Union of India Union of India v. M/s Shekhar Enterprises and another M/s Shekhar Enterprises and another
Case Details
2023 (O&M) FAO-2808-2023 (O&M) Sr. No.107 IN THE HIGH COURT OF PUNJAB AND HARYANA AT IN THE HIGH COURT OF PUNJAB AND HARYANA AT IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CHANDIGARH FAO FAO-2808-2023 (O&M) Date of Decision : 20.01.2025 Date of Decision : Union of India Union of India …Appellant … Versus M/s Shekhar Enterprises and another M/s Shekhar Enterprises and another …Respondents …Respondent CORAM : HON’BLE MS. JUSTICE LAPITA BANERJI HON’BLE MS. JUSTICE LAPITA BANERJI HON’BLE MS. JUSTICE LAPITA BANERJI Mr. Arun Gosain, Advocate, Present : Mr. Arun Gosain, Advocate, for the appellant. for the appellant. Mr. Vishal Sodhi, Advocate, Mr. Vishal Sodhi, Advocate, for the respondent for the respondents. *** LAPITA BANERJI, J. (Oral) LAPITA BANERJI Under Challenge in the present appeal is the impugned Under Challenge in the present appeal is Under Challenge in the present appeal is judgment and order dated January 02, 2023 passed by the learned District judgment and order dated January 02, 2023 passed by the judgment and order dated January 02, 2023 passed by the Judge, Pathankot. Judge, Pathankot. 2. Learned District Judge vide impugned order, refused to Learned District Judge vide impugned order, refused to Learned District Judge vide impugned order, refused to interfere with the award passed by the learned Arbitrator and dismissed the interfere with the award passed by the learned interfere with the award passed by the learned application under Section 34 of the 1996 Act. It was argued by the application under Section 34 of the 1996 Act application under Section 34 of the 1996 Act appellant before the learned Court adjudicating the application appellant before the learned Court applicant-appellant before the learned Court Section 34 of the Arbitration and Conciliation Act, 1996 (for short under Section 34 of the Arbitration and Conciliation Act, 1996 (for short Section 34 of the Arbitration and Conciliation Act, 1996 (for short that the learned Arbitrator misdirected himself by not taking “1996 Act”) that the learned Arbitrator misdirected himself by not taking that the learned Arbitrator misdirected himself by not taking into consideration Clause 11 of the arbitration agreement relating to time, into consideration Clause 11 of the arbitration agreement relating to into consideration Clause 11 of the arbitration agreement relating to delay and extension of the contract and extension of the contract and unjustly/unfairly relied unjustly/unfairly relied upon clauses ed Arbitrator was of the view that 7 and 9 of the said agreement. The learned Arbitrator was of the view that 7 and 9 of the said agreement. The learn appellant had to make good the amount that was claimed the Union of India-appellant had to make good the amount that was claimed the Union of India by the claimant-contractor against claim Nos.3(a), 3(b), 5(b) by the claimant s.3(a), 3(b), 5(b), 5(c), 8 and 9 interest @10% per annum from March 9, 2012 i.e. 6 months after the interest @10% per annum from March 9, 2012 i.e. 6 months after with interest @10% per annum from March 9, 2012 i.e. 6 months after submission of the final bill by the contractor up to the date of the award. submission of the final bill by the contractor up to the date of the award. submission of the final bill by the contractor up to the date of the award. VANDANA 2025.01.23 18:27 I attest to the accuracy and integrity of this document Page 1 of 5 2023 (O&M) FAO-2808-2023 (O&M) The appellant was given a period of 3 months to make the payment. In the The appellant was given a period of 3 months to make the payment. In the The appellant was given a period of 3 months to make the payment. In the amount was not paid within the aforesaid period of event the entire awarded amount was not paid within the aforesaid period of event the entire 3 months, the entire amount , the entire amount as due was directed was directed to carry future interest @ 12% per annum from the day after the date of publication of award to the 12% per annum from the day after the date of publication of award to the 12% per annum from the day after the date of publication of award to the date of actual payment. date of actual payment. 3. By the impugned order, the learned District Judge came to the By the impugned order, the learned District Judge came to the By the impugned order, the learned District Judge came to the
Legal Reasoning
finding that there was no infirmity in the aforesaid award and the appellant finding that there was no infirmity in the aforesaid finding that there was no infirmity in the aforesaid not bring the challenge within the purview of the grounds set out in not bring the challenge within the purview of the grounds set out could not bring the challenge within the purview of the grounds set out Section 34 of the 1996 Act. Since Court h Section 34 of the 1996 Act. hearing an application under sit in appeal over the award passed by the learned Section 34 could not sit in appeal over the award passed by the learned Section 34 could not Arbitrator while dealing with the application Arbitrator while dealing with the under Section 34 of the 1996 Act, in view of the law laid down by the Hon’ble Supreme Court of India in Act, in view of the law laid down by the Hon’ble Supreme Court of India Act, in view of the law laid down by the Hon’ble Supreme Court of India riya Ispat Nigam Ltd. Vs. M/s Dewan Chand Ram Saran” 2012 (3) riya Ispat Nigam Ltd. Vs. M/s Dewan Chand Ram Saran “Rashtriya Ispat Nigam Ltd. Vs. M/s Dewan Chand Ram Saran , the award was not interfered with. RCR (Civil) 720, the award was not interfered with. RCR (Civil) 720 4. Learned counsel for the appellant submits that apart from the Learned counsel for the appellant submits that apart from the Learned counsel for the appellant submits that apart from the grounds mentioned in the application under Section 34 of the 1996 Act, the grounds mentioned in the application under Section 34 of the 1996 Act, the grounds mentioned in the application under Section 34 of the 1996 Act, the learned Arbitrator committed a jurisdictional error since the second learned Arbitrator committed a jurisdictional error since the second learned Arbitrator committed a jurisdictional error since the second extension was not granted by the Court and was only mutually agreed upon extension was not granted by the Court and was extension was not granted by the Court and was by the parties. 5. 6. Issue notice to the respondents. Issue notice to the respondents.
Legal Reasoning
Mr.Vishal Sodhi, Advocate appears and accepts notice Mr. Vishal Sodhi, Advocate appears and accepts notice on behalf of the respondents and submits that by behalf of the respondents and submits that by passing the impugned order, the learned District Judge did not commit any the learned District Judge di d not commit any error since after appreciation of evidence, even if an evidence, even if an alternative view to the view to the view taken by the learned Arbitrator was possible, was possible, the award could not be be interfered with. Further more, he submits that the extension of mandate of learned Arbitrator was done by he submits that the extension of mandate of learned Arbitrator was he submits that the extension of mandate of learned Arbitrator was VANDANA 2025.01.23 18:27 I attest to the accuracy and integrity of this document Page 2 of 5 2023 (O&M) FAO-2808-2023 (O&M) mutual consent of the parties and at this appellate stage, no issue could mutual consent of the parties and at th is appellate stage, no issue could be raised regarding the said fact. The appellant has challenged the award on raised regarding the said fact. The appellant has challenge raised regarding the said fact. The appellant has challenge ndate of the learned Arbitrator for the first the ground of expiry of the mandate of the learned Arbitrator for the first the ground of expiry of the ma time before this Court hearing the appeal under Section 37 time before this Cou the appeal under Section 37 of the 1996 Act. 7. He relies on the decisions passed by a coordinate Benc He relies on the decision passed by a coordinate Bench of the Delhi High Court dated 17.09.2004 in ‘Shyam Telecom Ltd. Vs. Arm Ltd. Delhi High Court dated 17.09.20 Shyam Telecom Ltd. Vs. Arm Ltd.’ and and 01.08.2008 the Bombay High Court dated 01.08.2008 the Bombay High Court dated in ‘M/s Mascon Multiservices and Consultants Pvt. Ltd. Vs. Bharat Oman Refineries Ltd. Multiservices and Consultants Pvt. Ltd. Vs. Bharat Oman Refineries Ltd. Multiservices and Consultants Pvt. Ltd. Vs. Bharat Oman Refineries Ltd. . and Another’. 8. 9. Heard the parties and perused the material on record. Heard the parties and perused the material on record. Heard the parties and perused the material on record. It appears that the learned Arbitrator considered clauses 7, It appears that the learned Arbitrator considered clauses 7, 9 and 11 of the contract between the parties an and 11 of the ontract between the parties and after detailed reasoning granted the aforesaid claims. It could not be said that the award wa granted the aforesaid claim It could not be said that the award was against the Public Policy of India or that the learned Arbitrator misdirected himself the Public Policy of India or that the learned Arbitrator misdirected himself the Public Policy of India or that the learned Arbitrator misdirected himself in any manner or that the learned Arbitrator committed a jurisdictional in any manner or that the learned Arbitrator committed a jurisdictional in any manner or that the learned Arbitrator committed a jurisdictional ror. Therefore, there was no scope of interference by the Court error. Therefore, there was no scope of interference by the Court ror. Therefore, there was no scope of interference by the Court the dispute under Section 34 of the 1996 Act. A beneficial adjudicating the dispute under Section 34 of the 1996 Act. A beneficial the dispute under Section 34 of the 1996 Act. A beneficial reference can be made to the scope of the 34 proceedings in the judgment of reference can be made to the scope of the 34 proceedings in the judgment of reference can be made to the scope of the 34 proceedings in the judgment of the Supreme Court passed in ‘Associate Build the Supreme Court passed i uilders Vs. Delhi Development Authority’, (2015) 3 SCC (2015) 3 SCC. The relevant extract is set out herein t extract is set out herein below:- An arbitral tribunal must decide in accordance “An arbitral tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a with the terms of the contract, but if an arbitrator construes a with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean term of the contract in a reasonable manner, it will not mean term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of that the award can be set aside on this ground. Construction of that the award can be set aside on this ground. Construction of ntract is primarily for an arbitrator to decide the terms of a contract is primarily for an arbitrator to decide the terms of a co unless the arbitrator construes the contract in such a way that unless the arbitrator construes the contract in such a way that unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or it could be said to be something that no fair minded or it could be said to be something that no fair minded or reasonable person could do. It was further held that it has been reasonable person could do. It was further held that it has been reasonable person could do. It was further held that it has been opined by this court th at when it comes to setting aside of an opined by this court that when it comes to setting aside of an award under the public policy ground, it would mean that the award under the public policy ground, it would mean that the award under the public policy ground, it would mean that the VANDANA 2025.01.23 18:27 I attest to the accuracy and integrity of this document Page 3 of 5 2023 (O&M) FAO-2808-2023 (O&M) award should shock the conscience of the court and would not award should shock the conscience of the court and would not award should shock the conscience of the court and would not include what the court thinks is unjust on the facts of the case include what the court thinks is unjust on the facts of the case include what the court thinks is unjust on the facts of the case view for that of the arbitrator to do seeking to substitute its seeking to substitute its view for that of the arbitrator to do ” what it considers to be “justice”.” what it considers to be “justice”. 10. The scope of interference in Section 37 of the 1996 Act is The scope of interference in Section 3 The scope of interference in Section 3 cannot go beyond the stipulations of extremely limited and the court cannot go beyond the stipulations of extremely limited and Section 34 of the 1996 Act. A beneficial reference can be made to the Section 34 of the 1996 Act. A beneficial reference Section 34 of the 1996 Act. A beneficial reference Konkan Railway Corporation Limited judgment of the Supreme Court in “Konkan Railway Corporation Limited judgment of the Supreme Court Vs. Chenab Bridge Project Undertaking” (2023) 9 SCC 85 Vs. Chenab Bridge Project Undertaking (2023) 9 SCC 85. The relevant extract of the same is reproduced hereunder:- extract of the same is reproduced hereunder: 14. “14. Analysis: At the outset, we may state that the Analysis: At the outset, we may state that the jurisdiction of the Court under Section 37 of the Act, as jurisdiction of the Court under Section 37 of the Act, as jurisdiction of the Court under Section 37 of the Act, as MMTC Ltd Vs. Vedanta Ltd., (2019) 4 SCC clarified by this in MMTC Ltd Vs. Vedanta Ltd., clarified by this in 163 is akin to the jurisdiction of the court under Section 34 of 163 is akin to the jurisdiction of the court under Section 34 of 163 is akin to the jurisdiction of the court under Section 34 of the Act. Scope of interfe rence by a court in an appeal under the Act. Scope of interference by a court in an appeal under Section 37 of the Act, in examining an order, setting aside or Section 37 of the Act, in examining an order, setting aside or Section 37 of the Act, in examining an order, setting aside or refusing to set aside an award, is restricted and subject to the refusing to set aside an award, is restricted and subject to the refusing to set aside an award, is restricted and subject to the same grounds as the challenge under Section 34 of the Act. same grounds as the challenge under Section 34 of the Act. same grounds as the challenge under Section 34 of the Act. Therefore, the scope of jurisdiction under Section Therefore, the scope of jur 15. 15. 34 and Section 37 of the Act is not akin to normal appellate 34 and Section 37 of the Act is not akin to normal appellate 34 and Section 37 of the Act is not akin to normal appellate jurisdiction. It is well settled that courts ought not to interfere jurisdiction. It is well-settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The with the arbitral award in a casual and cavalier manner. The with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or mere possibility of an alternative view on mere possibility of an alternative view on interpretation of the contract does not entitle courts to reverse interpretation of the contract does not entitle courts to reverse interpretation of the contract does not entitle courts to reverse the findings of the Arbitral Tribunal.” the findings of the Arbitral Tribunal.” the findings of the Arbitral Tribunal.” 11. This Court also relies upon the reasoning of Shyam’s (supra) This Court also relies upon the reasoning of This Court also relies upon the reasoning of and M/s Mascon Multiservices Mascon Multiservices (supra) to come to the finding that once th to come to the finding that once the parties themselves submit to the jurisdiction of the learned Arbitrator and parties themselves submit to the jurisdiction of the learned Arbitrator and parties themselves submit to the jurisdiction of the learned Arbitrator and expressly waived their rights to challenge the mandate of the Arbitrator, waived their rights to challenge the mandate of the Arbitrator which had come to an end by efflux of time, th which had come to an end by e fflux of time, they should not be permitted to at the stage of setting aside of the take that ground to challenge the award at the stage of setting aside of the take that ground to challenge the award award under Section 34 or at the stage of an appeal filed under Section 37 award under Section 34 or at the stage of an appeal filed under Section 37 award under Section 34 or at the stage of an appeal filed under Section 37 In the present case, the parties entered into reference on of the 1996 Act. In the present case, the parties entered into reference on of the 1996 Act. VANDANA 2025.01.23 18:27 I attest to the accuracy and integrity of this document Page 4 of 5 2023 (O&M) FAO-2808-2023 (O&M) July 14, 2016. The first extension was made by the consent of the parties till July 14, 2016. The first extension was made by the consent of the parties till July 14, 2016. The first extension was made by the consent of the parties till December 31, 2017. December 31, 2017. 12. expiry of the mandate on December 31, 2017, the Before the expiry of the mandate on December 31, 2017, the Before parties on November 11, 2017 agreed to an extension till January 31, 2018. parties on November 11, 2017 agreed to an extension till January 31, 2018. parties on November 11, 2017 agreed to an extension till January 31, 2018. ed by the learned Arbitrator on January 25, 2018. The award was passed by the learned Arbitrator on January 25, 2018. The award was pass Therefore, admittedly the award was passed before expiry of the second Therefore, admittedly the award was passed before expiry of the second Therefore, admittedly the award was passed before expiry of the second extension that was consensually made by the parties. Therefore, this Court extension that was consensually made by the parties extension that was consensually made by the parties finds no infirmity in the judgment and order passed by the learned District finds no infirmity in the judgment and order passed by the l finds no infirmity in the judgment and order passed by the l Judge on January 02, 2023. Accordingly, FAO No.2808 of 2023 is Judge on January 02, 2023. Accordingly, FAO No.2808 of 2023 is Judge on January 02, 2023. Accordingly, FAO No.2808 of 2023 is dismissed. 13.
Decision
Pending application(s) if any, shall also stand disposed of. Pending application(s) if any, shall also stand disposed of. Pending application(s) if any, shall also stand disposed of. (LAPITA BANERJI) (LAPITA BANERJI) JUDGE JUDGE January 20, 202 vandana , 2025 ther speaking/reasoned : Whether speaking/reasoned : Whether reportable : Whether reportable Yes/No Yes/No VANDANA 2025.01.23 18:27 I attest to the accuracy and integrity of this document Page 5 of 5