Eta Engineering Pvt. Ltd. vs I.T.D.C. Ltd. And Anr.
2007 Latest Caselaw 194 Del

JUDGMENT

J.P. Singh, J.

1. This appeal under Section 37 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as the 'Act') has been preferred by the claimant, against the order dated 21.3.2006 passed by the learned Single Judge dismissing objections under Section 34 of the Act against the award dated 6.8.2005.

2. Briefly the facts are that the respondent No. 1 is a Government of India Enterprise and was running Hotel Samrat and Hotel Kanishka at the relevant time. Subsequently Hotel Kanishka was sold to respondent No. 2 (M/s Hotel Excelsior Limited), whereas the Hotel Samrat is still under the control of respondent No. 1. The respondent No. 1 had issued tenders for supply, installation, testing and commissioning two Nos. of 550 TR capacities each, centrifugal air conditioned plants for Hotel Samrat and subsequently on the same terms and conditions awarded the work for Hotel Kanishka as well. The present appeal relates to the work done for Hotel Kanishka. The work Order was given on 23.4.1998.

3. A Letter of Credit was opened by respondent No. 1 on 7.9.1998 with M/s Trane India Limited USA who was the principal of the appellant. The payment for the chillers was to be made directly by the respondent No. 1 to the custom authorities, while the appellant was responsible for timely liaison with the custom officials loading, unloading, demurrage etc. terms of payment, insurance, performance bank guarantee etc.

4. There was delay in completion of the job. The parties blamed each other. Consequently, disputes arose between the parties. An Arbitrator was appointed. The Appellant filed its claim and the respondent No. 1 filed its counter claim.

5. The learned Arbitrator disallowed most of the claims of the appellant and awarded Rs. 8,50,917.32p. The claimant had already received about Rs. 24 lacs. The learned Arbitrator rejected counter claim of Rs. 32 lacs raised by respondent No. 1. Objection petition was filed before the High Court by the claimant. The learned Single Judge dismissed the objections. Hence this appeal.

6. The learned single Judge has held that the objections were not covered under Sub-section 2 of Section 34 of the Arbitration and Conciliation Act, 1996 and thus dismissed the same. Section 34 of the Arbitration and Conciliation Act is as under :

34. Application for setting aside arbitral award.- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with Sub-section (2) and Sub-section (3).

(a) An arbitral award may be set aside by the Court only if -

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(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; or

(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; or

(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; or

(b) the Court finds that -

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

Explanation. - Without prejudice to the generality of Sub-clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81.

7. A perusal of the above provision shows that the scope of interference for setting aside an award is now very restricted. Faced with this situation the learned Counsel highlighted that the award was in conflict with the public policy of India.

8. It is also urged that the appellant did not accept the letter of credit opened on 7.9.1998 and had requested for amendments. It is submitted that respondent took time to amend the letter of credit and therefore 21 weeks awarded to complete the work were to be reckoned from the date of last amendment. It is submitted that the arbitrator has wrongly held that the time for completion of project was to start from 7.9.1998. It is submitted that the award has been passed without any material or documentary evidence in its support and ought to have been set aside by the single Bench.

9. We have also gone through the terms and conditions of the letter of intent and the work order. The total period for completion was agreed to be 21 weeks reckoned from the confirmed letter of credit opened by respondent No. 1 in favor of M/s Trane India Limited USA, who was the principal of the appellant- claimant.

10. As per the agreement it was obligatory on the part of the appellant to over-see the supply of imported equipment by its principal M/s Trane India Limited USA. The appellant was also called upon to expedite the work in view of the time bound requirement and was told to ensure that the work was completed and commissioned within the stipulated period.

11. The Arbitrator has gone into the question as to who was responsible for the delay. As per the agreement the work was to be completed by 31.1.1991, but the appellant could not complete the work even by August, 2002. The Arbitrator has held that no documentary evidence in support of allegations of the appellant was filed. The letter of credit was opened on 7.9.1998. The appellant did not submit documentation which was to be forwarded for procurement of import license, therefore whatever delay was caused, it was because of the appellant. The Arbitrator has further held that the work was carried on by the appellant on ad-hoc basis resulting in loss of time. The appellant did not carry out even the work which had to be done before arrival of the equipment or was not connected with the equipment to be imported. All this shows that as an after thought the appellant was seeking for making amendments in the letter of credit in an effort to use it as an excuse for covering the delay.

12. In our view the appellant could not get the period extended by writing self serving letters for amendment of the letter of credit. Even the amendments cannot come to his rescue due to his overall lethargic manner of work as noted by the learned Arbitrator. All this shows that the appellant himself was solely responsible for delay in completion of work.

13. As regards the plea that the award was in conflict with the public policy of India, the learned Counsel has not been able to explain as to how the award was in conflict with the public policy of India. The objects of the Arbitration and Conciliation Act, 1996 are to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. The intention behind the new Arbitration Act was to have speedy disposal of the disputes. The appellant who had taken upon itself to have the equipment imported through its principal in the USA, in our view, could not taken advantage of his own wrongs, which caused the delay in arrival of the equipments and otherwise also as recorded by the Arbitrator the other spade work for installation of the imported equipment was also being done by the appellant in a lackadaisical manner. In our view, there is no question of violation of any public policy of India, in the impugned award as alleged or at all.

14. Considering all these facts and circumstances, we are of the view that the learned single Judge has passed a well reasoned order supported by the relevant Supreme Court judgments. We fully affirm and endorse the findings of the learned Single Judge and do not find any merit in this appeal. The same is, therefore, dismissed. Parties are, however, left to bear their own costs.