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2023 DIGILAW 1121 (JHR)

APCO INFRATECH Ltd. v. MECON Ltd.

2023-09-05

RATNAKER BHENGRA, SHREE CHANDRASHEKHAR

body2023
JUDGMENT : SHREE CHANDRASHEKHAR, J. 1. M/s APCO INFRATECH Ltd. [in short APCO] has filed this Commercial Appeal under section 13(1-A) of the Commercial Courts Act, 2015 against the judgment dated 30th May 2019 passed by the Presiding Officer of the Commercial Court at Ranchi in Commercial (REVOC) Case No. 117 of 2015. The Commercial Court has set aside the arbitral Award dated 15th May 2015 on the ground that the composition of the arbitral Tribunal was not as per the agreement of the parties and, therefore, the arbitral Award was liable to be set aside under section 34 (2) (a) (v) of the Arbitration and Conciliation Act, 1996 [in short AC Act]. 2. Briefly stated, the Indian Oil Corporation Limited [in short IOCL] awarded the work for “Civil Works for Pipeline Tank Terminal at Amousi near Lucknow” [in short the Project] in the State of Uttar Pradesh to M/s MECON Limited [in short, MECON] and in turn, the MECON invited bids in two parts for executing the Project captioned as Civil Works (Package-I) and Civil Works (Package-II) and both works were awarded to the APCO vide LOIs dated 15th March 2001 and 11th June 2001. The total value of the subject works was Rs. 3,55,87,269/- for Package-I and Rs. 4,55,37,886/- for Package-II and the Project was to be completed within 8 months. The Work Order dated 11th March 2001 enclosed the schedule of rates and various other taxes described in Attachment-2 wherein it was provided that (i) the schedule of rates and the total contract price shall remain firm throughout the contract period, (ii) no variation in the schedule of rates on any account is permissible and (iii) the unit rates are inclusive of Income Tax, Sales Tax, Octroi duty, if applicable, and all applicable taxes, duties and levies. The schedule of rates provided that the contract price shall include and cover the cost of materials, labor, tools and tackles, construction equipment, templates, scaffoldings, transportation, power and water, and shall also include the cost of insurance covering 3rd party liability, loss of human life and risk of damages on other material/equipment. The agreed terms of payment were provided in Attachment-3 which contained a condition that “the payment shall be released only on receipt of the corresponding payment from IOCL” which is the Principal employer for the Project. 3. The agreed terms of payment were provided in Attachment-3 which contained a condition that “the payment shall be released only on receipt of the corresponding payment from IOCL” which is the Principal employer for the Project. 3. The Work Order dated 15th March 2001 which contained the aforesaid conditions for payment under clause 4.0 is extracted below: MECON LIMITED (A Government of India Enterprise) Dated: 15.03.2001 WORK ORDER M/s APCO Constructions (P) Ltd. 3/14, Viswas Khand, Gomati Nagar, Lucknow-226010 Uttar Pradesh Fax No. 0522-308153 Works Order No. Date of LOI/Order Date of Completion Contractor's Code MEC/2323/43/WO/001 15.01.2001/15.03.2001 14.09.2001 Dear Sirs, Subject: Works Order for Civil Works (Package-I) required for Pipeline Tank Terminal at Amousi Near Lucknow, in the State of Uttar Pradesh. Ref: 1. Our Works Tender Enquiry No. MEC/S/2323/11/11/WC/001 dated 19.12.2000 2. Your Offer No. APCO/2001/MECON/1388 dated 30.12.2000 3. List of enclosed documents and correspondence-Attachment-I 4. Our LOI/FAX Order No. 43/33/2323/02/1515 dated 15.01.2001 With reference to above, we MECON LIMITED, are pleased to place this work order on you for the subject jobs for a value of Rs. 3,55,87,269/- (Rupees Three crore fifty five lakhs eighty seven thousand two hundred sixty nine only) as per the terms and conditions of the documents forming the part of this works order for execution of the subject job at Pipeline Tank Terminal of IOCL at Amousi near Lucknow in the state of Uttar Pradesh. 1.0 SCOPE OF WORK 1.1 Your scope of work is to carryout the jobs as mentioned in the Technical Specification enclosed for the project viz. Pipeline Tank Terminal at Amousi near Lucknow in the state of Uttar Pradesh as per the time schedule indicated herein below. 2.0 TIME LIMIT The entire work under this contract shall be completed within 8 months from the period mentioned above from the date of issue of FAX LOI. The schedule of completion of various activities is enclosed as ATTACHMENT-2. 3.0 SCHEDULE OF RATES 3.1 The schedule of rates and the total contract price as agreed is enclosed as Part-III. The rates and the contract price, as agreed upon, will remain firm throughout the tenure of the contract and is not subject to variation on any account. 3.2 The unit rates are inclusive of Income Tax, all applicable taxes including Sales Tax on works contract, duties and levies and Octroi if applicable. The rates and the contract price, as agreed upon, will remain firm throughout the tenure of the contract and is not subject to variation on any account. 3.2 The unit rates are inclusive of Income Tax, all applicable taxes including Sales Tax on works contract, duties and levies and Octroi if applicable. 3.3 Contract price shall be deemed inter-alia to include and cover the cost of all materials, all charges and expenses towards labour, supervisor personnel, tools and tackles, construction and lifting, hoisting equipment, templates, scaffoldings, supports, approaches etc. taxes, duties, levies, construction power and water, lubricant, consumable, transport including 3 shift working if required. Contract price shall include cost of insurance, covering 3rd party liability, loss of human life and the risk of damages of other materials/equipment properties tenure of the contract. Contract price shall also include handling, storage, area lighting, water supply, security, watch and ward and safety within the battery limit, housing and transport facilities for your staff and workers, if required. Fire fighting arrangement shall be made by you and maintained as detailed in the technical specification or as may be ordered in writing during the execution of the work. 3.4 Contract price shall also includes fees, if any, to be paid to statutory authority. 4.0 TERMS OF PAYMENT 4.1 The agreed terms of payment is enclosed as ATTACHMENT-3 4.2 It may be noted that although the order is being placed by MECON and execution is to be done as per the provisions of this contract instruction of site engineer MECON, Amousi, the payment shall be released only on receipt of corresponding payment from IOCL, the principle employer for the project. 5.0 You are requested to take following action (a) Sign, stamp and return the work order and enclosures, as token of your acceptance of the work order. (b) Make payment of security deposit. 6.0 CORRESPONDENCE The correspondence which regard to this work order shall be made to the following address: (a) On all Technical matters: Shri S.P. Mishra Asst. General Manager and Project Coordinator (O&P), MECON Limited, Ranchi-834002 (b) On all Commercial matters: Shri K. Sivasankaran Asst. (b) Make payment of security deposit. 6.0 CORRESPONDENCE The correspondence which regard to this work order shall be made to the following address: (a) On all Technical matters: Shri S.P. Mishra Asst. General Manager and Project Coordinator (O&P), MECON Limited, Ranchi-834002 (b) On all Commercial matters: Shri K. Sivasankaran Asst. General Manager MECON Limited, 3rd Floor, Tower No. 7 International Infotech Park Vashi, Navi Mumbai-400703 (c) On all site related matters: Shri S.K. Ray AGM, Site-in-charge MECON Limited Pipeline Tank Terminal Project C/o Indian Oil Corporation, Amousi, Lucknow (U.P.) Thanking you and assuring you of our best services at all time. Yours faithfully For MECON LIMITED (K. SIVASANKARAN) Asst. General Manager 4. According to the APCO, the subject works were completed by 30th September 2002 and acknowledging that a completion certificate was issued in its favor. The completion certificate dated 12th July 2003 refers to Package-I which pertained to land development and road works for a total value of Rs. 3,92,06,513/- and Package-II which comprised buildings and structural works for a total value of Rs. 4,99,21,675/-. This completion certificate was issued by Mr. C. Bhattacharya who was the General Manager for the MECON. The completion certificate records the satisfaction of the MECON as regards the completion of all contractual obligations of the APCO within the scheduled completion period which was 30th September 2002. 5. The completion certificate dated 12th July 2003 which specifically mentioned that the APCO has professionally executed the subject works is extracted below: MECON LIMITED (A Government of India Enterprise) Ref. No. 43.33.2323/Civil-I&II.962 Dated: 12.07.2003 COMPLETION CERTIFICATE It is to certify that M/s APCO Constructions (P) Ltd. B-9-Vibhuti Khand, Gomtinagar, Lucknow-226 010, Uttar Pradesh has successfully executed Civil Package I&II against Work Order No. MEC/2323/43/WO/001 & MECON/2323/43/WO/003 dated 15.03.2001 and 11.06.2001 respectively at IOCL Tank Truck Terminal, Amousi. The work involved for the above order are as under: 1. Land Development and Road Works Rs. 3,92,06,513/- (Rupees Three Crores Ninety Two Lakhs Six Thousand Five Hundred Thirteen only) 2. Buildings and Structural Works Rs. 4,99,21,675/- (Rupees Four Crores Ninety Nine Lakhs Twenty One Thousand Six Hundred Seventy Five only) M/s APCO has professionally executed the above mentioned works to the fullest satisfaction of IOCL & MECON and completed all contractual obligations within the schedule date of completion i.e. 30.09.2002. Buildings and Structural Works Rs. 4,99,21,675/- (Rupees Four Crores Ninety Nine Lakhs Twenty One Thousand Six Hundred Seventy Five only) M/s APCO has professionally executed the above mentioned works to the fullest satisfaction of IOCL & MECON and completed all contractual obligations within the schedule date of completion i.e. 30.09.2002. This certificate is issued on the request of M/s APCO Constructions Pvt. Ltd. for a specific purpose and it does not have any contractual obligations towards MECON. Yours faithfully For MECON LIMITED (C. Bhattacharya) General Manager 6. While the final bills for Package-I and Package-II were pending, the APCO was invited to the MECON's Mumbai office on 21st March 2003 for settlement of the bills and extra claims. According to the APCO, there were some headways and two payments of Rs. 35 lacs each were released on 4th September 2003. However, the balance amount of Rs. 92 lacs was not released even in the next six months and, aggrieved thereby, the APCO shot a letter dated 12th April 2004 to the MECON for payment of the balance amount. This letter is extracted below: APCO Ref. Apco/2004/MECON/2136 Dated: 12.04.2004 The Director (Commercial) Mecon Ltd. Ranchi-834002 Kind Attn: Shri Ananya Kumar. Subject: Final dues against the IOCL pipeline Terminal works carried out at Amausi, Lucknow under Package-I&II. Dear Sir, We wish you to recall our previous correspondence vide letter no. 2014 of Feb. 21, 2004 in connection with the release of our long pending dues against final bill prepared by M/s. Mecon Ltd. in March 2003. The bill sought to reflect a total sum of Rs. 162.00 lacs as due to us. During the subsequent period several requests were made to you, apart from the letter as mentioned above, seeking release of the above outstanding amount, but all of our efforts turned infructous. It was only in the month of Sept. 2003, when we could receive two payments from you on 04.09.2003 of Rs. 35.00 lacs each. It may further be recalled that the project was finished in Sep 2002 & despite our intense pursuation it took Mecon a considerable time of six months to check our final bill in the month of March 2003. As if this delay was not enough, against the total dues of Rs. 162.00 lacs as per final bill, a scant sum of Rs. As if this delay was not enough, against the total dues of Rs. 162.00 lacs as per final bill, a scant sum of Rs. 70.00 lacs was released to us after six months of checking of the final bill. You are aware that the works were finalised at a gross value of Rs. 891.00 lacs. Your releasing only forty three percent of the dues, that too, after a year of completion of the works, besides withholding the balance fifty seven percent, amounting to an odd Rs. 92.00 lacs, even as of now, has had a telling effect on our company's performance during the preceding one and a half year's period at our other construction sites. It is quite satirical that at one side our handsome amount is stranded with you since long, while on the other we are constrained to borrow funds from various financers/bankers so as to overcome the present financial crisis, we are undergoing. That, the onus of this sorry plight of ours rests with a reputed organisation like Mecon Ltd. is a fact, which is highly regrettable. We once again implore before you to arrange for immediate release of our dues amounting to Rs. 92.00 lacs, failing which, it shall be construed that the justice which has so far been delayed may get further delayed, in the event of which, we shall be constrained to act as per the relevant clauses of the contract. Yours truly, S.H. Siddiqui Technical Advisor 7. The APCO continued to send requests through letters in particular the letters dated 2nd June 2004 and 24th September 2004 but the balance payment of Rs. 92 lacs (subsequently reduced to Rs. 72,16,927/-) was not released. About one year thereafter, the MECON intimated to the APCO that on account of outstanding payment from the IOCL the balance payment of the APCO was held up and immediately on receipt of the payment from the IOCL its payment shall be processed. In its letter dated th September 2005, the MECON made a specific reference to Clause 4.2 of the Work Order dated 15th March 2001 and indicated that Rs. 8.01 crores have already been paid to the APCO against the total work value of Rs. 8.9 crores. More than a decade after the work was completed and a completion certificate was issued, the MECON forfeited the balance amount of Rs. 8.01 crores have already been paid to the APCO against the total work value of Rs. 8.9 crores. More than a decade after the work was completed and a completion certificate was issued, the MECON forfeited the balance amount of Rs. 72,16,927/- against the liquidated damages imposed on the APCO for the delay in the completion of the subject works. 8. The letter dated 24th July 2012 which refers to and gives reasons for the imposition of liquidated damages reads as under: MECON LIMITED (A Government of India Enterprise) (Head Office) Ranchi-2, Jharkhand, India Phone: 0651-2483000 FAX: 0651-2482189/2482214 E-mail:ranchi@meconlimited.co.in Website:http://www.meconlimited.co.in 11/C2/2323 Dated: 24.07.2012 M/s APCO Infratech Limited (Formerly known as APCO Construction Private Limited) APCO House, B-9 Vibhuti Khand, Gomti Nagar, Lucknow-225010 (U.P.) Subject: Release of Payment Dear Sir, Please refer to our following contracts placed on M/s APCO Construction Pvt. Ltd. for civil work for the project of IOCL, Amousi, Lucknow and your letter no. Apco/2012/MECON/376 dated 05.07.12 addressed to the Honorable Union Minister for Steel: S. No Work Order No. Completion Schedule Est. Contract Price Final Executed Contract Price 1. MEC/2323/43/WO/001/Civil Works (Package-I) 8 Months Rs. 3,55,87,269.00 Rs. 3,82,21,513.00 2. MEC/2323/43/WO/003/Civil Works (Package-2) 8 months Rs. 4,55,37,886.00 Rs. 4,99,21,675.00 3. 43.33.2323 8 Months Rs. 9,85,000.00 Rs. 9,85,000.00 TOTAL Rs. 8,21,10,155.00 Rs. 8,91,28,188.00 It may be noted that, the job under above contracts were completed in a span of 20 months for Package-1 and 16 months each for other two balance contracts against contractual completion schedule of 8 months only as stated above. Against above three contracts MECON has already paid Rs. 8,19,11,261.00 (Rupees Eight Crores Nineteen Lakhs Eleven Thousand Two Hundred Sixty One only). Balance amount of Rs. 72,16,927.00 (Rupees Seventy Two Lakhs Sixteen Thousand Nine Hundred Twenty Seven only) has been deducted and adjusted towards liquidated damages as per terms of the contract. It may be noted that, the contract between APCO & MECON had stipulation that in case of delay in execution of work by M/s APCO, MECON shall effect recovery from payment of M/s APCO by way of liquidated damages @1% of the contract price per week of delay or part thereof, with a celling of 10% of the contract price. Accordingly as on date no amount remains payable any further to M/s APCO in respect of the subject contracts. Needless to mention, IOCL has also imposed liquidated damages due to delay on MECON. Accordingly as on date no amount remains payable any further to M/s APCO in respect of the subject contracts. Needless to mention, IOCL has also imposed liquidated damages due to delay on MECON. Thanking you, Yours faithfully, For MECON Limited (S.P. Mishra) Joint General Manager (CO&C) 9. After this stage, the APCO invoked the arbitration clause and approached the Indian Council for Arbitration [in short ICA] for resolution of the dispute through arbitration as provided under Clause 56 of the contract. Upon receiving the letter dated 17th January 2013 from the APCO, a notice was issued to the MECON and as per the Rules of ICA it was required to nominate an Arbitrator of its own choice. The MECON did not exercise its option and, consequently, the ICA nominated one of the Arbitrators from its panel of Arbitrators as the nominee Arbitrator for the MECON. 10. Before the arbitral Tribunal, a plea touching upon jurisdiction and constitution of the Tribunal was raised by the MECON. It was contended on behalf of the MECON that the claim for payment of Rs. 72,16,927/- was raised much beyond the period of limitation. The arbitral Tribunal referred to the letters dated 6th September 2005, 3rd November 2005, and 1st August 2006 by which the MECON had intimated the APCO that balance payment shall be made after release of the corresponding amount from the IOCL. It has also made a reference of the payment of Rs. 15 lacs on 13th March 2007 to the APCO towards part payment of the outstanding amount and held that the cause of action for the APCO arose on 24th July 2012 when the MECON set up a claim for liquidated damages and made adjustment of Rs. 72,16,927/- on that count. 11. The arbitral Tribunal held that there is no dispute as to the balance amount of Rs. 72,16,927/- payable to the APCO and this amount has been adjusted by the MECON arbitrarily levying liquidated damages in lump-sum, many years after the completion of work. It further found that no notice was issued to the APCO for imposing liquidated damages during the contract period and, for the first time, an intimation was sent by the MECON on 24th July 2012 in this regard. It further found that no notice was issued to the APCO for imposing liquidated damages during the contract period and, for the first time, an intimation was sent by the MECON on 24th July 2012 in this regard. In this factual background, the arbitral Tribunal held that non-payment of the balance amount on the pretext of levying liquidated damages was against the terms of the contract, and in violation of the applicable laws. The arbitral Tribunal awarded Rs. 72,16,927/- with interest @ 9% per annum thereon w.e.f. 1st June 2003. For awarding the interest from such a date, the arbitral Tribunal took note of the trade practices as regards the settlement of bills and has referred to section 31(7)(a) of the AC Act. The claimant has also been awarded Rs. 7,13,456/- with simple interest @ 9% per annum from 26th March 2013 to 15th May 2015 which was the MECON’s share for the Arbitrators’ fees paid by the APCO. The arbitral Tribunal has made the arbitral Award dated 15th May 2015 in the following terms: “11.22 In view of the aforesaid fact the AT decided Issue No-2 in favour of the claimant that the MECON was not entitled to deduct Liquidated Damages (‘LD’ for short) under terms and conditions of the Contract and under the law. 12.0 The claimant has claimed a sum of Rs. 1,99,47,586/- calculated at a base claim of Rs. 72,16,927/- with interest thereon at the rate of 18% per annum from 01.04.2003 till the date of filing of the arbitration. Since both the Issues have been decided in favour of the claimant and against the respondent the AT is of the view that the claimant is entitled to receive from the respondent said amount of Rs. 72,16,927/- which was illegally and arbitrarily adjusted by the respondent towards the LD. Further as the deduction of the LD was neither in accordance with the terms of the contract nor Law, the AT is of the view that the claimant needs to be suitably compensated by the respondent for the deprivation of use of said Rs. 72,16,927/- to the Claimant. The AT finds that in the circumstances it would be appropriate to compensate the claimant by awarding simple interest at the rate of 9% per annum on the amount of Rs. 72,16,927/-. The claimant has claimed interest from 01.04.2003. 72,16,927/- to the Claimant. The AT finds that in the circumstances it would be appropriate to compensate the claimant by awarding simple interest at the rate of 9% per annum on the amount of Rs. 72,16,927/-. The claimant has claimed interest from 01.04.2003. It is observed that the respondent had called the claimant vide letter dated 17.03.2003 (Annexure C5) for settlement of the final bill. It could be therefore assumed that for such work the final bill could have been settled by 31.03.2003. It is a trade practices that after such settlement with the sub-contractor (i.e. the claimant), the main contractor (i.e. the respondent) would raise the corresponding bill on the principle employer (i.e. the IOCL). Considering that the bill could be raised by the respondent in month of April, the corresponding payment thereof could be received by the respondent from the IOCL by end of May 2003. In view of the aforesaid fact it would be appropriate to consider the interest from 01.06.2003 on the amount of Rs. 72,16,927/- The Arbitration and Conciliation Act, 1996, under Section 31 (7) (a) empowers the Arbitral Tribunal, unless otherwise agreed by the parties, to include in the sum for which the award is made, interest at reasonable rate between the cause of action arose and the date on which the award is made. The AT has already concluded that there was unjustified and unlawful deduction of the LD and the claimant should be compensated for loss. The AT therefore awards the interest on the amount of Rs. 72,16,927/- @ 9% for the period from 01.06.2003 upto 15.05.2015 i.e. the date of award i.e. for a period of 11 years and 349 days i.e. 11.95 years. Accordingly, the amount of interest works out to Rs. 77,61,805/-. The total amount due to the claimant including interest under this claim would be Rs. 72,16,927/- + Rs. 77,61,805/- = Rs. 1,49,78,732/-. The AT therefore finds that the amount due to the claimant from the respondent shall be 1,49,78,732/-.” 13.0 Cost of Arbitration The claimant has also prayed for the cost of arbitration. The claimant has submitted the details showing cost amounting to Rs. 19,58,570/- which is dealt with as under: (a) Deposit made by the claimant with ICA on behalf of the respondent. The respondent had refused to deposit its 50% share of arbitrators fees and charges of ICA. The claimant has submitted the details showing cost amounting to Rs. 19,58,570/- which is dealt with as under: (a) Deposit made by the claimant with ICA on behalf of the respondent. The respondent had refused to deposit its 50% share of arbitrators fees and charges of ICA. As a result the claimant had to pay the same on behalf of the respondent. The amount so deposited by the claimant on behalf of the respondent is Rs. 7,13,456 vide cheque dated 25.03.2013. The AT therefore awards principle amount of Rs. 7,13,456/- and an interest thereon at 9% simple interest per annum from the period from 26.03.2013 to 15.05.2015 i.e. 2.14 years. The interest amount works out to Rs. 1,37,412/-. The total amount with interest works out to Rs. 8,50,868/-. The AT therefore awards that the claimant shall receive from the respondent an amount of Rs. 8,50,868/- towards the respondent's share of cost of arbitration. (b) Cost of arbitration incurred by the claimant. On adjudication of the entire dispute as above, the AT observes that the deduction and adjustment of the LD by the respondent was arbitrary, against the terms of the contract and in total violation of laws of land and the claimant was unnecessarily dragged to arbitration. Further the adjudication of the matter was prolonged by the respondent by not submitting it to the jurisdictions of the ICA and arbitral tribunal constituted by the ICA which lead to further cost of arbitration to the claimant, while the respondent refused to deposit its 50% share of the cost of arbitration. In view of the aforesaid facts, the AT finds that this is the fit case for the award of cost of arbitration. The claimant has claimed an amount of Rs. 19,58,570/- out of which the amount of Rs. 3,50,000/- is not allowed as it pertains to claimant's counsel and representative for which there are no details. Out of balance Rs. 16,08,570/- and amount of Rs. 7,13,456/- towards respondent's share has already been awarded by the AT under sub Para (a) herein above. The AT therefore awards the balance amount of Rs. 8,95,114/- (i.e. Rs. 16,08,570/- less Rs. 7,13,456/-) to the claimant to be paid by the respondent as cost of the arbitration. The interest on this amount shall be from the date of award. 7,13,456/- towards respondent's share has already been awarded by the AT under sub Para (a) herein above. The AT therefore awards the balance amount of Rs. 8,95,114/- (i.e. Rs. 16,08,570/- less Rs. 7,13,456/-) to the claimant to be paid by the respondent as cost of the arbitration. The interest on this amount shall be from the date of award. 14.0 Recapitulation of Award The AT finds unanimously that the claimant is entitled to receive the following amounts from the respondent. (a) Main claim with interest Rs. 1,49,78,732/- (b) Towards Cost of arbitration Respondent share Rs. 8,50,868/- (c) Towards Cost of arbitration Rs. 8,95,114/- Total Amount Rs. 1,67,24,714/- 15.0 Award The AT therefore passes the following award: The respondents do pay to the claimant: (A) Sum of Rs. 1,67,24,714/- (Rs. One Crore Sixty Seven Lac Twenty Four Thousand Seven Hundred Fourteen Only). (B) The amount at (A) above shall be paid by the respondent to the claimant within 60 (Sixty) days from the date of this Award. In case the respondent fails to pay the claimant said amount within aforesaid period specified, the respondent shall further to pay simple interest at the rate of 18% per annum on the aforesaid amount of Rs. 1,67,24,714/- (Rs. One Crore Sixty Seven Lac Twenty Four Thousand Seven Hundred Fourteen Only) from the date of Award till the full payment thereof is made. (C) The arbitral proceedings shall stand terminated accordingly. The Award is signed by Mr. A.B. Desai at Vadodara. The Award is made and signed by the other two arbitrators at Ranchi on 15th May 2015. Sd/- (Sushil Lohis) Arbitrator Sd/- (Binod Poddar) Presiding Arbitrator Sd/- (A.B. Desai) Arbitrator Place: Ranchi Date: 15.05.2015 12. Aggrieved thereby, the MECON raised the following grounds in its application under section 34 of the AC Act for the setting aside of the arbitral Award dated 15th May 2015: “(A) That constitution of the said Arbitral Tribunal itself is improper, illegal, and invalid in law, being in contradiction with contract and/or law. (B) That the impugned Order passed by the Ld. Arbitral Tribunal is contrary to law and public policy of India. (C) That the said order whereby the Arbitral Tribunal has upheld its jurisdiction for adjudicating the matter is ultra vires, being de hors the contract, and based on wrong premises, ignoring and overlooking true facts and evidence. (D)That the order of the Ld. Arbitral Tribunal is contrary to law and public policy of India. (C) That the said order whereby the Arbitral Tribunal has upheld its jurisdiction for adjudicating the matter is ultra vires, being de hors the contract, and based on wrong premises, ignoring and overlooking true facts and evidence. (D)That the order of the Ld. Arbitral Tribunal is arbitrary, irrational, patently illegal and erroneous and is liable to be set aside. (E) That the order is against the terms of contract executed between the parties and is liable to be set aside. (F) That the order wrongly and arbitrarily holds the reference made by the claimant (Respondent herein) as being within limitation under the Limitation Act, 1963, in contradiction with settled laws of the land.” 13. The MECON raised further objections regarding (i) the appointment of an Arbitrator residing at Vadodara without its consent (ii) findings regarding the cause of action (iii) improper conduct of the APCO by communicating through the Ministry of Steel and (iv) award of cost and interest thereon. According to the MECON, the arbitral Award is arbitrary, unconscionable, contrary to facts, and not in conformity with the agreed conditions of the contract. 14. The Presiding Officer of the Commercial Court at Ranchi held that the ICA could not have processed the case in the absence of an agreement between the parties to appoint the Arbitrator under the Rules of ICA. The learned Judge further held that the composition of the arbitral Tribunal was not in accordance with the agreement of the parties inasmuch as the MECON’s nominee Arbitrator was appointed by the ICA and no notice was issued in terms of section 21 of the AC Act and, therefore, the arbitral Award dated 15th May 2015 was liable to be set aside under section 34(2)(a)(v) of the AC Act. 15. In Commercial (REVOC) Case No. 117 of 2015 the Presiding Officer of the Commercial Court at Ranchi has held as under: “15. In the backdrop of Rule 4 (a) and Rule 4 (c), I find that the Council could have processed the case only if both the parties agreed to follow the entire procedure under Rules of Arbitration of Council. In Commercial (REVOC) Case No. 117 of 2015 the Presiding Officer of the Commercial Court at Ranchi has held as under: “15. In the backdrop of Rule 4 (a) and Rule 4 (c), I find that the Council could have processed the case only if both the parties agreed to follow the entire procedure under Rules of Arbitration of Council. I also find that the following facts are admitted: (1) the respondent did not appoint his nominee rather the Council appointed Sri Sushil Lohia as nominee arbitrator on behalf of the respondent which was objected by the respondent by way of preliminary objection, (2) it is also admitted that the arbitration fee of the respondent was paid by the claimant himself as it is evident from the award itself and therefore in view of the admitted facts in my view the arbitral tribunal was not constituted with the consent of both the parties. 16. Hon'ble the Delhi High Court in Alupro Building Systems Pvt. Ltd. vs. Ozone Overseas Pvt. Ltd. decided on 28.02.2017 in O.M.P. No. 3/2015 has held that the arbitration proceeding being held without a notice by the respondent/claimant under Section 21 of the Arbitration and Conciliation Act invoking the arbitration clause being received by the petitioner are invalid. In the present case also it appears that no notice was given to the respondent instead the Registrar of the ICA by its letter dated 23.03.2013 informed the respondent to file its defence statement on or before 23.02.2013 without disclosing the composition of the arbitral tribunal. 17. At this stage, it will be relevant to know the legal position regarding the scope of objection u/s 34 of the Arbitration and Conciliation Act 1996. The relevant provision reads as under: “2(a) the party making the application furnishes proof that: (i) a party was under some incapacity. (ii) the arbitration agreement is not valid under the law to which the parties have subjected to or, failing any indication thereon, under the law for the time being in force. (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case. (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case. (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside. (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or failing such agreement, was not in accordance with this Part.” Further Sec 34 (5) stipulates, an application under this section shall be filed by a party only after issuing prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. 18. In Oil and Natural Gas Corporation Ltd. vs. Saw Pipes Ltd. (2003) 5 SCC 705 : AIR 2003 SC 2629 it has been held that if an award is contrary to substantive provisions of law or the provisions of the Arbitration and Conciliation Act or against the terms of the contract would be patently illegal and would be subject to interference U/s 34 (2) (a) (v) of the Arbitration and Conciliation Act. 19. At Para 75 the Hon'ble Apex Court concluded: 75. In the result it is held that: (A) (1)................ (2) The court may set aside the award: (i)(a) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties. (b) failing such agreement, the composition of the arbitral tribunal was not in accordance with part I of the Act. (ii).................. 20. In the result it is held that: (A) (1)................ (2) The court may set aside the award: (i)(a) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties. (b) failing such agreement, the composition of the arbitral tribunal was not in accordance with part I of the Act. (ii).................. 20. In view of the authoritative pronouncement discussed above it is manifestly clear that in the present case the arbitral tribunal was not constituted in accordance with the agreement of the parties vis-a-vis the nominee arbitrator of the respondent was appointed by the ICA, the arbitration fees of the respondent was paid by the claimant, the respondent was never given notice in terms of Section 21 of the Arbitration and Conciliation Act and the respondent was simply directed to file its defence before the tribunal on or before 23.02.2013, Rule 4(a) and 4(c) of the ICA rules have not been followed and the award is also hit by the provisions as contained in Section 34 (2) (v) of the Arbitration and Conciliation Act therefore the award dated 15.05.2015 is liable to be set aside. 21. Accordingly, I find substance in the petition filed u/s 34 (2) of the Arbitration and Conciliation Act, which is hereby allowed and the award dated 15/05/2015 passed by the arbitral tribunal are set aside on the grounds stated in the paragraph. In the facts and circumstances of the case the Parties shall bear their own cost.” 16. The aforesaid findings have been challenged on the ground that the Commercial Court exceeded its jurisdiction and exercised a power that is not legally vested in it under section 34(2) (a) (v) of the AC Act. Mr. Nitin Kumar Pasari, the learned counsel for the APCO would submit that the conclusion of the Commercial Court that the composition of the arbitral Tribunal was not as per the agreement of the parties has no legal foundation either in law or emanating from Clause 56 rather such findings are based on assumptions and considerations which do not arise in the case. The learned counsel for the APCO has made inter-alia the following submissions: (i) Rule 4 of the ICA Rules has been misinterpreted to mean that the arbitral Tribunal could not have been constituted without consent of the MECON. The learned counsel for the APCO has made inter-alia the following submissions: (i) Rule 4 of the ICA Rules has been misinterpreted to mean that the arbitral Tribunal could not have been constituted without consent of the MECON. (ii) The appointment of the MECON's nominee Arbitrator by the ICA was legal and valid and the composition of the arbitral Tribunal was in consonance with the agreement of the parties. (iii) The fees of the Arbitrators can be paid by one party including the share of the other party which can be legally realized by the party paying the fees from the other party under section 31 of the AC Act. (iv) A challenge to the composition of the arbitral Tribunal can be laid only in the case of unilateral appointment of the Arbitrator made without any information to the other party. (v) Clause 56 of the contract does not require a notice under section 21 of the AC Act and there was no procedural illegality committed by the APCO in approaching the ICA. 17. Strangely enough, the MECON pleaded and raised the issue of legal misconduct on the ground that the fees for arbitration was realized from the APCO and the Commercial Court seems to have accepted this plea. Section 31-A of the AC Act confers power to the Court or arbitral Tribunal to determine (i) the amount of costs (ii) when such costs are to be paid and (iii) whether costs are payable by one party to another. Explanation to sub-section (1) provides that the expression “costs” shall mean reasonable costs relating to the fees and expenses of the Arbitrators, Courts and witnesses; legal fees and expenses; any administrative fees of the Institution supervising the arbitration and; any other expenses incurred in connection with the arbitral or Court proceedings and the arbitral Award. Sub-Section (4) further provides that the Court or arbitral Tribunal may make any order that a party shall pay a proportion of another party's costs. In the present case, the arbitral Tribunal has quantified the costs for arbitration and included in the Award the MECON's share which was paid to the arbitral Tribunal by the APCO. In Teja Singh Soorma vs. Union of India and Another, AIR 1955 All. In the present case, the arbitral Tribunal has quantified the costs for arbitration and included in the Award the MECON's share which was paid to the arbitral Tribunal by the APCO. In Teja Singh Soorma vs. Union of India and Another, AIR 1955 All. 666 a Division Bench of the High Court of Allahabad observed that the law does not contemplate that an Arbitrator must proceed with the arbitration proceedings without payment of his fees and in case the Arbitrator demands or receives fees from one party that shall not amount to misconduct. 18. According to the MECON, the invocation of Clause 56 about six years after the last payment was made to the APCO on 13th March 2007 was beyond the period of limitation prescribed under the Limitation Act. On the other hand, the APCO took a stand that there was no unequivocal denial by the MECON to its liability towards payment of Rs. 72,16,927/- and it was about a decade after both the subject works were completed that the MECON intimated its intention to appropriate the said amount towards liquidated damages. In support of its stand that the cause of action did not accrue till 24th July 2012 as there was no unequivocal demand made by the MECON over a decade preceding the imposition of liquidated damages through the letter dated 24th July 2012, the APCO seeks support from Mst. Rukhmabai vs. Lala Laxminarayan, AIR 1960 SC 335 , wherein the Hon'ble Supreme Court has held as under: “33. The legal position may be briefly stated thus: The right to sue under Art. 120 of the Limitation Act accrues when the defendant has clearly and unequivocally threatened to infringe the right asserted by the plaintiff in the suit. Every threat by a party to such a right, however ineffective and innocuous it may be, cannot be considered to be a clear and unequivocal threat so as to compel him to file a suit. Whether a particular threat gives rise to a compulsory cause of action depends upon the question whether that threat effectively invades or jeopardizes the said, right. 34. The facts relevant to the question of limitation in the present case may be briefly restated. The trust deed was executed in 1916. The suit house was constructed in 1920. Whether a particular threat gives rise to a compulsory cause of action depends upon the question whether that threat effectively invades or jeopardizes the said, right. 34. The facts relevant to the question of limitation in the present case may be briefly restated. The trust deed was executed in 1916. The suit house was constructed in 1920. If, as we have held, the trust deed as well as the construction of the building were for the benefit of the family, its execution could not constitute any invasion of the plaintiff's right. Till 1926, the plaintiff's father, Ratanlal was residing in that house. In 1928 when Daga challenged the trust deed, the family compromised the matter and salvaged the house. From 1936 onwards the plaintiff has been residing in the suit house. It is conceded that he had knowledge of the litigation between Rukhmabai and Chandanlal claiming the property under the trust deed; but, for that suit he was not a party and the decision in that litigation did not in any way bind him or affect his possession of the house. But in execution of the decree, the Commissioner appointed by the Court came to the premises on February 13, 1937, to take measurements of the house for effecting partition of the property, when the plaintiff raised objection, and thereafter in 1940 filed the suit. From the aforesaid facts, it is manifest that the plaintiff's right to the property was not effectively threatened by the appellant till the Commissioner came to divide the property, it was only then there was an effectual threat to his right to the suit property and the suit was filed within six years thereafter. We, therefore, hold that the suit was within time.” 19. As per section 43 of the AC Act, the Limitation Act, 1963 applies to the arbitrations but the period of limitation for invoking the arbitration clause is not provided thereunder nor does the AC Act provide any clue as regards the period of limitation for invoking the arbitration clause. The provision under Article 137 of the Limitation Act has therefore been invoked and now this is the law settled by the Hon'ble Supreme Court that a period of three years should be the period of limitation for invoking the arbitration clause from the date of accrual of the cause of action. 20. The expression “cause of action” is of vintage origin. 20. The expression “cause of action” is of vintage origin. The cause of action as this expression is commonly defined means a bundle of facts which if traversed would be necessary for the plaintiff to prove in order to support his right for a judgment of the Court. Lord Watson [Chand Kour vs. Partab Singh, 1880 SCC Online PC 14] referred this to the “media” upon which the plaintiff may ask the Court to arrive at a conclusion in his favor. In Bolo vs. Koklan, (1929-30) 57 IA 325 : AIR 1930 PC 270 . Their Lordships of the Privy Council observed that: “there can be no right to sue until there is an accrual of the right asserted in the suit and its infringement, or at least a clear and unequivocal threat to infringe that right, by the defendant against whom the suit is instituted.” This expression seems to have been explained by the Courts in India in a similar manner as understood in the common law jurisdictions. In the context of this expression, in A.B.C. Laminart (P) Ltd. vs. A.P. Agencies, Salem, (1989) 2 SCC 163 the Hon'ble Supreme Court has observed that the bundle of facts must include some act done by the defendant because, in the absence of such an act, no cause of action can possibly accrue. Now this is a question of fact as to when the right to apply accrued and this needs no reiteration that a right to apply accrues when a dispute arises between the parties, and as observed in Major (Rtd.) Inder Singh Rekhi vs. Delhi Development Authority, (1988) 2 SCC 338 , there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. 21. The arbitral Tribunal on an analysis of the materials before it came to a finding that the cause of action arose on 24th July 2012. The arbitral Tribunal has recorded the following conclusions: “(i) That on finalization of final bill, there was admittedly balance amount of Rs. 72,16,927/- due to the claimant. As per the claimant the balance amount is the same. There is therefore no dispute as regards the amount of balance payment due to the claimant. (ii) That payment due to the claimant amounting to Rs. 72,16,927/- due to the claimant. As per the claimant the balance amount is the same. There is therefore no dispute as regards the amount of balance payment due to the claimant. (ii) That payment due to the claimant amounting to Rs. 72,16,927/- was deducted and adjusted by the respondent, in lump sum, towards liquidated damages, number of years after the completion of works. (iii) That notice to the claimant about imposition of LD was not issued during the currency of the contract or before the completion of contract by the respondent or its Ministry. (iv) That denial of the payment due to the claimant by the respondent was intimated to the claimant for the first time on 24.07.2012, along with the reason for denial of the due payment i.e. deduction and adjustment towards LD. (v) On consideration of all the documentary evidence and reasoning and findings as above the AT finds that the ‘cause of action’ to initiate the arbitration arose on 24.07.2012 and the reference made for initiation of arbitration proceedings on 17.01.2013 by the claimant is well within limitation period of three years.” 22. The stand taken by the MECON that the period of limitation started running from 13th March 2007 when the last payment was made to the APCO has no real substance. There may not have been the exchange of correspondences at regular intervals but as a matter of fact at no point in time before the letter dated 24th July 2012 was issued by the MECON there had been any denial of the claim of the APCO for payment of the balance amount. On the contrary, the MECON continued to give assurances all through this period that once the corresponding payment is released from the IOCL the outstanding amount shall be paid. It was a consolidated claim of Rs. 92 lacs (subsequently reduced to Rs. 72,16,927/-) which was calculated on the submission of final bills in March 2001 and part payments were made by the MECON till March 2007. Having regard to the conduct of the MECON in extending unequivocal promises to make payment, the period provided under the Limitation Act for raising a money claim or for a reference to the ICA could not have started to run. In Geo Miller and Co. Having regard to the conduct of the MECON in extending unequivocal promises to make payment, the period provided under the Limitation Act for raising a money claim or for a reference to the ICA could not have started to run. In Geo Miller and Co. (P) Ltd. vs. Rajasthan Vidyut Utpadan Nigam Ltd. (2020) 14 SCC 643 the Hon'ble Supreme Court elucidated the concept of cause of action in the context of invocation of the arbitration clause and held that in every case the Court upon careful consideration of the history of the dispute must find out the breaking point at which any reasonable party would have abandoned further efforts at arriving at the settlement and contemplated referral of the dispute for arbitration. The cause of action arose on 24th July 2012 when the MECON expressed its intention in no uncertain terms not to make any payment to the APCO on the ground that the balance amount has been adjusted against the liquidated damages imposed on the APCO. Even on that day, there was no denial rather it has been accepted by the MECON that Rs. 72,16,927/- was payable to the APCO inasmuch as the said amount was appropriated towards the liquidated damages. While so, the claim raised before the arbitral Tribunal was not barred by limitation and the claim has rightly been adjudicated by the arbitral Tribunal. The letter dated 24th July 2012 by which the APCO was sent an intimation about the imposition of liquidated damages was the “breaking point” and counted from such date invocation of Clause 56 was also well within time. 23. The mandate under the AC Act is that the composition of the arbitral Tribunal should be in accordance with the agreement. If there is no such agreement then it should be in accordance with the procedure prescribed in Part-I of the AC Act and the agreement for the composition of the arbitral Tribunal should not be in conflict with the provisions of the AC Act. In the application under section 16 of the AC Act, the MECON raised the question of jurisdiction of the arbitral Tribunal on the ground that the governing law of the land has been contravened inasmuch as no notice under section 21 was issued before the APCO knocked the doors of the ICA. In the application under section 16 of the AC Act, the MECON raised the question of jurisdiction of the arbitral Tribunal on the ground that the governing law of the land has been contravened inasmuch as no notice under section 21 was issued before the APCO knocked the doors of the ICA. The MECON has therefore challenged the arbitral Award on the ground that a notice under section 21 of the AC Act was not given to it and, therefore, non-adherence to this mandatory notice shall render the arbitral Award dated 15th May 2015 without jurisdiction and thus a nullity. Mr. Manish Mishra, the learned counsel for the MECON contended that the APCO could not have unilaterally approached the ICA without invoking section 21 of the AC Act. This submission has been raised on the premise that a mere provision in Clause 56 for referring the matter to the ICA shall not deprive the MECON of a right to propose arbitration through alternative modes. The learned counsel would submit that party autonomy is the essence of the AC Act and, therefore, notwithstanding a provision in Clause 56 for the resolution of dispute between the parties through arbitration according to the Rules of ICA the parties might have agreed for arbitration through their own nominated Arbitrators had a notice under section 21 been given to the MECON. The learned counsel for the respondent has also referred to Alupro Building Systems Limited vs. Ozone Overseas Ltd. 2017 SCC Online Del. 7228 and Malvika Rajnikant Mehta and Others vs. JESS Construction, 2022 SCC Online Bom. 920 to submit that section 21 performs an important function of forging consensus between the parties on several aspects, such as, scope and determination of the disputes, identification of the claims and counter-claims and, most importantly, choice of the Arbitrator. The learned counsel would submit that had a notice under section 21 been issued the parties could have narrowed down the area of dispute and fruitful results could have been achieved. 24. Clause 56 of the conditions of contract reads as under: “56.0 All the disputes and differences whatsoever arising between the parties out of or in relation to the construction meaning and operation or effect of this order or breach thereof shall be settled amicably. 24. Clause 56 of the conditions of contract reads as under: “56.0 All the disputes and differences whatsoever arising between the parties out of or in relation to the construction meaning and operation or effect of this order or breach thereof shall be settled amicably. If however the parties are not able to resolve them amicably the same shall be settled by arbitration in accordance with the rules of Indian Council of Arbitration and the Award made in pursuance thereof shall be binding to the parties.” 25. Clause 56 of the contract is worded in such a manner to include all the disputes and differences arising between the parties. It covers the matters even as to the construction and meaning of the different clauses or expressions or any expression appearing in the NIT. The provisions of Clause 56 are unambiguous and provide in unequivocal terms that if the parties fail to resolve the dispute and differences amicably the same shall be settled through arbitration in accordance with the Rules of ICA. Clause 56 does not lay down a procedure for appointment of their own Arbitrator by both parties, and it does not also contemplate a situation where the parties would sit together and finalize the Arbitrator. It provides that if the parties fail to resolve their dispute and differences amicably the same shall be settled by arbitration adhering to the Rules of ICA. In Sudarshan Trading Company vs. Government of Kerala, (1989) 2 SCC 38 the Hon'ble Supreme Court has held that the interpretation of a contract is a matter for the Arbitrator to determine since the Arbitrator is a judge chosen by the parties whose decision the parties have agreed to be final. 26. Iron and Steel Co. Ltd. vs. Tiwari Road Lines, (2007) 5 SCC 703 is a case on the point. In that case, the Hon'ble Supreme Court held that if the parties have agreed on a procedure for appointing the Arbitrator or Arbitrators the dispute between the parties can be resolved through arbitration in accordance with the agreed procedure. The Hon'ble Supreme Court laid emphasis on the resolution of the dispute between the parties in accordance with the agreed procedure and held that a party can have recourse to the Court only under the contingencies provided under section 11 of the AC Act. The Hon'ble Supreme Court laid emphasis on the resolution of the dispute between the parties in accordance with the agreed procedure and held that a party can have recourse to the Court only under the contingencies provided under section 11 of the AC Act. The facts in Tiwari Road Lines (supra) are a little different but only to the extent that without resorting to the settlement procedure under the arbitration clause the aggrieved party had moved an application under section 11 of the AC Act. The arbitration clause in the said case provided as under: “13.1. All disputes or differences whatsoever arising between the parties out of or relating to the construction, meaning and operation or effect of this contract or the breach thereof shall be settled by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration and the award made in pursuance thereof shall be binding on the parties. 13.2. In all above cases, the work under the contract shall, if reasonably possible, continue during the arbitration proceedings and no payment due or payable to the contractor as advised by the company will be withheld by the companion account of such proceedings.” 27. Reaffirming that the agreed procedure for appointment of the Arbitrator must be given precedence to any other mode, the Hon'ble Supreme Court held as under: “10. In the matter of settlement of dispute by arbitration, the agreement executed by the parties has to be given great importance and an agreed procedure for appointing the arbitrators has been placed on high pedestal and has to be given preference to any other mode for securing appointment of an arbitrator. It is for this reason that in clause (a) of sub-section (8) of Section 11 of the Act it is specifically provided that the Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties.” 28. Tiwari Road Lines (supra) also referred to S. Rajan vs. State of Kerala, (1992) 3 SCC 608 , wherein the scope of sub-section (4) of section 20 of the Arbitration Act, 1940 has been discussed by the Hon'ble Supreme Court to hold that where the agreement itself specifies the Arbitrator the dispute must be referred to the Arbitrator specified in the agreement. In paragraph no. In paragraph no. 12 of the said judgment the Hon'ble Supreme Court has held as under: “12........This is the clear purport of sub-section (4). It says that the reference shall be to the arbitrator appointed by the parties. Such agreed appointment may be contained in the agreement itself or may be expressed separately. To repeat, only in cases where the agreement does not specify the arbitrator and the parties cannot also agree upon an arbitrator, does the court get the jurisdiction to appoint an arbitrator. It must, accordingly, be said that in the present case, there was no occasion or warrant for the learned Subordinate Judge to call upon the parties to submit panels of arbitrators. He was bound to refer the dispute only to the arbitrator named and specified in the agreement. This aspect, however, has become academic now in view of the fact that the very application under Section 20 has been held by us to be barred by limitation. Even so we thought it necessary to emphasise this aspect in view of the numerous instances noticed by us where courts ignore the arbitrator specified in the agreement and appoint a different person as the arbitrator.” 29. In Tiwari Road Lines (supra) there is a reference also to Rite Approach Group Ltd. vs. Rosoboron Export, (2006) 1 SCC 206 , wherein it was held that the specific provision in the arbitration clause conferring jurisdiction on the “Chamber of Commerce and Trade of the Russian Federation” as the authority to whom the dispute shall be referred excludes all other authority or Court to have jurisdiction and that authority alone can arbitrate the dispute between the parties. The Hon'ble Supreme Court in the aforesaid context has held as under: “10. In the matter of settlement of dispute by arbitration, the agreement executed by the parties has to be given great importance and an agreed procedure for appointing the arbitrators has been placed on high pedestal and has to be given preference to any other mode for securing appointment of an arbitrator. It is for this reason that in clause (a) of sub-section (8) of Section 11 of the Act it is specifically provided that the Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties.” 30. It is for this reason that in clause (a) of sub-section (8) of Section 11 of the Act it is specifically provided that the Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties.” 30. Rule 4(a) of the Rules of ICA provides that if the parties have agreed to the resolution of disputes by arbitration the same shall be determined and settled following the procedure prescribed under the Rules of ICA but where the parties have agreed to the appointment of the arbitral Tribunal through a different procedure the ICA shall not process the case, unless both parties agree to follow the procedure under the Rules of ICA. Now, before proceeding further to deal with the finding of the Commercial Court on this issue, it is necessary to have a brief view of the procedure followed under the Rules of ICA. The relevant Rules of ICA are extracted as under: Rule 4 (a) Any dispute relating to any commercial matter including shipping, sale, purchase, banking, insurance, building construction, engineering, technical assistance, know how, patents, trade marks, management consultancy, commercial agency or labour arising between two or more parties in India who agree or have agreed for arbitration by the Council or under the Rules of Arbitration of the Council, shall be determined and settled in accordance with these Rules. (b) The Council shall also be competent to administer the conduct of arbitration in any dispute or difference relating to a commercial transaction between parties as mentioned in sub-clause (a) where they have agreed to have their dispute arbitrated under any other Rules of Arbitration and have agreed to have such arbitration administered by the Council, wholly or in respect of some matters arising out of such arbitration. (c) In case the parties have provided different procedure for appointment of arbitrator or schedule of cost including the arbitrator's fee, the Council shall not be bound to process the case unless both the parties agree to follow the entire procedure of arbitration under Rules of Arbitration of the Council. (c) In case the parties have provided different procedure for appointment of arbitrator or schedule of cost including the arbitrator's fee, the Council shall not be bound to process the case unless both the parties agree to follow the entire procedure of arbitration under Rules of Arbitration of the Council. (d) The Council shall be competent to function as Appointing Authority as contemplated under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).” Rule 5 Wherever the Parties have provided or agreed for arbitration by the Indian Council of Arbitration or for arbitration under the Rules of Arbitration of the Council, these rules or any amendment thereof, in the form obtaining at the time the dispute is referred to arbitration of the Council, shall apply. ..................................................... ..................................................... Rule 17 (a) On receipt of an application for arbitration, the Registrar shall have absolute discretion to accept or reject the said application. The Registrar is not bound to give reasons for the exercise of his discretion. Before deciding on the acceptability of an application for arbitration, the Registrar may ask the parties for further information and particulars of their claims. (b) Similarly, if any information or particulars regarding the arbitration agreement furnished by Claimant with the application for arbitration are found to be incorrect or false, at any time subsequently, the Registrar shall have the power to reject the application for arbitration. (c) Any Party aggrieved by the decision of the Registrar, in accepting or rejecting an application for arbitration as above, may apply to the Court for suitable directions. Rule 18 (a) On receipt of the application together with the claim statement, the Registrar shall send to the other Party (Respondent) a copy of the claim statement and attached documents and ask such other party to furnish within thirty days or within any extended date not exceeding thirty days, a defense statement setting out his case accompanied by all documents and information in support of or bearing on the matter. (b) Any communication sent by the Registrar under Registered Post to the Respondent on the address appearing in the Arbitration Agreement/the contract between the parties, as per the information supplied to the Council, will be deemed to be duly served on the Respondent, if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address last known, even if the Respondent refuses to accept the said communication or if it is returned to the Council by the postal authorities as unclaimed by the said party. The Registrar may proceed further with the arbitration proceedings as per the rules as if such communication had been duly served on the concerned party. The Registrar may in such cases make an additional communication to the Parties by Registered Letter or by other means which may provide a record of attempts to deliver it. (c) A copy of the defence statement and all appended documents, if any, shall be sent to the Claimant for information. (d) The communication is deemed to have been received on the day it is so delivered. 31. The ICA is a body that conducts and facilitates arbitration according to the rules framed by it. The Arbitration Committee constituted under Rule 3 consists of the President of the Council and three members of the Governing Body. Clause (c) to Rule 4 provides that even where the parties have provided different procedures for the appointment of Arbitrator the Council shall not be bound to process the matter unless both the parties agree to follow the procedure under the Rules of ICA. Under Rule 9, a panel of Arbitrators is prepared by the Committee from amongst persons who are qualified and possess knowledge and experience in their respective field of profession and arbitration laws and procedures, and the Registrar of the Council is required to prepare and maintain an up-to-date panel of Arbitrators together with adequate information under Rule 10. Any party intending to commence arbitration proceedings under the Rules of ICA is required to give notice of a request under Rule 15 for arbitration to the Registrar of ICA and the Registrar upon receipt of such a request shall in its discretion accept or reject the application. Any party intending to commence arbitration proceedings under the Rules of ICA is required to give notice of a request under Rule 15 for arbitration to the Registrar of ICA and the Registrar upon receipt of such a request shall in its discretion accept or reject the application. Under Rule 18, the application together with a claim statement is sent to the respondent requiring the respondent to furnish within 30 days a defence statement accompanied by all documents and information in support thereof. Through a letter dated 17th January 2013, the APCO approached the ICA to initiate the arbitration for resolution of the dispute relating to payment. The ICA gave a notice of arbitration to the MECON through the letter dated rd January 2013 and required the MECON to nominate its nominee Arbitrator in terms of Rule 23(b) and file its statement of defence as provided under Rule 18 of the Rules of ICA. However, the MECON did not nominate its nominee Arbitrator and an Arbitrator on behalf of the MECON was appointed by the ICA and the nominated Arbitrators proceeded in the matter in terms of the Rules of ICA. 32. Section 21 of the AC Act provides that the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. The importance of section 21 of the AC Act lies in the fact that the date of notice to the respondent for arbitration shall be the date for counting the period of limitation both for deciding (i) whether the claim is time-barred and (ii) whether the invocation of the arbitration clause is barred by limitation. Section 21 begins with the expression “unless otherwise agreed by the parties” and this excludes the mutually agreed procedure. Clause 56 provides that in the event the parties fail to resolve the dispute amicably the same shall be settled by the arbitration in accordance with the Rules of ICA, and this is the procedure the parties agreed to adopt for resolution of the dispute. Clause 56 does not refer to any other dispute resolution mechanism as a pre-condition for invoking the arbitration clause. Clause 56 does not refer to any other dispute resolution mechanism as a pre-condition for invoking the arbitration clause. This is also not in dispute that under the ICA Rules the parties are free to choose their nominee Arbitrator and only in the event the respondent fails to nominate its Arbitrator the ICA nominates the respondent's nominee Arbitrator. Furthermore, Clause 56 of the contract does not provide the appointment of the sole Arbitrator. This clause also does not indicate the proposed Arbitrator/Arbitrators by name or by designation. It simply provides that if the parties fail to arrive at an amicable settlement the dispute shall be resolved through arbitration in accordance with the Rules of ICA. Even assuming that section 21 is applicable in the present case, a notice from the ICA consequent upon receiving a request from the APCO must be held a notice under section 21. The purpose behind section 21 of the AC Act is that the other party is put to notice that the discussions, deliberations, and negotiations have reached a dead end. At this stage, nothing more than an intimation is required to be given to the MECON and that has been done through the ICA. An argument can be raised that the procedure laid down under the AC Act prohibits the filing of the statement of claim directly before an Arbitrator without any formal invocation of arbitration. However, the filing of a statement of claim with a request to the ICA to conduct arbitration shall not amount to the filing of the claim before the Arbitrator. The justification sought to be offered by the MECON on its insistence to a prior notice under section 21 of the AC Act before approaching the ICA is that the parties could have adopted a different route. But mere reference to the ICA by the APCO for the resolution of the dispute was in no way a hurdle for the MECON to enter into a dialogue with the APCO and decide the future course of action. The materials on record do not suggest that the MECON ever took any effort in this direction and tried to resolve the issue. On the contrary, its pleadings and the stand taken before the arbitral Tribunal indicate that it remained persistent in its stand that the imposition of liquidated damage was justified. The materials on record do not suggest that the MECON ever took any effort in this direction and tried to resolve the issue. On the contrary, its pleadings and the stand taken before the arbitral Tribunal indicate that it remained persistent in its stand that the imposition of liquidated damage was justified. The several circumstances contemplated by the MECON whereunder the parties could have mutually agreed to a common Arbitrator or a panel of Arbitrators were intended to frustrate the arbitration. 33. Section 21 of the AC Act which refers to the commencement of arbitration has its significance for counting the period of limitation. The notice under section 21 may serve another purpose in that a notice for resolution of the dispute by arbitration shall be necessary for a default appointment of the Arbitrator under section 11 of the AC Act. Therefore, the provision under section 21 which requires notice to the other party serves a limited purpose as aforementioned and this requirement of notice cannot be stretched beyond a limit to be construed as a barring clause prohibiting the APCO from approaching the ICA. The point we unhesitatingly intend to make is that too much emphasis cannot be laid to a requirement of notice and the purpose behind section 21 was served when a notice was given to the other party through the ICA. The notice issued by the ICA to the MECON on 23rd January 2013 is the notice under section 21 on behalf of the APCO and that shall be the date for counting the period of limitation. We find support from Vosnoc Ltd. (supra) that the form of the notice is not important. In Vasnoc Ltd. (supra) the Queen’s Bench Division was called upon to interpret a notice given by “Vosnoc” appointing Mr. Ferryman as an Arbitrator and called on “Transglobal” to nominate their Arbitrator. Clause 17.8 of the contract provided that the matter in dispute shall be referred to three persons to be appointed by each of the parties and the third by the two chosen Arbitrators. Lord Raymond Jack Q.C. held that the letter by “Vosnoc” was a sufficient notice under section 14 of the AC Act. Vosnoc Ltd. vs. Transglobal Projects Ltd. (1998) 2 All ER 990, refers to a decision of the Court of Appeal in Nea Agrex S.A. vs. Baltic Shipping Co. Lord Raymond Jack Q.C. held that the letter by “Vosnoc” was a sufficient notice under section 14 of the AC Act. Vosnoc Ltd. vs. Transglobal Projects Ltd. (1998) 2 All ER 990, refers to a decision of the Court of Appeal in Nea Agrex S.A. vs. Baltic Shipping Co. Ltd. (1976) Q.B. 933 where the notice was to the effect that: “Please advise your proposals in order to settle this matter, or name your Arbitrators. Expecting your reply.....” Lord Denning M.R held that the notice was sufficient to construe the commencement of the arbitration. In their separate judgments, Goff L.J. and Shaw L.J. also concurred with Lord Denning. 34. As regards the award of interest, this much only is necessary to say that the arbitral Tribunal can award interest at a reasonable rate for a period commencing from the date when the cause of action arose and there is no agreement of the parties forfeiting the power of the arbitral Tribunal to award interest. The award of interest is the discretion of the arbitral Tribunal and this power to award interest is recognized under sub-section (a) to section 31(7) of the AC Act. In Delhi Airport Metro Express (P) Ltd. vs. DMRC, (2022) 9 SCC 286 the Hon'ble Supreme Court held that in the absence of an agreement between the parties the Arbitrator would have the discretion to exercise its powers under clause (a) of sub-section (7) of section 31 and such discretion is wide enough. 35. The interference by the Court under section 34 of the AC Act cannot be on the ground that there was some procedural irregularity in issuing the notice under section 21; though, there is none in the present case. The scope of interference is very limited and pertains only to the situations where the findings of the Arbitrator are arbitrary, capricious or perverse or where the illegality goes to the root of the matter. The central theme of the AC Act is that the sanctity of an arbitral Award should be preserved and any judicial interference with the arbitral Award must be within the confines of section 34. The expressions “only by” in sub-section (1) and “only if” in sub-section (2) of section 34 leave no scope for any judicial interference with an arbitral Award except on the specified grounds mentioned under sub-section (2) of section 34. The expressions “only by” in sub-section (1) and “only if” in sub-section (2) of section 34 leave no scope for any judicial interference with an arbitral Award except on the specified grounds mentioned under sub-section (2) of section 34. The Court cannot on re-appreciation of the evidence substitute its own view or to do what it considers to be just. In Champasey Bhara and Company vs. Jivraj Balloo Spinning and Weaving Company Ltd. AIR 1923 PC 66 the Judicial Committee of the Privy Council held that the Arbitrator is the sole and final Judge of all questions both of law and on fact and the only exceptions to that rule are cases where the Award is the result of corruption or fraud, and one other, viz. where the question of law necessarily arises on the face of the Award or upon some paper accompanying and forming part of the Award. 36. The Presiding Officer of the Commercial Court at Ranchi overlooked the legislative intendment as contained under sections 5 and 34(2) of the AC Act and committed serious errors in law in the process of adjudication while examining the challenge to the arbitral Award dated 15th May 2015. The inference with the arbitral Award dated 15th May 2015 by the Commercial Court is not based on any sound rule of law or practice and was totally unwarranted. 37. In the result, this Commercial Appeal succeeds. The judgment dated 30th May 2019 passed in Commercial (REVOC) Case No. 117 of 2015 is set aside and the arbitral Award dated 15th May 2015 is restored. I Agree - Ratnaker Bhengra, J.