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2024 DIGILAW 210 (UTT)

State of Uttarakhand v. Sandesh Kumar

2024-03-21

RAKESH THAPLIYAL, RITU BAHRI

body2024
JUDGMENT : Ritu Bahri, CJ. The State has come up in both the appeals against the common judgment and order dated 11.05.2022, passed by the Additional District Judge (Commercial) Dehradun, whereby arbitration case No. 96 of 2019 and Arbitration Case No. 97 of 2019, filed by the appellants against the award dated 28.07.2016, passed by the single Arbitrator Mr. M.Z. Haq, in, were rejected. The two appeals before us have arisen out of common judgment and order, therefore, they are being decided together for the sake of brevity and convenience. 2. Brief facts leading to filing of both the appeals are that the appellants instituted aforementioned arbitration cases under Section 34 of the Arbitration and Conciliation Act, 1996 against the award dated 28.07.2016, passed by the single Arbitrator Mr. M.Z. Haq. The contention of the appellants is that the arbitration cases were filed before the Arbitrator on 11.08.2015. Opposite party submitted its written statement and counter-claim on 03.11.2015. The contract in question was executed between the parties for expansion and development of Kotdwar to Haridwar motor road. Opposite party presented a bank guarantee of Rs.20,53,300/-. The work commenced on 24.02.2012 and has to be completed on 31.03.2013. It is contended that the opposite party was handed over the possession of work place, but he failed to bring the resources, labour and machinery on the pretext that work had to be undertaken in forest area, whereas the fact was that necessary permission had already been taken for said work in the forest area. The road was in existence since 1960. Opposite party left the work, and when the payment of his bank guarantee was sought, he instituted a suit under Section 09 of the Arbitration and Conciliation Act. It is also contended that the opposite party had taken back the bank guarantee during pendency of the said suit due to which the appellants had to suffer losses. The appellants had to invite bid afresh and made to pay Rs.426.42 lakhs to the other contractor. It is further contended that the Arbitrator by admitting the claim petitioner and Rs.34,09,920/- for counter-claim of the appellants had passed the award in question. 3. The appellants in their arbitration cases took the ground that the Arbitrator had not framed issues and no conclusion has been drawn in it and as such the appellants had to suffer due to miscarriage of justice. 3. The appellants in their arbitration cases took the ground that the Arbitrator had not framed issues and no conclusion has been drawn in it and as such the appellants had to suffer due to miscarriage of justice. It is also contended that the procedure prescribed on 03.08.2015 had not been complied with; no evidence was there for award on account of overhead expenses; there was no evaluation formula alleged for it. It is alleged that the Arbitrator was negligent for misconduct as violated the public policy, and without appreciating the evidence regarding loss of machinery, had passed the award in question. No evidence was brought on record to show that the contractor ever brought any machinery at the work place, or he was the owner of any machinery and passed the award regarding the loss of working labour. Opposite party had failed to produce any evidence to show that labour had been employed by him at the work place. The Arbitrator had passed the award on account of loss and profit without any evidence. It is alleged that the Arbitrator further had not taken decision that the opposite party had violated the contract, whereas sufficient evidence were available on record in this regard. Lastly, it is contended that there was no reason apparent on record for releasing the bank guarantee, and the interest had been paid without having any jurisdiction to do so. It is further alleged that the award in question is against the law and is contrary to the public policy of India and induced by deceit and is against the moral ethics of substantial principle of justice. Therefore, the award passed in favour of the opposite party is liable to be set aside. 4. The Additional District Judge (Commercial) Dehradun dismissed both the arbitration cases filed by the appellants on the following grounds : (i) The appointment of Mr. M.Z. Haq as a single Arbitrator was as per the consent of both the parties, and a letter had already been issued by the Rural Development Department regarding appointment of the single Arbitrator. (ii) The respondent had initiated the arbitral proceedings after the proceedings under Clause 25 of the contract had been done. M.Z. Haq as a single Arbitrator was as per the consent of both the parties, and a letter had already been issued by the Rural Development Department regarding appointment of the single Arbitrator. (ii) The respondent had initiated the arbitral proceedings after the proceedings under Clause 25 of the contract had been done. (iii) Prior to issuance of notice for arbitration, a letter has been sent to the adjudicator on 05.02.2015 (copy enclosed as Annexure-7 to the arbitration petition), and after that on account of non-decision by the adjudicator within the time stipulated, the respondent had taken a decision to initiate arbitration proceedings. (iv) As per Clause 19, sub-sections (2) and (3) of the Arbitration and Conciliation Act, the parties failed to follow the procedure to be followed by the arbitral tribunal in conducting its proceedings. (v) The issues in the present case were framed by the Arbitrator from 12.10.2015 till 23.01.2016, and these issues were proposed by the contractor as well as the State. Since the State did not push for framing of the issues proposed by it, and had consented to the procedure adopted by the Arbitrator, the award cannot be challenged on the above said grounds. (vi) With respect to concluding the arbitral proceedings within one year, it has been held that arbitral proceedings were initiated on 03.11.2015, which were well within one year. (vii) The last ground for challenging the award was that the award is liable to be set aside as reasons for giving the award have not been explained. 5. The Commercial Court after perusing the award in question dated 28.07.2016 observed that the arbitral tribunal having considered the supporting documents, the arguments and evidence in support thereof, and after giving detailed consideration had passed the award in question. While passing the award, the table which was presented by the contractor before the single Arbitrator depicting basis of loss on account of overhead expenses, machinery, decrease in value, loss in labour was made the basis for accepting the claim and passing of the award. As per the judgment, all claims of the contractor have been considered in accordance with law, and reasons have been given for rejecting the grounds taken by the appellants in challenging the award. 6. After perusing the impugned judgment, the scope of Section 37 of Arbitration and Conciliation Act, 1996, has to be examined for interfering in the arbitral award. As per the judgment, all claims of the contractor have been considered in accordance with law, and reasons have been given for rejecting the grounds taken by the appellants in challenging the award. 6. After perusing the impugned judgment, the scope of Section 37 of Arbitration and Conciliation Act, 1996, has to be examined for interfering in the arbitral award. The scope for interference under Section 37 of the Arbitration and Conciliation Act is very limited. The Hon’ble Apex Court in Larsen Air Conditioning and Refrigration Company Vs Union of India and others, 2023 SCC OnLine SC 982, has held that in appeal, Section 37 of the Act grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34. 7. Finally, the main ground for consideration is with regard to the applications seeking condonation of delay in both the appeals. Counsel for the appellants has placed reliance on the judgments of the Division Bench of this Court passed in Appeal against Order No. 346 of 2022, Haryana Vidyut Parsaran Nigam Limited & another Vs M/s Mahavir Transmission Udyog Pvt. Ltd. & another, decided on 02.11.2022; as well as in Appeal from Order No. 127 of 2021, State of Uttarakhand & others Vs M/s Hillways Constructions Company Pvt. Ltd., decided on 07.03.2022. Reliance has also been placed on the judgment passed by learned Single Judge of this Court in Appeal from Order No. 09 of 2022, Jishan Ali Vs Arbitrator NHAI/Collector, decided on 05.03.2022. 8. However, in the instant case, the State has come up in two separate appeals against the common order of the Commercial Court, and there is delay of 91 days and 151 days, respectively, in preferring these appeals. The judgment delivered by Kerala High Court in the case of Muhammed Shafeek Vs. M/s Tasty Nut Industries, Kilikolloor, Kollam & others, rendered in C.M. Appln. No. 01 of 2023 in COML. Appeal No. 3 of 2023, decided on 17.10.2023, cannot be made basis to condone said delay. The issue of delay has already been considered in a number of judgments. One such judgment of the Division Bench of this Court was rendered in Appeal from Order No. 127 of 2021, State of Uttarakhand & others Vs. Appeal No. 3 of 2023, decided on 17.10.2023, cannot be made basis to condone said delay. The issue of delay has already been considered in a number of judgments. One such judgment of the Division Bench of this Court was rendered in Appeal from Order No. 127 of 2021, State of Uttarakhand & others Vs. M/s Hillways Constructions Company Pvt. Ltd., decided on 07.03.2022, wherein after examining the provisions of Section 13(1A) of the Commercial Courts Act, which only provides condonation of delay of 30 days and 60 days, the application for condonation of delay of 85 days was dismissed, taking note of the judgment of Hon’ble Apex Court rendered in Government of Maharashtra (Water Resources Department) represented by Executive Engineer Vs Borse Brothers Engineers and Contractors Pvt. Ltd., (2021) 6 SCC 460 , wherein in para 63 it has been held as under : “Given the aforesaid and the object of speedy disposal sought to be achieved both under the Arbitration Act and the Commercial Courts Act, for appeals filed under section 37 of the Arbitration Act that are governed by Articles 116 and 117 of the Limitation Act or section 13(1-A) of the Commercial Courts Act, a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by way of exception and not by way of rule. In a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in the discretion of the court, be condoned, always bearing in mind that the other side of the picture is that the opposite party may have acquired both in equity and justice, what may now be lost by the first party’s inaction, negligence or laches.” 9. Borse Brothers (supra) case has been followed in another Division Bench judgment passed by this Court on 02.11.2022, in Appeal against Order No. 346 of 2022, Haryana Vidyut Parsaran Nigam Limited & another Vs M/s Mahavir Transmission Udyog Pvt. Ltd. & another, where delay of 908 days was sought to be condoned in an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996. Even this appeal was dismissed. Also, in Appeal from Order No. 09 of 2022, Jishan Ali Vs. Even this appeal was dismissed. Also, in Appeal from Order No. 09 of 2022, Jishan Ali Vs. Arbitrator NHAI/Collector, decided on 05.03.2022, learned Single Judge of this Court taking note the proposition of law laid down in the case of Borse Brothers (supra) rescind itself from condoning the delay of 551 days, and rejected the application seeking condonation of such delay. 10. In the cases in hand, there is a delay of 91 days and 151 days, respectively, in preferring both the appeals. Since there is no sufficient cause given for condoning such delay, therefore, delay condonation applications, both bearing Nos. 02 of 2022, are hereby rejected. 11. Apart from the delay, on merits also the award has been passed by giving just and valid reasons. 12. In view of the foregoing discussion, this court does not find any reason to interfere with the impugned award dated 28.07.2016 along with common judgment and order dated 11.05.2022, passed under Section 34 of the Arbitration and Conciliation Act, by Additional District Judge (Commercial), Dehrdaun in Arbitration Case No. 96 of 2019 and Arbitration Case No 97 of 2019. Both the appeals are, accordingly, dismissed. Interim order dated 22.12.2022 is hereby vacated. 13. The FDR, along with interest, kept in the nationalized bank by the Registry of this Court be remitted to the court concerned.