Claim No. 10: An amount of ₹14,39,687 towards additional
expenditure incurred on account of provision of grills/guard
bars to windows.
Claim No. 16 and Claim No. 19 partially: An amount of ₹72,
62,487 towards compensation on account of delayed and
short payments of RARs and final bill.
Claim No. 17: An amount of ₹4,71,23,622 towards damages
due to prolongation of the contract period on account of
breach by the respondent.
Claim No. 18: An amount of ₹31,91,711 towards
compensation on account of excessive recovery made by the
respondent towards work contract tax.
Claim No. 19: Interest towards past, pendente lite and future
interest.
Claim No. 20: An amount of ₹10,00,000 towards cost of
arbitration and claim number one of UOI amounting to
₹3,00,000.
10. The arbitral tribunal came forward with claim-wise
adjudication in terms whereof the respondent's claims No. 1, 2, 4, 5,
against each of said rejected claims which are as under: -
submission made before sole arbitrator,
decision conveyed by the accepting officer is
considered just and fair in respect of claim
No. 1 of claimant/contractor. The
specifies that the construction of block of
guard rest room with elevated sentry post
complete all as specified and shown on
drawings. No additional building has been
constructed. Accordingly, I do not uphold
the claim and award amount to the claimant
contractor. However, tender documents
needs to be drafted in a transparent manner
to avoid disputes and benefit of doubt is
given to UOI as public money is involved.
Claim No.2: An amount of ₹3,56,856 towards extra
expenditure incurred on account of
construction of two separate blocks instead
of one block catered under CA provision in
respect of item No. 17 of Schedule "A" Part-1
i.e., block of garage for 10 cars and 30
motorcycles.
Decision: (i) The plea of the respondent that it was a
final and binding decision to this effect was
conveyed by accepting officer. Accordingly,
this claim is not arbitrable in terms of
condition No.7 of IAFW - 2249 and this
claim is beyond the jurisdiction of sole
arbitrator. Final and binding decision is
required to only when there are conflicting
provisions in one and same document. The
respondent failed to clarify as to what are
the conflicting provisions within the same
document. The contention of Union of India
that a final and binding decision has been
conveyed cannot be sustained. I, therefore,
reject the plea of the respondent.
(ii) It is a case of increase in 'scope of work'.
Department should have enclosed a
combined drawing for block of garage for 10
cars and 30 motorcycles at the time of issue
of tender documents. Moreover, it was
decided by accepting office to accord
deviation order for one common wall, two
columns and plinth protection, however,
Department did not produce any details
regarding such pricing and payment to the
Claimant. Department did not implement
even their own decision during currency of
the contract UOI represented by CE
Pathankot zone has not raised any objection
regarding pricing of the claims furnished by
the claimant along with SOC. Department is
required to reimburse the claimant
regarding increase in scope of work against
serial item No. 17 of Schedule 'A' Part-1. The
cost of 30 motorcycles garage is on lower
side as compared to the cost of 10 cars
garage. CWE Jammu on behalf of UOI has
technically checked the pricing of the claim
as intimated vide their letter number
85007/29/ARB/142/E8 dated 29
September 2018. Amount after technical
checkup works out to be ₹3, 62, 108.90.
(iii) Keeping in view the contract provisions,
submissions made in writing and orally
before me, I do not uphold the claim as
proper details have not been produced
before me as per the decision of the
accepting officer, accordingly, I award nil
amount to the claimant.
Claim No.4: An amount of ₹52,206.00 towards extra
expenditure incurred towards provision of
reinforcement and respect of pedestal to FFI.
Decision: In view of note 14 on DRG number CEPZ -
TD - 62/06 sheet/5, no plus DO is
admissible to claim contractor. Accordingly,
I do not uphold the claim and award NIL
amount to claimant contractor.
Claim No.5: An amount of ₹1,53,712.00 towards
expenditure incurred on account of
provision of RCC parapet in SM Barrack at
GF& FF in veranda viz items 14 and 15 of
schedule A.
Decision: In view of various contract, provisions,
claimant has provided reinforcement on
technical requirement basis, no DO is
admissible. I do not uphold the claim and
award nil amount to the claimant.
Claim No.8: An amount of ₹18,10,100 towards
compensation on account of abnormal
variation in respect of quantities of certain
items of part XIX and XX of schedule A.
Decision: It is observed that variation in quantity is
with 25% of concerned schedule, therefore I
do not uphold the claim and award NIL
amount to the claimant contractor.
Claim No.11: An amount of ₹22,68,874 towards
compensation on account of damages
arising due to specification of MINUS D.O.
for Built - in - furniture not covered under
the scope of CA.
Decision: The tender documents has not properly
drafted, and there are sufficient reasons that
Clement has raised the claim, but still, the
built-in furniture is covered in the scope of
contract as per note and.06.1 C in serial
page 14 of contract agreement, therefore, I
do not upload the claim and award NIL
amount to the claimant contractor.
Claim No.12: An amount of ₹2,95,683 towards
compensation on account of damages
arising due to non-contractual recovery from
the final bill towards defects and claim NO2
of UI for recovery against defect rectification
amounting to ₹2,95,653.00.
Decision: Claimant has not rectified the defects to the
entire satisfaction of the Department,
therefore, I do not upload the claim of
Clement and award NIL amount to the
claimant. However, the department should
ensure better contract management by
ensuring proper details of risk and cost
contract and contractor should be informed
in black and white to avoid disputes. The
details produced were not self-explanatory.
In conclusion based on practical
consideration, the claim of UOI's Recovery
against rectification is held. FDR bearing
number 679418 dated 08/10/2014
deposited by the claimant to be encased or
₹2, 95, 653 be adjusted against the amount
awarded to the complainant and FDRB
returned to the claimant. In case FDR is
encashed, interest accrued on FDR shall be
refunded to the claimant contractor as
amount in shape of FDR is already in
possession with UOI.
Claim No. 13: An amount of ₹1,95,800 towards extra
expenditure incurred for rectification of
defects pertaining to waterproofing
treatment caused by inadequate
specifications.
Decision: It is noticed that department has deviated
from the specification as recommended by
the manufacturer. There are variations in
this specification scattered in the contract
agreement and as recommended by the
manufacturer, still the claimant cannot
escape from their responsibility to provide
quality work. Accordingly, I do not uphold
the claim and award Nil Amount In favour of
the claimant contractor.
Claim No. 17: An amount of ₹4,71,23,622 towards
damages due to prolongation of the contract
period on account of breach by the
respondent.
Decision: Regarding delay in completion of work, it
was beyond the control of UI to a larger
extent in the prevailing circumstances at the
time of execution of work. I therefore do not
afford this claim and award amount in
favour of the claimant
11. The claims of the respondent which came to be allowed by the
arbitral tribunal, aggregating to Rs. 1,79,57,954/-, are the claims
No. 3, 6, 7, 9, 10, 14, 15, 16, 18 & 19 bearing respective decision
which are as under: -
"Claim No.3: An amount of ₹1,02,57,123 towards extra
expenditure incurred on account of
provision of plinth beams to building listed
in Schedule 'A'/Part 1.
Decision: (i) The plea of the respondent that it was a
final and binding decision to this effect, was
conveyed by accepting officer. Accordingly,
this claim is not arbitrary in terms of seven
of IAFW-2249 and this claim is beyond the
jurisdiction of sole arbitrator. Final and
binding decision is required only when there
are conflicting provisions in one and same
documents. The respondent failed to clarify
as to what are the conflicting provision
within the same document. The contention
of union of India that final binding decision
has been conveyed is not sustained by me.
(ii) It was necessary to find out as to which
drawing is forming part of original document
a copy of which was in custody of PCDA. The
respondent was therefore asked to obtain
this copy from CDA and produce the same
during next hearing. They However, fail to
produce this drawing, despite insistence of
the claimant, where upon the claimant
contended that original drawing was also
without this revision, and hence the
respondent is not intentionally producing
the original drawing. This view of the
complainant appears to be correct, the fact
remains that the PCDA Chandigarh Mandir
on behalf of respondent did not produce the
original drawing, and the only thing on
record is the revised drawing forming part of
CTC set of the drawings.
(iii) It is observed that clarification to
drawings has been endorsed by the
department at serial page 213 of CA, it is
specific that ", wherever RCC print beams
are shown on the drawings, brick foundation
or not to be provided. In case brick
wall/brick foundation is shown below plinth
beam, it shall be treated as wide be shall be
provided as per drawing number CEPZ/DD -
05/2011 sheet 3/5.'
(iv) Therefore, clarification given in the CA
will prevail and supersede the other
provisions given in drawing. This provision
specifically indicates and highlights that
plinth Bheem should be provided as per
drawing number CEPZ/DD - 05/2001 sheet
number 3/5. It is admitted by union of India
drawing number CAPZ/TD/05/ 2001 sheet
number 3/5 without any revision was
forming part of CA duly signed by union of
India and climate contractor. Therefore,
contention of union of India that said
drawings have been made part of CA
inadvertently cannot be accepted when it is
a written and signed contract agreement.
The contention of union of India represented
by C Pathankote zone that claimant
contractor has signed the revised drawing in
appropriately is not based on facts. CE
Pathan court zone is the draft of the tender
documents, hence climber contractor is not
held responsible on this account.
(v) Keeping the above in view, plain beams
are not forming part of CA. The claimants
will carry out the estimates based on such
drawings at the time of coating of tender and
plinth beams are clearly not shown. So
arbitrator is bound by the documents
forming part of agreement, and basically, it
is a case of deviation from the contract
provision. Even during the currency of the
contract, department was considering to sort
the disputes by way of plus deviation order
as it appears from the claimant letter
number BC: CEPZ - 29: Bracket PT - 111
bracket/202 Date 04/03/2009.union of
India has not refused the contention of
claimant during arbitration hearing. It was
also decided to omit one brick, thick dwarf
wall on external walls by both parties.
(vi) Claimant contractor has demanded ₹1,
02, 57, 123 .00. It can be concluded that in
case contract does not get for plain beams, a
brick wall post as part of contract. After
adjustment of cost of brick wall and
omission of dwarf wall on external walls,
financial effect of deviation, order works out
to be ₹ 89, 41, 007.00 as intimated by
claimant wide their letter number BC/CEPZ
- 29/ARB/80 dated 12/07/2018. CWE
Jammu on behalf of UI has technically
checked the pricing of the claim as intimated
while their letter number
85007/29/ARB/142/E dated
29th/09/2018. Amount after technical
check up works out to be ₹8 nine, 41,
007.00.
I therefore upload the claim partially and I
award ₹8 nine, 41, 007.00 bracket
₹89,41,007 only bracket In favour of the
claimant contractor.
Claim No.6: An amount of ₹3,50,538 towards extra
expenditure incurred in execution of certain
additional works, ordered on the claimant.
Decision: (i) UOI brought out that changes brought
out at 6.1 a, B, DNE have been implemented
at site without the approval of department.
The contention of department is not
acceptable as appropriate action was not
taken to issue directions not to execute
these works. Clement has not executed
these works gratuitously. Therefore, amount
against these deviations are due to the
claimant. Similarly, department has not
disputed occurrence of damage and
consequently financial loss to the claim.
Therefore, amount of ₹4 zero, 332.00. On
account of damage to security wall is due to
contractor. Additional Hooks provided was
checked by both parties and amount
claimed is due to claimant as decided by
both parties in arbitration hearing.
(ii) Keeping in view the various written and
oral submissions made before me, I upload
the claim and award ₹3, 50, 538 (rupees
three lakh fifty thousand five hundred thirty
eight only) only in favour of claim and
contractor.
Claim No. 7: An amount of ₹7,15,700 towards extra
expenditure on account of changes in design
facia of certain buildings.
Decision: (i) It is observed that changes have been
made in the design of downward fascia and
same has not been regularised through AIP.
Part payment was made through RARS up to
74th RAR to the claimant. Keeping in view
the various written and oral submissions
made before me, claimant has not executed
these works gratuitously.
(ii) I uphold the claim and award ₹7,25,700
in favour of claimant contractor.
Claim No.9: An amount of ₹1,12,709 towards
compensation on account of damages
arising due to application of incorrect rates
of flooring under D.O.NO 86.
Decision: (i) The plea of UOI that AIP was placed on
Clement and the objection was not raised by
the claimant. The claimant pleaded that UI
has default by placing deviation order after
actual completion of work which is covered
in the scope of deviation order and are
applicable, in case deviation order is placed
during the currency of contract. Contention
of claimant is sustained by me accordingly.
(ii) It is observed that deviation order for
extra work executed due to difference in
thickness of Kota stone of 18MM and 7MM
thick ceramic tile has not been considered
by department during currency of contract
and same is admissible to the claimant.
(iii) Keeping in view the written and oral
submission made before me, I uphold the
claim and award ₹1,12,709 to the claimant
contractor.
Claim No.10: An amount of ₹14,39,687 towards
additional expenditure incurred on account
of provision of grills/guard bars to windows.
Decision: (i) The UOI represented CE Pathankot zone
has not denied that deviation has not been
made at site, but without any proper AIP/go
ahead from the department. Department has
not issued directions to the claimant to stop
the work when such deviation while being
made at site. The claimant contractor has
not executed the deviation work
gratuitously. Basically, it is a case of
deviation order and it is not understood as
to why these deviation orders were not
revised during the currency of Contract.
(iii) Keeping in view the written and oral
submissions made before me, I afford the
claim and award ₹1 four, 39, 687.00 in
favour of claimant contractor for provision of
Grill/guard to the windows.
Claim No.14: An amount of ₹13,47,060 towards
expenditure incurred on carrying out daily
routine maintenance of assets taken over
and occupied by users for which formal
completion certificate was issued after a gap
of 18 months.
Decision: (a) The claimant submitted department has
taken over the buildings of:-
(i) SM Barracks
(ii) Cookhouse
(iii) Dining hall.
(iv) Garage ramp.
(v) Washing platform.
(vi) Admn. Building
On 28th May 2 010 and were handed over to
the user for their use. CE Pathankot zone
Pathankot has not denied effect of taking
over buildings. Though there was no
separate facing given for these buildings yet
these buildings were taken over in interest of
work/state. Department insisted upon
claimant to carry out the rectification of
defects caused by normal, wear up to 12
months beyond the date of completion.
(b) In view of condition 49 of IAF W - 2249,
department can take over such buildings
completed to satisfaction of GE. However,
defect liability period will commence from
the date of taking over these buildings.
(c) Claimant has produced the record of
carrying out the routine maintenance, duly
signed, concerned, JE, users rep and rep of
Contractor. Even the claimant has carried
out the replacement of bulbs and fluorescent
tubes as per record produced during
arbitration hearing. Claimant has carried
out the defect rectification up to 20th
September 2 013 as per record produced
during arbitration hearing. Department did
not object to the pricing carried out by the
claimant during arbitration hearing.
Similarly, department also did not object to
time period. Claimed by claimant during
arbitration hearing.
(d) The claimant has restricted the claim for
15 months instead for a period of ranging
from 15 to 24 months. UI, instead of asking
maintenance from Clement should have
claimed maintenance funds and
maintenance of building should have been
carried out by department beyond 27th May
2 011 from Government funds. Department
played the department can take over the
building and defect liability period will
commence from the date of completion. The
contention of department is not based on
condition 46 of IAFW - 2249 and 49 of IAF
W - 2249, therefore same is not sustained
by me.
(e) In view of above, I uphold the claim fully
and award ₹13,47,060 In favour of claimant.
Claim No.15: Towards escalation on the above claims 1 to
13 only.
Decision: (i) CE Pathankot zone representing UOI did
not offer comments on the escalation
amount on the plea that none of the claim is
admissible, therefore escalation amount is
also not admissible.
(ii) UOI was again directed to offer their
comments as per minute issued on 12th
April 2 018 and again reminded white soul
arbitrator letter nO.300217/RPS/82/PERS
dated 19/09/201A.UI replied the ibid letter
but did not offer their comments on
escalation details (Claim N0.14 of claimant).
The claimant has claimed the escalation on
higher side. Therefore, amount is calculated
on average basis as per final bill.
I afford the claim partially and award ₹18,
49,542 in favour of claimant against claim
number three, six, seven, nine and 10 only
Claim No. 16 and Claim No. 19 partially:
An amount of ₹72,62,487 towards
compensation on account of delayed and
short payments of RARs and final bill.
Decision: (i) CWE Jammu brought out that sincere
efforts have been made by department to
make the payment in time to claimant, and
there is no abnormal delay in payment of
RARs. The payment of final bill has been
delayed, accordingly 6%. Simple interest
shall be paid to the claimant on the final bill
amount of ₹23,91,086 with effect from
22/10/2013 to 09/01/2015. An amount of
₹7,55,662 was also paid through hand
receipt on 25/03/2015. Accordingly, simple
interest at the rate of 6% shall also be paid
on ₹7,55,662 to the claimant from
22/10/201 3 to 25/03/2015.
Accordingly, I uphold the claim partially and
amount of interest shall be paid by UOI to
claimant as described in para 16.13(i),
accordingly.
Claim No. 18: An amount of ₹31,91,711 towards
compensation on account of excessive
recovery made by the respondent towards
work contract tax.
Decision: (i) WCT has been recovered at the rate of
11.5%, whereas same is required to be
recovered by UI at the rate of 10.31%.
(ii) The contention of UOI that JNK High
Court judgement in respect of case number
OWP419/2014CMANO539/2014, OWP525/
2014, CMA number 685/2014 has been
pronounced after completion of work is not
applicable to the work cannot be accepted
since the judgement has attained finality
after dismissal of SLP in the Supreme Court.
Similarly, circular 01/2006 dated
14/03/2016 issued by the JNK department
of commercial tax has been issued after
completion of work based on dismissal of
SLP of GNK government. Supreme Court.
(iii) Keeping in view the contract provision,
submissions made in writing an orally before
me, I afford the claim in totality and ₹31, 91,
711 in favour of claimant.
Claim No. 19: Interest towards past, pendente lite and
future interest.
Decision: The work was completed on 21/09/2012.
Therefore, I award a simple interest of 6% on
the awarded amount except amount
pertaining to claim 16 21/09/2012. Date of
completion to 09/01/2019, date of
publishing of award. In case award is not
paid within 19 days from the date of
publishing of award or by court whichever
as earlier it will carry 9.5% simple interest
from the date of publishing of award to the
date of payment or declared by court,
whichever is earlier.
Claim No. 20: An amount of ₹10,00,000 towards cost of
arbitration and claim number one of UI
amounting to ₹3,00,000.
Decision: Each party will bear its own expenditure
incurred during arbitration, and I do not
upload the claim of claimant and UI.
Accordingly, I want NIL amount to the
claimant and as well as to UOI."
12. Thus, vide an award dated 10/01/2019 read with an
amendment dated 05/03/2019, the arbitration case came to be
disposed of which left the Chief Engineer (AF) WAC, Military
Engineering Service (MES) aggrieved as a result whereof a petition
under section 34 of the J&K Arbitration & Conciliation Act, 1997 (as
it was then in force in the then State of Jammu & Kashmir)
preferred by the Chief Engineer, Pathankot joined by the Garrison
Engineer, Project Jammu before the court of Principal District
Judge, Jammu filed on 28/09/2019 which came to be assigned to
2nd Additional District Judge, Jammu for adjudication.
13. In their said petition under section 34 of the J&K Arbitration
& Conciliation Act, 1997, the above named two officials as the
petitioners came to assail the decision of the arbitral tribunal with
respect to the claims allowed in favour of the respondent.
14. In their said petition under section 34, the two petitioners
joined issue purely from factual aspect and angle. In this regard,
said two petitioners' side challenge to issue wise decision in favour
of the respondent with respect to the claims as set out in section 34
petition is referred to herein next:-
i) With respect to the decision of the arbitral tribunal with
respect to claim No. 3, it came to be challenged on the
premise that the plinth beems were covered under the
scope of the contract agreement and in that regard the
structure drawings were meant to be actually referred to
but the arbitral tribunal overlooked the same and thus
fell in error of judgment.
ii) With respect to the decision on claim No. 6, the
challenge thrown was that the arbitral tribunal without
verifying as to whether the proposed changes were given
any approval in principle (AIP) or not and without going
into the details as to whether the items forming the
subject matter of claim No. 6 were included in lump-
sum quoted by the respondent or not renders the award
on claim No. 6 as non-speaking without any details
rendering the award qua said claim No. 6 being in
violation of the J&K Arbitration & Conciliation Act,
1997.
iii) The challenge to decision on claim No. 7 was also
premised on the same line as challenge to the claim No.
6.
iv) Decision on claim No. 9 was questioned that since the
respondent had failed to notify objection to D. O. No. 86
within fifteen days of conveying of approval in principle
(AIP) and accepted the D.O. without any reservation, as
such, it was an afterthought on the part of the
respondent which was hit by limitation but was
overlooked by the arbitral tribunal.
v) Claim No. 10 as allowed in favour of the respondent was
questioned on the count that provision for Grills/Guard
bars to windows was part of the revised drawing and, as
such, did not qualify to be a deviation but still the
arbitral tribunal reckoned the same to be a deviation at
the site allowed by the petitioners and, as such,
disentitled the respondent to claim an additional
expenditure for the said claim. The arbitral tribunal is
said to have overlooked the contract agreement
provision and acting beyond the ambit of the same.
vi) Decision on claim No. 14 came to be objected on the
ground that the arbitral tribunal did not consider the
fact that the buildings were handed over to the
Department with the consent of the respondent and that
the arbitral tribunal did not give any basis to check the
valuation of pricing of maintenance and to deduct the
cost of maintenance which was already covered in the
maintenance period as per contract.
vii) Decision on claim No. 15 came to be challenged saying
that escalation award is unjustified as the arbitral
tribunal has not given any detailed calculation and how
the money was worked out.
viii) Decision with respect to claim No. 16 was questioned on
the premise that as per condition No. 6 of IAFW 2249
(General Conditions of Contracts) the time period for
making payment of final bills is applicable to
undisputed final bills and, as such, the time period
specified in condition No. 6 of IAFW2249 was not
applicable and no interest was admissible but the
arbitral tribunal overlooked the contract provision and
acted beyond the ambit.
ix) Claim No. 18 related decision of the arbitral tribunal
was questioned by quoting the Hon'ble Supreme Court
of India's judgment and further saying that the claim
was an afterthought on the part of the respondent. It
came to be submitted that any claim in this regard was
to be a case of refund to be obtained from the Sales Tax
Department and, as such, the petitioners were not liable
for the same in particular for any interest on the
amount as claimed under the said claim No. 18.
x) Decision on claim No. 19 with respect to the payment on
interest came to be questioned on the challenge that the
same were un-contractual against the expressed
contract condition, as such, the interest awarded
against the claims were tenable and liable to be set
aside.
15. In their petition under section 34, the summarized challenge
to the award of the arbitral tribunal was on the basis that the same
was unjustified in comparison with specific agreed contract
provision, mis-conduct on the part of the arbitral tribunal on the
ground of non-appreciation and non-consideration of the
arguments, documents and reply/objections submitted by the
petitioners before the arbitral tribunal and the award being in
conflict with the policy of India, as the claims by the respondent
were not supported with any documentary evidence.
16. Said petition under section 34 of the J&K Arbitration &
Conciliation Act, 1997 came to be negated by the court of 2nd
Additional District Judge, Jammu by virtue of a judgment dated
12.10.2020 on file No. 07/Arbitration.
17. In negating the challenge posed to the arbitration award
under section 34 of the J&K Arbitration & Conciliation Act, 1997,
the court of 2nd Additional District Judge, Jammu came to bear in
perspective not only the scope of section 34 of the J&K Arbitration &
Conciliation Act, 1997 but also the position of law as settled by the
Hon'ble Supreme Court of India in the case of "ONGC Vs Western
Geco International Ltd." & "ONGC Ltd. Vs Saw Pipes Ltd." in
particular and came to hold that the arbitral tribunal has discussed
each and every claim in proper perspective and even if there was
any error of fact with respect to the claims allowed in favour of the
respondent, the same were not good enough to provide a basis for
challenge under section 34 of the J&K Arbitration & Conciliation
Act, 1997.
18. It is against this judgment dated 12.10.2020 of the learned
2nd Additional District Judge, Jammu that the present appeal has
been addressed.
19. Mr. Vishal Sharma, learned DSGI has made very vehement
submissions in questioning the judgment dated 12.10.2020 of the
learned 2nd Additional District Judge, Jammu.
20. In an appeal under section 37 of the J&K Arbitration &
Conciliation Act, 1997 (now repealed), this Court on its appellate
side jurisdiction is supposed to examine the order under appeal
read with the award which was the subject matter of challenge
under section 34 of the J&K Arbitration & Conciliation Act,
1997and not vice versa.
21. When this Court examines the section 34 petition filed on
behalf of the appellants before the court of learned 2nd Additional
District Judge, Jammu, an observation is self-attracted that in the
entire section 34 petition the findings of the arbitral tribunal vis-a-
vis claims allowed in favour of the respondent were not questioned
by any whisper of averment that the same were "perverse." In fact,
word "perverse" has not even been whispered lest stated in the
petition. In absence of a challenge on that count how and what
challenge came to be posed to the award was left to be drawn from
the reading and understanding of the contract agreement and from
that perspective to bear the adjudication of the section 34 petition.
22. The appellants' petition under section 34 of the J&K
Arbitration & Conciliation Act, 1997 read between the lines means
to make a sense to this Court that it was no part of the onus of the
appellants to substantiate, through their pleadings in the petition
under section 34 of the J&K Arbitration & Conciliation Act, 1997, as
to how the claims allowed in favour of the respondent by the arbitral
tribunal were misconceived and contrary to the agreement admitting
of no dispute at first instance much less an arbitral one. A petition
under section 34 of the Arbitration & Conciliation Act, 1996 is
supposed to be composition of pleadings and evidence so as to
enable an effective adjudication.
23. In absence of clarity in their own challenge to the award in
reference under section of 34 of the J&K Arbitration & Conciliation
Act, 1997, the appellants cannot expect this Court to don the hat of
an arbitrator and then carry out the adjudication of the matter in
appeal which surely is not the scope envisaged under section 37 of
the J&K Arbitration & Conciliation Act, 1997.
24. The appellants had a full opportunity to complain, explain
and expound in their petition under section 34 of the J&K
Arbitration & Conciliation Act, 1997 the exact fault lines and points
of adjudication so made by the arbitral tribunal vis-a-vis claim-wise
adjudication of the respondent's claims in particular those allowed
in favour of the respondent and then engage the court below to
come up with response to ground-wise challenge so posed in a
petition under section 34 of the J&K Arbitration & Conciliation Act,
1997. However, that opportunity was missed by the appellants at
that stage of challenge and, therefore, the same cannot be now
retrieved by the appellants through the medium of the present
appeal and engaged this Court in literally in the role of jurisdiction
under section 34 of the J&K Arbitration & Conciliation Act, 1997.
25. In the case of "M/s Dyna Technologies Pvt. Ltd. Vs M/s
Crompton Greaves Ltd." (2019)15 SCR 295, the Hon'ble Supreme
Court of India came forward with discernment of scope of section 34
of the Arbitration & Conciliation Act, 1996 and in that regard in
para 26 it has been observed that an arbitral award should not be
interfered with in a casual and cavalier manner, unless the court
comes to a conclusion that the perversity of the award goes to the
root of the matter without there being a possibility of alternative
interpretation which may sustain the arbitral award. It further came
to be recommended that section 34 is different in its approach and
cannot be equated with a normal appellate jurisdiction as the
mandate of section 34 is to respect the finality of the arbitral award
and the party autonomy to get their dispute adjudicated by an
alternative forum as provided under the law and if the courts were
to interfere with the arbitral award in the usual course on factual
aspects, then the commercial wisdom behind opting for alternate
dispute resolution would stand frustrated.
26. Drawing from the aforesaid guiding understanding of the
Hon'ble Supreme Court of India, when this Court examines the
present case, then the arbitrator, who came forward with
adjudication of the dispute in reference, is entitled to due respect
from this Court given the fact that the arbitrator was surely a
domain expert and that too appointed by the discretion of the
authority that being Engineer-in-Chief, IHK of Ministry of Defence
Army, New Delhi to which the respondent submitted his consent
and, therefore, the practical and professional wisdom of the
arbitrator to examine the nature and nitty-gritties of dispute
obtaining between the respondent and the appellants qua the
contract in reference cannot be read with any element of doubt and
that gets fully supported from the fact that for each and every claim
the learned arbitrator came forward with discussion and decision
and that is good enough exercise of jurisdiction on the part of an
arbitrator even if there are said to be any error or omissions in the
adjudication so made.
27. In the case of "Delhi Airport Metro Express Private Limited
Vs Delhi Metro Rai Corporation Limited," (2022)1 SCC 131, the
Hon'ble Supreme Court of India has updated the understanding
obtaining on the scope of section 34 of the Arbitration &
Conciliation Act, 1996 and to this extent paras 28, 29 & 30 are
worth reproduction:-
"28. This Court has in several other judgments interpreted Section 34 of
the 1996 Act to stress on the restraint to be shown by Courts while
examining the validity of the arbitral awards. The limited grounds available to
Courts for annulment of arbitral awards are well known to legally trained
minds. However, the difficulty arises in applying the well-established
principles for interference to the facts of each case that come up before the
Courts. There is a disturbing tendency of Courts setting aside arbitral
awards, after dissecting and reassessing factual aspects of the cases to come
to a conclusion that the award needs intervention and thereafter, dubbing the
award to be vitiated by either perversity or patent illegality, apart from the
other grounds available for annulment of the award. This approach would
lead to corrosion of the object of the 1996 Act and the endeavours made to
preserve this object, which is minimal judicial interference with arbitral
awards. That apart, several judicial pronouncements of this Court would
become a dead letter if arbitral awards are set aside by categorising them as
perverse or patently illegal without appreciating the contours of the said
expressions.
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 re-appreciate 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".
30. Section 34(2)(b) refers to the other grounds on which a court can set
aside an arbitral award. If a dispute which is not capable of settlement by
arbitration is the subject-matter of the award or if the award is in conflict
with public policy of India, the award is liable to be set aside. Explanation (1),
amended by the 2015 Amendment Act, clarified the expression "public policy
of India" and its connotations for the purposes of reviewing arbitral awards. It
has been made clear that an award would be in conflict with public policy of
India only when it is induced or affected by fraud or corruption or is in
violation of Section 75 or Section 81 of the 1996 Act, if it is in contravention
with the fundamental policy of Indian law or if it is in conflict with the most
basic notions of morality or justice."
28. When this court bears in mind the mandate so stated by the
Hon'ble Supreme Court of India as referred in aforesaid paras, this
Court finds no scope to hold the arbitration award suffering from
any legal weakness warranting interference under section 34 of the
Arbitration & Conciliation Act, 1996 and that is the reason the court
below found no merit in the challenge posed by the appellants in
their petition under section 34 of the Arbitration & Conciliation Act,
1996 to the award.
29. In the case of "Psa Sical Terminals Private Limited Vs
Board of Trustees of V. O. Chidambranar Port Trust Tuticorin &
others" (2023)15 SCC 781, the Hon'ble Supreme Court of India
has again reiterated and refreshed the understanding with respect
to the scope of judicial intervention in examination of an arbitration
award in terms of section 34 read with section 37 of the Arbitration
& Conciliation Act, 1996. By reckoning that neither under section
34 nor under section 37 of the Arbitration & Conciliation Act, 1996
the court is entitled to re-appreciate the evidence attending
adjudication of an arbitration case the Hon'ble Supreme Court of
India in paras 40, 41 & 42 came up with the understanding on the
subject as is reproduced herein under:-
"40. It will thus appear to be a more than settled legal position, that in an
application under Section 34, the court is not expected to act as an appellate
court and re-appreciate the evidence. The scope of interference would be
limited to grounds provided under Section 34 of the Arbitration Act. The
interference would be so warranted when the award is in violation of "public
policy of India", which has been held to mean "the fundamental policy of
Indian law". A judicial intervention on account of interfering on the merits of
the award would not be permissible. However, the principles of natural
justice as contained in Section 18 and 34(2)(a)(iii) of the Arbitration Act would
continue to be the grounds of challenge of an award. The ground for
interference on the basis that the award is in conflict with justice or morality
is now to be understood as a conflict with the "most basic notions of morality
or justice". It is only such arbitral awards that shock the conscience of the
court, that can be set aside on the said ground. An award would be set aside
on the ground of patent illegality appearing on the face of the award and as
such, which goes to the roots of the matter. However, an illegality with regard
to a mere erroneous application of law would not be a ground for interference.
Equally, re-appreciation of evidence would not be permissible on the ground
of patent illegality appearing on the face of the award.
41. A decision which is perverse, though would not be a ground for
challenge under "public policy of India", would certainly amount to a patent
illegality appearing on the face of the award. However, a finding based on no
evidence at all or an award which ignores vital evidence in arriving at its
decision would be perverse and liable to be set aside on the ground of patent
illegality.
42. To understand the test of perversity, it will also be appropriate to refer to
paragraph 31 and 32 from the judgment of this Court in Associate Builders
(supra), which read thus:
"31. The third juristic principle is that a decision which is perverse or
so irrational that no reasonable person would have arrived at the
same is important and requires some degree of explanation. It is
settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something
irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such
decision would necessarily be perverse.
32. A good working test of perversity is contained in two judgments.
In Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath
& Sons [1992 Supp (2) SCC 312], it was held :
"7. ... It is, no doubt, true that if a finding of fact is arrived at
by ignoring or excluding relevant material or by taking into
consideration irrelevant material or if the finding so
outrageously defies logic as to suffer from the vice of
irrationality incurring the blame of being perverse, then, the
finding is rendered infirm in law."
In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC
10 : 1999 SCC (L&S) 429], it was held :
"10. A broad distinction has, therefore, to be maintained
between the decisions which are perverse and those which are
not. If a decision is arrived at on no evidence or evidence which
is thoroughly unreliable and no reasonable person would act
upon it, the order would be perverse. But if there is some
evidence on record which is acceptable and which could be
relied upon, howsoever compendious it may be, the
conclusions would not be treated as perverse and the findings
would not be interfered with."
30. Bearing in consideration the factual aspects of the present
case as well as the legal position obtaining adverted to hereinbefore,
this Court is not inclined to accept the vehement contentions and
pleas of Mr. Vishal Sharma, learned DSGI that it is a good case for
an appellate side intervention to take place from the end of this
Court in exercise of jurisdiction under section 37 of the Arbitration
& Conciliation Act, 1996. This Court finds no legal scope, basis and
possibility to disturb award and judgment and, therefore, dismisses
this appeal, more particularly when considering the fact that out of
the award amount of Rs. 3,02,54,877/- deposited with this Court on
15.09.2021, 30% of the said amount stands already released in
terms of an order dated 08.04.2022 in favour of the respondent
which came to be so withdrawn by the respondent.
31. The present appeal is, thus, dismissed.
(RAHUL BHARTI)
JUDGE
JAMMU
03.02.2025
Muneesh
Whether the judgment is speaking : Yes / No
Whether the judgment is reportable: Yes / No
