initial contract completion date. 73) The Petitioner had specifically contended before the Arbitral Tribunal that the drawings to the extent of 94% of PO Value were issued, out of which the Respondent had completed....
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.... drawings' were issued, Respondent executed only 14% work. In such circumstances, the Tribunals ought to have discussed, with reference to evidence on record, as to which version is correct and why. It ought to have recorded some findings as to whether Petitioner's claim of supply of 94% 'hold-free drawings' is correct or not. However, this exercise is not undertaken by the Tribunal and version of Respondent is blindly accepted without discussing any documentary evidence on record. Again, the finding that 'it is established that there was huge delay caused by the Respondent in issue of GFC drawings, revision of drawings....' clearly appears to be perverse as the same is recorded in ignorance of the position that 94% of the drawings were issued to the Respondent. 75) Issue No. 6 relating to release of timely payments to the Respondent is answered by recording only following laconic finding:- Arbitrator's findings and reasoning: Timely full payment is a backbone of timely completion of works. From the arguments and evidences produced by the parties, it is clear that respondent retained the money arbitrarily more than what was provided in the contract and did ....
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.... It is noticed from the evidences placed before AT that respondent admitted having works under hold and delay attributable to them for 140 days. In addition, work was held up for 75 days due to breakout of nationwide epidemic Covid-19, in a contract of 320 days (10.5 mths). Hence during initial contract period, claimant could get only 105 working days (=320-140-75), which is 32.8% of initial contract period. Respondent admitted that claimant had completed more than 33% of work in the initial contract period. Even including EOT, during total contract period of 365 days, claimant got only 150 working days (=365-140-75), which is 41% of total contract period. Respondent admitted that claimant could achieve 37.77% progress during the total contract period. Hence performance of claimant was almost matching the front and drawings availability and the work progress was not suffering adversely on account of in-adequate resource mobilization by claimant; but was suffering due to defaults of respondent solely. In view of the facts on record the total value of works that the Respondent failed to release within the agreed contract period is about Rs.48.93 Cr which is about 52%....
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....nation order are factually incorrect. However, the Respondent shied away from the witness box despite grant of opportunity. It is another matter that the finding on Issue No. 8 also suffers from the same vice of non-consideration of even a single document by the Arbitral Tribunal. 80) Issue No. 9 relating to grant of extension of time is answered in favour of the Respondent and against the Petitioner by recording following cryptic findings: Arbitrator's findings and reasoning: The original contract period expired on 30.5.22. Respondent granted provisional EOT upto 19.9.22 without imposing LD vide his letter dt 30.5.22. Thereafter Respondent changed it and granted EOT for 45 days upto 14.7.22, without imposing LD, on 7.6.22 against claimant's request upto 31.12.22. Claimant replied it on 23.6.22. Respondent did not grant EOT after 14.7.22. Hence no contract existed thereafter. I therefore hold that the contract had come to an end on 14.7.22 by efflux of time. No EOT was granted thereafter. There is no dispute about this between the parties. There was no justification for respondent to deny justified EOT upto 31.12.22 for his own admitted delays ....
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....nputs. iii) Respondent failed in avoiding imposing frequent holds on works. iv) Respondent failed in giving timely decisions so as to continue work smoothly. v) Respondent failed in issuing timely work permits. vi) Respondent failed in making timely payments without any unlawful holds. vii) Respondent failed in issuing timely change orders as per Cl 20 of SCC and fulfil consequential contractual provisions such as reduction in CPBG, quantity variation of BOQ items etc. viii) Respondent failed in granting EOT as per CI 5 & 13 of GTC for his own admitted delay attributable to respondent and for Covid-19, beyond claimant's control etc total for 215 days. ix) Respondent terminated contract unlawfully even whe provisions of contract under Cl 12 of GTC were not triggered. x) Respondent failed in resolving dispute amicably as pe contract Cl 14 of GTC before resorting to arbitration. xi) Respondent failed in appointing arbitrator when disputes are not resolved amicably as per contract. xii) Respondent failed to release of SD/retention money and CPBG even after completion of defect free DLP as per ....
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....contradiction of 'IC Act' / law and natural justice. 83) Perusal of the above findings would indicate that not even a single document is considered for holding Petitioner responsible for failing to finalise sequencing of priority structures, for failing to inform the Respondent of dates by which such structures were required, for failure to give timely decisions, for failing to issue timely work permits, for failing in making timely payments etc. All these findings are recorded without referring to even a single document on record. The Tribunal ought to have considered and discussed atleast some documents on record, in absence of oral evidence, as to when a particular decision was required by Respondent and when such decision was given by Petitioner. Similarly, some documents ought to have been discussed to indicate as to when any particular work permit was required to be issued and how there was delay in issuance of the same. The above findings are recorded by the Arbitral Tribunal on its ipse-dixit without even bothering to take into consideration even a single document on record. The findings are patently perverse to say the least. The findings also exhibit lack of ju....
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....d. in Unibros Ltd Versus. All India Radio 2023 SCC Online SC 1366, and has held in para-15,16 and 19 as under :- 15. Considering the aforesaid reasons, even though little else remains to be decided, we would like to briefly address the appellant's claim of loss of profit. In Bharat Cooking Coal (supra), this Court reaffirmed the principle that a claim for such loss of profit will only be considered when supported by adequate evidence. It was observed: "24. ... It is not unusual for the contractors to claim loss of profit arising out of diminution in turnover on account of delay in the matter of completion of the work. What he should establish in such a situation is that had he received the amount due under the contract, he could have utilised the same for some other business in which he could have earned profit. Unless such a plea is raised and established, claim for loss of profits could not have been granted. In this case, no such material is available on record. In the absence of any evidence, the arbitrator could not have awarded the same." 16. To support a claim for loss of profit arising from a delayed contract or missed opportunities from other....
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....ndings on the said issue which are recorded in para-59 of the Award as under:- Arbitrator's findings and reasoning: Respondent has never disputed that the required structural steel has not been brought at site. There was also no dispute regarding the quality of structural steel. What respondent has disputed is that claimant failed to attend joint measurement, hence it is not admissible. Respondent failed to bring out any such provision of contract as already recorded in findings of AT in para 53 above. The structural steel of required quantity was only brought through security gate of respondent with proper IMRs which is as authentic as joint measurements quantity in absence of any other authentic measurements records taken and produced by respondent as required under the contract provisions. Claimant has not claimed any excess quantity beyond BOQ quantity. Moreover, respondent has not brought out any letter to AT's notice where he has written to claimant for having failed to procure required quantity of steel. It is an established fact that advance paid requires receipt of material at site along with a copy of the invoice for the same. Respondent....
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....rement of material at higher cost during Russia-Ukrain war is not covered by any provision of contract; hence dismissed. As per technical specification, the claimant is required to submit the detail drawings within 4 weeks of issuance of GA drawings. I therefore hold that claim of Rs. 6,30,59,230/- as per calculations shown in para 85, towards unpaid structural steel brought at site including part fabrication & erection, as per IMRs, is payable to claimant; but no extra payment for using TEKLA software or preparing detail design and drawings is admissible. 90) The Tribunal has proceeded to award the claim mainly on account of failure on the part of the Petitioner to proceed with joint verification. Petitioner is held responsible for avoiding joint verification. The quantity of structural steel is determined mainly on the basis of Inward Material Receipts (IMR). No document is discussed for recording existence of alleged admission of consumption of all the steel at the site. The purchase and supply of claimed quantity of steel is presumed on the basis of failure on the part of Petitioner in writing any letter to Respondent about not procuring required quantity o....
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....om filing formal application under Section 16 of the Arbitration Act and how the email dated 1 September 2023 was treated and decided as application under Sections 16 and 32 of the Arbitration Act. Since the Petitioner was agitating the issue of jurisdiction till 16 September 2023 and since the said issue was decided by order dated 16 September 2023, no occasion arose for the Petitioner to file affidavit of evidence. However, by order dated 16 September 2023 the Arbitral Tribunal recorded that all procedural formalities were completed and final arguments shall commence on the next date of hearing. In view of these peculiar circumstances, though initially an opportunity was granted by the Arbitral Tribunal on 3 August 2023 for filing of evidence, the Arbitral Tribunal appears to have shown some haste in directing the parties to commence arguments simultaneously with deciding application of jurisdiction under Sections 16 and 32 of the Arbitration Act. PETITIONER'S OBJECTION OF BIAS 94) So far as the allegation of bias levelled by the Petitioner against the learned Arbitrator is concerned, I am not inclined to delve deeper into the said allegation since I have arrived at a concl....
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....nal as such statements, if submitted, would obviate the challenges to the procedures before Section 34 Court. The present case however depicts departure from set principles of law and procedures. The Petitioner has refused to submit any such statement and recorded detailed reason for refusing to do so. I have already held that the Petitioner has been erroneously denied an opportunity of amending the statement of defence. Having conducted the arbitral proceedings by following procedures unknown to law, the Tribunal expected Petitioner to certify that full opportunity was granted and all procedures were followed. CONCLUSIONS 98) Considering the overall conspectus of the case, I am of the view that the impugned Award is unsustainable and liable to be set aside. The Arbitral Tribunal has adopted procedure unknown to law while conducting the arbitral proceedings. It has erroneously treated mere emails for deferment of proceedings as applications and has prevented the Petitioner from filing proper applications. It has erroneously prevented the Petitioner from raising the issue of validity of the contract in the light of suppression of CIRP against Nice Projects Ltd. prior to issuan....
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....llenge laid to the award. In doing so, the Court does not supplant the reasons of the arbitral tribunal but only explains it for a better and clearer understanding of the award. (emphasis added) 101) However, the Tribunal has not discussed even a single document and had no oral evidence before it. The Tribunal cannot record conclusions by stating that the same are reached 'from material on record', without actually referring to the exact document it seeks to rely on. Court exercising powers under Section 34 is not expected to go through the documents on record of the tribunal and certify that the conclusions of the Tribunal are otherwise supportable by evidence on record. There is a marked difference between explaining the inadequately worded underlying reason in the award by Section 34 Court by discussing documents on record and rewriting the whole of the award by supporting each finding with documents available on record. The latter exercise involves supplanting of reasons, which is impermissible. For preserving the impugned Award, what this Court will have to do in the present case is to undertake the latter exercise. I am not supposed to navigate through the heap of....