Delhi High Court
M/S. Toco Engineering Co. vs Power Grid Corporation Of India ... on 6 May, 2010
Author: Manmohan
#F-50, 52, 53
* IN THE HIGH COURT OF DELHI AT NEW DELHI
50.
+ O.M.P. 474/2003
M/S. TOCO ENGINEERING CO. ..... Petitioner
Through Mr. B. Mohan, Advocate
versus
POWER GRID CORPORATION
OF INDIA LTD. ..... Respondents
Through: Mr. Pawan Upadhyay with
Mr. Puneet Parihar, Advocates
AND
52.
+ CS(OS) 35/2004
M/S. TOCO ENGINEERING CO. ..... Petitioner
Through Mr. B. Mohan, Advocate
versus
POWER GRID CORPORATION
OF INDIA LTD. ..... Respondents
Through: Mr. Pawan Upadhyay with
Mr. Puneet Parihar, Advocates
AND
53.
+ CS(OS) 1350A/2004
M/S. TOCO ENGINEERING CO. ..... Petitioner
Through Mr. B. Mohan, Advocate
versus
POWER GRID CORPORATION
OF INDIA LTD. ..... Respondents
Through: Mr. Pawan Upadhyay with
Mr. Puneet Parihar, Advocates
% Date of Decision : MAY 06, 2010
O.M.P. 474/2003, CS(OS) 35, 1350A/2004 Page 1 of 6
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the judgment?No.
2. To be referred to the Reporter or not? No.
3. Whether the judgment should be reported in the Digest?No.
JUDGMENT
MANMOHAN, J (ORAL)
1. By this common order, I shall dispose of the present batch of
three petitions.
2. Power Grid Corporation of India Ltd. (in short "PGCIL") has
filed the petition bearing O.M.P. No. 474/2003 under Sections 30 and
33 of Arbitration Act, 1940 (hereinafter referred to as "Act, 1940")
challenging the arbitral Award dated 22nd October, 2003 passed by Mr.
Justice (Retd.) S.C. Agrawal, Sole Arbitrator.
3. PGCIL impugns the Award in so far as it awards Claims No. 5, 6
and 11. The rate of interest is also challenged as being usurious and
excessive.
4. I may mention that before the Arbitrator, M/s. Toco Engineering
Company (in short "TEC") had filed 18 claims but the Arbitrator had
only awarded 3 claims and rejected the balance 15 claims. Primarily
the Arbitrator has awarded escalation charges and refund of retention
money as well as two bank guarantees which had been encashed.
5. Having heard the parties I am of the view that scope of
interference by this Court with an arbitral award rendered under Act,
1940 is limited. The Supreme Court in Arosan Enterprises Ltd. Vs.
Union of India & Another reported in (1999) 9 SCC 449 has clearly
outlined the scope of interference by this Court in objections filed under
Sections 30 and 33 of the Act, 1940. The relevant observations of the
Supreme Court in the said judgment are reproduced hereinbelow :-
"36. Be it noted that by reason of a long catena of cases, it
is now a well-settled principle of law that reappraisal of
evidence by the court is not permissible and as a matter of
fact exercise of power by the court to reappraise the evidence
is unknown to proceedings under Section 30 of the
Arbitration Act. In the event of there being no reasons in the
award, question of interference of the court would not arise at
all. In the event, however, there are reasons, the interference
would still be not available within the jurisdiction of the court
unless of course, there exist a total perversity in the award or
the judgment is based on a wrong proposition of law. In the
event however two views are possible on a question of law as
well, the court would not be justified in interfering with the
award.
37. The common phraseology "error apparent on the face of
the record" does not itself, however, mean and imply closer
scrutiny of the merits of documents and materials on record.
The court as a matter of fact, cannot substitute its evaluation
and come to the conclusion that the arbitrator had acted
contrary to the bargain between the parties. If the view of the
arbitrator is a possible view the award or the reasoning
contained therein cannot be examined. .........
(emphasis supplied)
6. Moreover, it is settled law that Arbitrator is the master of facts
and law, and the Courts should not interfere with the award of the
Arbitrator until and unless there is an error apparent on the face of the
record. Also, reasonableness of reasons given by the Arbitrator cannot
be challenged and even appraisal of evidence is never a matter which
the Court questions or considers. When the parties select their own
forum to decide the disputes, that forum must be conceded the power to
appraise the evidence as well as quality and quantity of the same.
7. Keeping in view the aforesaid parameters, I am of the opinion
that impugned Award requires no interference except with regard to the
rate of interest.
8. As far as Claims 5 and 6 are concerned, I find that the Arbitrator
after appreciation of facts has reached the conclusion that PGCIL was
responsible for delay in execution of the contract and further that the
contract had been terminated illegally. Consequently, TEC is entitled
for refund of retention money as well as the two bank guarantees which
had been encashed by the PGCIL.
9. As far as the Award of escalation is concerned, I find that the
Arbitrator has awarded the same after calculating it on the actual date of
execution. In my opinion, since the contract was extended by TEC
without levy of liquidated damages, TEC would be entitled to price
escalation. I may mention that there is no provision in the clause which
prohibits award of price escalation. By incorporating in the formula the
actual date of execution, the Arbitrator has only acted reasonably and
fairly. Consequently, the said claim calls for no interference in Section
34 proceedings.
10. However, as far as the award of interest is concerned, I deem it
appropriate to reduce the rate of interest. The Supreme Court in
Rajendra Construction Co. Vs. Maharashtra Housing & Area
Development Authority and Ors. reported in (2005) 6 SCC 678;
McDermott International Inc. Vs. Burn Standard Co. Ltd. & Ors.
reported in (2007) 8 SCC 466 and Rajasthan State Road Transport
Corporation Vs. Indag Rubber Ltd. reported in (2006) 7 SCC 700 has
reduced the rate of interest. In fact, in Krishna Bhagya Jala Nigam
Ltd. vs. G. Harischandra Reddy & Anr. reported in (2007) 2 SCC 720
the Supreme Court has held as under :-
"11. ...... here also we may add that we do not wish to
interfere with the award except to say that after economic
reforms in our country the interest regime has changed and
the rates have substantially reduced and, therefore, we are of
the view that the interest awarded by the arbitrator at 18%
for the pre-arbitration period, for the pendente lite period
and future interest be reduced to 9%."
11. Consequently, keeping in view the aforesaid judgments and the
current rate of interest, I reduce the rate of interest to 9% per annum
simple interest for the period mentioned in the Award as well as till the
date of payment.
12. With the aforesaid modifications in the rate of interest, the
impugned Award dated 22nd October, 2003 is made rule of the Court
and Registry is directed to prepare a decree in terms thereof.
Accordingly, petitions stand disposed of.
MANMOHAN,J
MAY 06, 2010
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