Delhi High Court
Rt And Associates Pvt Ltd vs Bharat Sanchar Nigam Ltd on 22 April, 2025
Author: Subramonium Prasad
Bench: Subramonium Prasad
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 08.04.2025
Judgment delivered on: 22.04.2025
+ FAO(OS) (COMM) NO. 275/2023
RT AND ASSOCIATES PVT LTD ...Appellant
Through: Ms. Renu Gupta and Ms.
Pratiksha Jalan, Advocates.
versus
BHARAT SANCHAR NIGAM LTD ...Respondent
Through: Mr. K.P. Sundar Rao, Mr.
Shubham Choudhary and Mr.
Udesh Puri, Advocates.
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT
HARISH VAIDYANATHAN SHANKAR, J.
1. The instant appeal under Section 37(1) of the Arbitration and
Conciliation Act1, 1996 assails the judgment2 dated 27.09.2023 in
O.M.P.(Comm.) No. 15/2015, titled „R.T. & Associates Pvt. Ltd. v.
Bharat Sanchar Nigam Ltd.‟ passed by the Ld. Single Judge
dismissing the petition under Section 34 of the Act. The impugned
judgment was rendered in the challenge against the arbitral award3
dated 27.06.2015.
2. The primary grievance of the Appellant is with regard to Claim
no. 1 raised by the Appellant/Claimant before the Ld. Arbitral
The Act
Impugned judgment
Award
Tribunal4. The Appellant contends that the Agreement dated
12.08.2009 executed between the parties did not intend that the
Appellant was obliged to facilitate the execution of title documents in
favour of the Respondent by the concerned authorities so as to give
effect to various clauses of the Agreement for its successful execution.
The Appellant contends that the Agreement was limited to requiring
the Appellant to apply to the authorities on behalf of the Respondent
for a change of land use, based on the title documents of the
Respondent.
3. At this juncture, it would be apposite to advert the necessary
facts leading up to the institution of the present appeal.
4. On 17.07.2008, the Respondent/Bharat Sanchar Nigam
Limited5 published a Notice Inviting Tender6 for "Architectural
Consultancy Service for Construction of Corporate Complex at CTS
Compound, Netaji Nagar, New Delhi". The Appellant participated in
the tender process by attending the pre-bid meetings and submitting its
bid.
5. The contract was awarded to the Appellant by the Respondent
on 24.07.2009.
6. On 12.08.2009, an Agreement was executed between the
parties, which prescribed, inter alia, the timelines of 6 months, 21
months and 3 months to the execution of the work assigned in three
phases, namely, pre-commencement, construction and post-
completion.
AT
BSNL
NIT
7. Clause 5.2 of the agreement stipulated the scope of the
consultancy. According to Clauses 5.2.1 and 5.2.3(g), the scope of the
consultancy included obtaining land ownership documents, approval
from local/ statutory authorities, mutation in the name of BSNL from
the Department of Telecommunications and change in land use, if
required.
8. It is the case of the Appellant that to carry out mutation and
change of land use, the Appellant asked the Respondent to provide the
title documents of the project land. Instead of providing the same, the
Respondent asked the Appellant to obtain them. The Appellant took
steps in furtherance of the same and approached the Land and
Development Office7. On the Appellant‟s persuasion, the office of the
L&DO requested the Ministry of Communication and Information
Technology to verify and establish the title of project land in BSNL‟s
name; however, the attempt was futile.
9. Meanwhile, the Appellant raised part-bill, which was paid by
the Respondent.
10. Alleging inaction on the part of the Appellant, the Respondent
issued a Show Cause Notice8 on 15.11.2010 asserting breach of
contract due to delay in completion of work. The Appellant sent two
replies dated 16.11.2010 and 25.11.2010 to the said SCN stating that
the delays were procedural and primarily attributable to the
Respondent.
11. A dispute arose between the parties pertaining to obtaining the
land ownership documents.
L&DO
SCN
12. Vide notice dated 29.11.2010, the Appellant invoked Clause
5.16 Agreement dated 12.08.2009 seeking appointment of an
Arbitrator.
13. By memorandum dated 07.01.2011, the Respondent intimated
the Appellant about the appointment of the sole Arbitrator.
14. Vide letter dated 29.11.2011, the Respondent terminated the
contract relying on Clauses 5.15(iv), 5.7(i) and 5.7(ii) of the
Agreement dated 12.08.2009.
15. The dispute was referred to Arbitration and the Ld. AT passed
the Award dated 27.06.2015 and the correction Award dated
03.07.2015 allowing Claim no. 2(c) partially and Claim no. 5 of the
Appellant and Counterclaims nos. 4, 6 and 7 of the Respondent.
16. Being aggrieved, the Appellant filed a petition under Section 34
of the Act impugning the award on limited grounds. The Ld. Single
Judge dismissed the petition. In the impugned judgment, the Ld.
Single Judge recorded the contentions of the parties and held as under:
"SUBMISSIONS BEFORE THIS COURT
28. Consultant restricted its challenge in the present petition
to the misinterpretation of Clauses 5.2.1 and 5.2.3(g) of the
Agreement by the AT, which, according to the Consultant, has
rendered the finding patently illegal. Consultant has argued that
the obligation under Clauses 5.2.1 and 5.2.3(g) only obliged it to
apply to the authorities on behalf of BSNL for change of land
use based on title documents of BSNL. It could not have been
the intent behind Clauses 5.2.1 and 5.2.3 that the Consultant was
obliged to facilitate execution of title documents in favour of
BSNL by the concerned authorities. It is contended that, to this
extent, the AT‟s reading of the aforesaid clauses is unreasonable
and hence patently illegal.
A contention was raised, although half-heartedly,
suspecting the competence of the Arbitrator to act as an
arbitrator in the dispute. It was alleged that he was an ex-
employee of BSNL and was involved in the preparation of
tender documents pertaining to this very contract. However, the
challenge was given up by the Consultant conceding that it did
not have any evidence to substantiate the allegation.
29. BSNL contended that AT‟s finding regarding Consultant‟s
obligation under Clause 5.2.3(g), is consistent with the letter and
spirit of aforesaid clauses. What was expected of the Consultant
under Clause 5.2.1 and 5.2.3(g) was fully emphasised in the pre-
bid meeting dated 24.02.2009, where BSNL clarified that the
Consultant had to obtain the land ownership documents as well
as mutation and change of land use. It is contended that there
was no scope for any ambiguity regarding the scope of Clause
5.2.3(g). Consultant‟s contention therefore is contrary to the
facts and intention of the parties. It was further argued by
BSNL, that termination of the contract was also on account of
the Consultant abandoning the site with its personnel thereby
abandoning the contract itself.
DISCUSSION AND CONCLUSION
30. The ground of patent illegality came to be interpreted by
Supreme Court in Delhi Airport Metro Express (P) Ltd. v. Delhi
Metro Rail Corporation Ltd. [(2022) 1 SCC 131] in the
following words: -
"29. Patent illegality should be illegality which goes
to the root of the matter. In other words, every error
of law committed by the Arbitral Tribunal would not
fall within the expression "patent illegality".
Likewise, erroneous application of law cannot be
categorised as patent illegality. In addition,
contravention of law not linked to public policy or
public interest is beyond the scope of the expression
"patent illegality". What is prohibited is for courts to
reappreciate evidence to conclude that the award
suffers from patent illegality appearing on the face
of the award, as Courts do not sit in appeal against
the arbitral award. The permissible grounds for
interference with a domestic award under Section
34(2-A) on the ground of patent illegality is when
the arbitrator takes a view which is not even a
possible one, or interprets a clause in the contract in
such a manner which no fair-minded or reasonable
person would, or if the arbitrator commits an error of
jurisdiction by wandering outside the contract and
dealing with matters not allotted to them. An arbitral
award stating no reasons for its findings would make
itself susceptible to challenge on this account. The
conclusions of the arbitrator which are based on no
evidence or have been arrived at by ignoring vital
evidence are perverse and can be set aside on the
ground of patent illegality. Also, consideration of
documents which are not supplied to the other party
is a facet of perversity falling within the expression
"patent illegality"."
31. The contention raised herein requires interpretation of
Clause 5.2.3(g) of the Agreement which is extracted hereunder:
-
"g. The Architectural Consultant shall be responsible
for pursuing and obtaining of all approvals from all
Local/ Statutory authorities according to prevailing
bye- laws, Laws, and Regulations etc including
obtaining land ownership documents, mutation and
change in land use if required. The BSNL shall pay
all statutory fees required for obtaining the approvals
from various local bodies/statutory bodies.
(emphasis added)
32. The aforesaid clause was interpreted by the AT to observe
that the clause was incorporated after a number of pre-bid
conferences. A plain reading of the clause (g) would show that
the Consultant was obligated to obtain ownership documents as
well as mutation and change of land use. Minutes of pre-bid
meeting have been relied upon by the AT to conclude that the
Consultant was obliged to obtain title documents from the
authorities. The scope of Clause 5.2.3(g) has been interpreted by
the AT and the interpretation seems to be reasonable.
Consultant‟s contention that the interpretation adopted by AT
would lead to absurd consequence since the Consultant was
expected to "create" title documents in favour of BSNL, is not
borne out to be correct from the award. AT has only held that
the Consultant was obliged to obtain title documents from the
authorities and apply for land use etc., if required.
33. It is seen that the AT has neither travelled beyond the
contract between the parties, nor are its findings unreasonable
much less suffering from any patent illegality known to law. The
award is based on evidence produced by the parties, with
opportunity of hearing given to the parties, and thus, the AT
adopted a judicial approach in deciding the claims.
34. With no other ground raised, the petition merits dismissal.
(emphasis supplied)
17. It is a settled position that the appellate power of this Court
under Section 37 of the Act is limited and cannot be exercised in a
cavalier manner. The Hon‟ble Supreme Court in MMTC Ltd. v.
Vedanta Ltd.9 contemplated upon the narrow scope of appeal under
Section 37 of the Act and observed that:
(2019) 4 SCC 163
"14. As far as interference with an order made Under Section
34, as per Section 37, is concerned, it cannot be disputed that
such interference Under Section 37 cannot travel beyond the
restrictions laid down Under Section 34. In other words, the
court cannot undertake an independent assessment of the merits
of the award, and must only ascertain that the exercise of power
by the court Under Section 34 has not exceeded the scope of the
provision. Thus, it is evident that in case an arbitral award has
been confirmed by the court Under Section 34 and by the court
in an appeal Under Section 37, this Court must be extremely
cautious and slow to disturb such concurrent findings."
(emphasis supplied)
18. A three-judge Bench of the Hon‟ble Supreme Court in UHL
Power Co. Limited v. State of Himachal Pradesh10 observed the
following:
"15. This Court also accepts as correct, the view expressed by
the appellate court that the learned Single Judge committed a
gross error in reappreciating the findings returned by the
Arbitral Tribunal and taking an entirely different view in respect
of the interpretation of the relevant clauses of the
implementation agreement governing the parties inasmuch as it
was not open to the said court to do so in proceedings Under
Section 34 of the Arbitration Act, by virtually acting as a court
of appeal.
16. As it is, the jurisdiction conferred on courts Under Section
34 of the Arbitration Act is fairly narrow, when it comes to the
scope of an appeal Under Section 37 of the Arbitration Act, the
jurisdiction of an appellate court in examining an order, setting
aside or refusing to set aside an award, is all the more
circumscribed."
(emphasis supplied)
19. Similarly, the Hon‟ble Supreme Court in Punjab State Civil
Supplies Corpn. Ltd. v. Sanman Rice Mills11 held that:
20. In view of the above position in law on the subject, the
scope of the intervention of the court in arbitral matters is
virtually prohibited, if not absolutely barred and that the
interference is confined only to the extent envisaged under
Section 34 of the Act. The appellate power of Section 37 of
the Act is limited within the domain of Section 34 of the Act.
(2022) 4 SCC 116
2024 SCC OnLine SC 2632
It is exercisable only to find out if the court, exercising
power under Section 34 of the Act, has acted within its limits
as prescribed thereunder or has exceeded or failed to
exercise the power so conferred. The Appellate Court has no
authority of law to consider the matter in dispute before the
arbitral tribunal on merits so as to find out as to whether the
decision of the arbitral tribunal is right or wrong upon
reappraisal of evidence as if it is sitting in an ordinary court
of appeal. It is only where the court exercising power under
Section 34 has failed to exercise its jurisdiction vested in it
by Section 34 or has travelled beyond its jurisdiction that the
appellate court can step in and set aside the order passed
under Section 34 of the Act. Its power is more akin to that
superintendence as is vested in civil courts while exercising
revisionary powers. The arbitral award is not liable to be
interfered unless a case for interference as set out in the earlier
part of the decision, is made out. It cannot be disturbed only for
the reason that instead of the view taken by the arbitral tribunal,
the other view which is also a possible view is a better view
according to the appellate court.
(emphasis supplied)
20. The limited contention advanced by the Appellant in the present
appeal is with regard to the alleged misinterpretation of Clause
5.2.3(g) of the Agreement. The Appellant has, in essence, argued that
its obligation under Clause 5.2.3(g) required them to apply for change
in land use to requisite authorities based on title documents already
under the name of the Respondent and this clause did not mean that
the Appellant had to obtain the said documents in order for it to
proceed further and carry out its obligations under the Contract. The
Appellant also contends that it was ready and willing to perform the
contract, but the lack of the ownership documents stood in its way to
proceed further.
21. The general scope of the consultancy under the contract was
provided in Clause 5.2.1 of the Agreement dated 12.08.2008, which,
inter alia, states as under:
"5.2.1. the Scope of Consultancy provides for
......................................... and obtaining approval from
local/statutory authorities i/c land use change if required and
mutation in the name of BSNL from DoT..............."
(emphasis supplied)
22. The general scope as provided under Clause 5.2.1, was further
elaborated in the subsequent clauses. This fact is clear from the phrase
used after Clause 5.2.2 which states that "....the details of services to
be provided by the consultant shall, inter-alia, include the
following".
23. Clause 5.2.3 specifically sets out, in detail, various obligations
under the heading „Architectural Design‟.
24. Sub-clause (g) of Clause 5.2.3, in particular, is relevant for the
present purposes and reads as follows:
"g. The Architectural Consultant shall be responsible for
pursuing and obtaining of all approvals from all Local Statutory
authorities according to prevailing bye- laws, Laws, and
Regulations etc including obtaining land ownership documents,
mutation and change in land use if required. The BSNL shall
pay all statutory fees required for obtaining the approvals from
various local bodies/statutory bodies."
(emphasis supplied)
25. To our mind, Clause 5.2.3(g), in unambiguous terms, vests
upon the Appellant the obligation of "...including obtaining land
ownership documents, mutation and change in land use if required". It
is, in fact, the case of the Appellant, that in order to obtain all
necessary approvals, the land ownership documents would be
required. If the land ownership documents were already with the
Respondent, there would have been no necessity for the sentence
quoted hereinabove. This, viewed in conjunction with the pre-bid
meetings where this aspect had been discussed and deliberated upon,
leaves no scope for "interpretation" of the said clause. The said clause
is expressly inclusive of the obligation of the Appellant to obtain the
land ownership documents.
26. There is further aspect that the Appellant‟s initial Claim no. 1
before the Ld. AT which was, in the following terms, „...the
termination letter no.02/EE(C)/BSNL/CTS/ND/146 dated 29.11.2011
of the agreement dated 12.8.2009 is illegal, null and void‟ was, on
21.12.2011, amended in the following terms, „Direct the respondent to
cooperate with the claimant and to provide all necessary documents
with regards to the property in question to enable the claimant to
obtain the necessary permissions, CLU, NOCs etc. so as to give effect
to the various clauses of the agreement for the successful execution of
the agreement dated 12.08.2009; and that the termination letter
no.02/EE(C)/BSNL/CTS/ND/146 dated 29.11.2011 of the agreement
dated 12.8.2009 is illegal, null and void‟.
27. The said amended claim, to our mind, is a clear admission of
the abject failure on the part of the Appellant to perform its agreed
terms of the Agreement.
28. The termination letter dated 29.11.2011 was the natural
corollary of the resulting failure and the consequence thereof.
29. In view of our discussion above, while affirming the judgment
of the Ld. Single Judge, we are of the considered view that there is no
merit in the present appeal and the same is, consequently, dismissed.
30. No orders as to costs.
SUBRAMONIUM PRASAD, J.
HARISH VAIDYANATHAN SHANKAR, J.
APRIL 22, 2025/sm/er/as
