Jharkhand High Court
The State Highways Authority Of ... vs Intercontinental Consultants & ... on 28 February, 2025
Author: Deepak Roshan
Bench: Deepak Roshan
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Commercial Appeal No. 7 of 2024
The State Highways Authority of Jharkhand through its Chief Executive
Officer, State Highways Authority of Jharkhand (SHAJ), resident of
Deendayal Nagar, Booty Road (Near office of Executive Engineer, N.H.
Ranchi Division), Ranchi-834008 Jharkhand), P.O- Ranchi University,
P.S. Lalpur ...... Appellant/Applicant
Versus
Intercontinental Consultants & Technocrats Pvt. Ltd. A-8, Green Park,
New Delhi 110016, India in association with M/s Espana Consultants Pvt.
Ltd. Delhi, Shop No. 17 WZ-23, Jwalaheri, PaschimVihar, Delhi 110063,
India. P.O. Paschimvihar, P.S. Paschimvihar East.
.... Respondent/Respondent
---------
CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE DEEPAK ROSHAN
---------
For the Appellant: Mr. Rajiv Ranjan, Advocate General
Mr. Ashutosh Anand, AAG-III
Mr. Sharad Kaushal, A.C. to A.A.G.-III
Mr. Shray Mishra, A.C. to A.G.
Ms. Bharti Kumari, A.C. to A.G.
For the Respondent: Mr. Ajit Kumar, Sr. Advocate
Mr. Vikalp Gupta, Advocate
---------
Reserved on: 12.02.2025 Pronounced on: 28 . 2 .2025
M.S. Ramachandra Rao, C.J.(Oral)
1. This Commercial Appeal is preferred under Section 13 of the
Commercial Courts Act, 2015 challenging the judgment dt. 16.03.2024 of
Additional Judicial Commissioner-III-cum-Presiding Officer,
Commercial Court, Ranchi (for short 'the Commercial Court') passed in
Commercial Arbitration Case No. 04/2022.
2. By the said judgment the Commercial Court has upheld the Award
dt. 14.12.2021 of the Arbitral Tribunal and dismissed the application
under Section 34 of the Arbitration and Conciliation Act, 1996 (in short
-1 of 7- Commercial Appeal No. 7 of 2024
'the Act') filed before the said Court by the appellant/applicant/State
Highway Authority of Jharkhand.
3. Admittedly, the appellant had entered into an agreement with the
respondent in collaboration with another for providing consultation
services relating to the Second Jharkhand State Road Project (ABD
Funded). This agreement called the 'Time-Based Contract Agreement'
was initiated on 02.11.2016 and the contract stipulated a revised price of
US$ 29,58,300.00 plus Indian Rs.30,60,60,750.00 for the execution,
completion of works, and rectification of defects, inclusive of provisional
sum and contingencies but exclusive of local indirect taxes.
4. Following the issuance of a notice to proceed on 16.11.2016, work
officially commenced on 01.12.2016. The duration of the contract was set
at 50 months including a two month pre-construction period and the
subsequent 12 month defects and liabilities period starting from the
effective date of the contract.
5. The appellant terminated the contract on 05.06.2018 allegedly due
to breach of contract by the respondent.
6. The disputes were referred to an arbitrator. Before the learned
arbitrator, the respondent raised 9 claims while the appellant raised
counter claims.
7. The decision of the Arbitral Tribunal along with 10 claims passed
in the Award is as under:
-2 of 7- Commercial Appeal No. 7 of 2024
Claim No. Contractor's claim Amount Respondent's Tribunal Assessment
Assessment
& Counter
claim
INR USD INR USD
SOC 1 -- -- Claim Claimant's -- --
Rejected Claim is
upheld
SOC 2 6,44,67,031 4,66,205 Claim 6,44,67,031 4,66,205
Rejected
SOC 3 2,26,49,000 Claim 2,26,49,000
Rejected
SOC 4 6,27,41,094 6,39,208 Claim 6,27,41,094 6,39,208
Rejected
SOC 5 68,00,000 Claim Rejected -- --
Rejected
SOC 6 1,03,42,664 82,156 Claim 1,01,35,810 80,500
Rejected
SOC7 27,79,516 9,11,386 Claim 40,68,680 --
Rejected
SOC8 65,22,000 65,22,000
Sub Total 16,95,01,305 88,98,955 17,05,83,615 11,85,913
SOC9 12% interest 12% interest Interest for 2,42,04,177 1,68,269
on the above on the above INR=10 %
sum sum 13 Compounded
and for
USD=8%
compounded
per year
Counter Disallowed
claim of the
respondent
Total 19,47,87,92 13,54,182
8. The appellant questioned the same before the Commercial Court on
several grounds and the respondent refuted the said grounds.
The judgment of the Commercial Court
9. The Commercial Court first considered the scope of Section 34 of
the Act and referred to the judgments cited by both the parties on the said
aspect. It took the view that an application under Section 34 of the Act is
not an appeal and the evidence cannot be re-appreciated as in an appeal. It
also recognized that there are limited grounds specified in Section 34 of
the Act for setting aside an arbitral Award, and after quoting Section 34
of the Act, framed the question as to "whether the Award given by the
-3 of 7- Commercial Appeal No. 7 of 2024
Arbitrator is against the Public Policy of India with its explanation or it is
hit by the grounds mentioned under Section 34 of the Act?"
10. While dealing with Claim 1 which related to setting aside the
illegal termination of contract by the appellant through a letter dt.
05.06.2018, which the Arbitral Tribunal had accepted, the Commercial
Court gave a finding that the respondent had fulfilled the deliverables on
the work front; in consultancy contracts, not all personnel need to be
deployed at the initial stage and they are mobilized as necessary
according to the work requirements; and the Arbitrator had noted that
intermittent staff were deployed at appropriate intervals and that their
deployment was approved by the respondent.
11. Regarding the allegation of delay in submitting the draft inception
report, it noted that the Arbitrator had observed that submission of the
said report was not mandatory according to the appellant's letter
dt. 24.07.2017; that the appellant had not raised any objection at the time
of its delivery; and that the termination of the contract could have been
under Clause 19 of the General Conditions of Contract.
12. After discussing the terms of the contract and the findings of the
Arbitral Tribunal and also Clause 19 of the General Conditions of
Contract, the Commercial Court held that the Tribunal had succinctly
analysed the issue of termination of the contract and rightly held that such
termination was incorrect, improper and illegal. It also gave a finding
that the appellant failed to show that the findings of the Arbitral Tribunal
on this aspect warrant interference under Section 34 of the Act.
-4 of 7- Commercial Appeal No. 7 of 2024
The consideration by this Court
13. On this point, though the learned Advocate General tried to
contend that the reasoning of the Arbitral Tribunal cannot be sustained in
the light of the grounds mentioned in Section 34 of the Act, and that the
Commercial Court erred in accepting the findings of the Arbitrator as
regards the validity of the termination of the contract by the appellant on
05.06.2018, after perusing the impugned judgment of the Commercial
Court, we are unable to agree with the said submission.
14. On this aspect, the Commercial Court has considered in detail the
pleadings of the parties, the terms of the contract, the correspondence
exchanged between the parties and has given cogent reasons for agreeing
with the Arbitral Tribunal on Claim 1.
15. As regards claim no.1, it rightly held that none of the contentions
raised by the learned Advocate General on behalf of the appellant would
fall within the grounds indicated in Section 34 of the Act for interfering
with the Arbitral Award.
16. The learned Advocate General further contended that the appellant
did not get adequate opportunity before the learned Arbitrator to make
submissions on account of the fact that the arbitration commenced by
submission of the statement of claim by the respondent on 23.10.2020 at
the time when novel corona virus -19 pandemic was in vogue, and that
the Arbitrator was based in Nepal for the most part of the hearing.
This plea does not impress in as much as the statement of defence
was filed by the appellant before the Arbitrator on 21.07.2021 and
rejoinder was filed by the respondent on 11.08.2021 by which time the
-5 of 7- Commercial Appeal No. 7 of 2024
pandemic was on the wane, and there was no impediment for the parties
to participate in the arbitration proceedings which concluded admittedly
on 14.12.2021.
17. The other plea raised by the learned Advocate General on behalf of
the appellant that certain invoices were disputed but the Arbitral Tribunal
held them to be valid without any proper application of mind is also
without merit.
The Arbitral Tribunal had pointed out that it found no ground or
evidence to agree with the appellant, and that there was no evidence or
justification to say that the invoices were manufactured and concocted or
to say that the invoices are not authentic or baseless. A finding was also
recorded by the Arbitral Tribunal that invoices submitted from time to
time do not seem to have been refused by the appellant at any time during
the contract's progress.
18. Therefore we uphold the decision of the Commercial Court in so
far as it confirmed the finding of the arbitral tribunal in the award as
regards claim no.1.
19. However, we find from the judgment of the Commercial Court that
when it considered other claims i.e. Claims 2 to 9, it seems to have simply
referred to the contentions of the appellant, the response of the respondent
and the findings of the Tribunal on such claims and had abruptly
concluded without any discussion/reasoning that no case is made out for
setting aside the Award.
20. The cryptic manner in which it dealt with these claims made by the
respondent before the Arbitrator leaves much to be desired. As the first
-6 of 7- Commercial Appeal No. 7 of 2024
Court considering the application under Section 34 of the Act, the
Commercial Court is expected to deal a little more in detail and give
adequate reasons for it's conclusion on these claims within the scope of
Section 34 of the Act.
21. Therefore, we deem it appropriate to set aside judgment dt.
16.03.2024 of the Additional Judicial Commissioner-III-cum-Presiding
Officer, Commercial Court, Ranchi passed in Commercial Arbitration
Case No. 04/2022, only with regard to findings made by it on Claims 2 to
9 made by the respondent which had been allowed by the Arbitral
Tribunal in favour of the respondent.
22. For the aforesaid reasons and to the extent of it's findings on
claims 2-9, the judgment dt. 16.3.2024 of the Commercial Court in
Commercial Arbitration case no.04/2022 is set aside; the matter is
remitted back to the Commercial Court to hear both sides and pass a fresh
judgment only as regards Claims 2 to 9 made by the respondent before
the Arbitral Tribunal. The Commercial Court shall pass a fresh order after
hearing both sides within three months from the date of receipt of a copy
of this order.
23. It is made clear that this Court has not expressed any opinion on
the findings of the Arbitral Tribunal as regards Claim 2 to 9. No costs.
24. Pending Interlocutory Application, if any, stands disposed of
(M. S. Ramachandra Rao, C.J.)
(Deepak Roshan, J.)
N.A.F.R.
VK
-7 of 7- Commercial Appeal No. 7 of 2024
