Jharkhand High Court
Ranchi Municipal Corporation vs M/S A2Z Waste Management (Ranchi) ... on 6 May, 2025
Author: Rajesh Shankar
Bench: Rajesh Shankar
2025:JHHC:13549-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
I.A. No. 12521 of 2024
In/and
Commercial Appeal No. 16 of 2024
and
Commercial Appeal No. 16 of 2024
Ranchi Municipal Corporation, having its office at Kutchery Road, P.O.
G.P.O., P.S. Kotwali, District Ranchi, Jharkhand through its
Administrator, Sri Sandeep Singh son of Sri Vijay Pal Singh aged about
40 years resident of Jawahar Nagar, Kanke Road, P.O. Gonda & P.S.
Gonda, District : Ranchi ... ... Appellant
Versus
M/s A2Z Waste Management (Ranchi) Limited, a Company incorporated
under the Companies Act, 1956 having its registered office at O-116,
First Floor, DLF Shopping Mall, Arjun Marg, DLF, Phase-I, Gurgaon,
P.O. & P.S. Gurgaon, District Gurgaon, Haryana, PIN-122002.
... Respondent
with
Commercial Appeal No. 3 of 2024
M/s A2Z Waste Management (Ranchi) Limited, a Company incorporated
under the Companies Act, 1956 having its registered office at O-116,
First Floor, DLF Shopping Mall, Arjun Marg, DLF, Phase-I, Gurgaon,
P.O. & P.S. Gurgaon, District Gurgaon, PIN-122002, State of Haryana,
through its Authorized Signatory, namely, Vishal G Gussain, aged about
26 years, Son of Chandan Singh Ghurdaura, resident of Flat No. 427, P
And T Flats, R.K. Puram, Sector-6, Postal Sb, P.O. and P.S.-R.K. Puram,
New Delhi, Pin Code-110022. .... ... Appellant
Versus
Ranchi Municipal Corporation, through its Municipal Commissioner,
having its Registered office at Kutchery Road, P.O. G.P.O., P.S. Sukhdeo
Nagar, District Ranchi, Jharkhand, PIN - 834001 ... Respondent
---------
CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJESH SHANKAR
---------
For the Appellant : Mr. Sachin Kumar, Advocate
Mr. Sashank Sekhar, Advocate.
For Respondent : Mr. Sumeet Gadodia, Advocate.
[Commercial Appeal No. 16 of 2024]
For the Appellant : Mr. Sumeet Gadodia, Advocate.
For Respondent : Mr. Sachin Kumar, Advocate
Mr. Sashank Sekhar, Advocate.
[Commercial Appeal No. 3 of 2024]
---------
C.A.V. On: 17.04.2025 Pronounced On: 6.5.2025
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M.S. Ramachandra Rao, C.J. (Oral)
Commercial Appeal No. 3 of 2024 is filed by M/s A2Z Waste
Management (Ranchi) Limited against the Ranchi Municipal Corporation (for
short the RMC) challenging the judgment dt. 05.01.2024 in Commercial
Arbitration Case No. 11 of 2023 of the Additional Judicial Commissioner-III-
cum-Presiding Officer, Commercial Court, Ranchi under Section 37 of the
Arbitration and Conciliation Act, 1996 (for short 'the Act').
2. The same judgment is also questioned by the RMC in Commercial
Appeal No. 16 of 2024, but the said appeal has been filed under Section 37 of
the Act with a delay of 320 days and I.A. No. 12521 of 2024 is filed by it
under Section 5 of the Limitation Act, 1963 to condone the said period of
delay.
3. Since both appeals arise out of the same judgment, we deem it desirable
to decide these matters together.
The Background facts
4. An agreement dt. 29.01.2011 was entered into by the RMC with M/s. A
to Z Infrastructure Limited for a project dealing with Municipal Solid Waste
Management in Ranchi after a process of tendering in which M/s. A to Z
Infrastructure Limited was the successful bidder.
5. M/s. A to Z Infrastructure Limited established a special purpose vehicle
namely M/s. A to Z Waste Management, Ranchi Limited (for short
'Contractor') and a Concessionaire agreement was formalized on 03.06.2011
with retrospective effect from 01.04.2011.
6. In the course of execution of the contract, disputes arose between the
parties and the Contractor terminated the contract on 27.12.2013 citing clause
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9.2 (C) and invoked the arbitration clause Article 11.2 (a) of the
Concessionaire agreement dt. 03.06.2011 on 07.04.2014.
7. The Contractor appointed its nominee arbitrator and requested the RMC
to appoint their arbitrator.
8. As RMC failed to appoint its nominee arbitrator the Contractor
approached the High Court of Jharkhand by filing Arbitration Application No.
3 of 2015. The High Court appointed Shri S. K. Murari as a nominee
arbitrator on behalf of RMC.
9. Subsequently, both arbitrators appointed Justice S.B. Sinha, Former
Judge of the Supreme Court of India as Presiding Arbitrator.
10. The parties submitted their claims, objections and counter claims and
presented oral and documentary evidence to support their respective positions.
The Arbitral Award
11. On 11.05.2018, arbitral award was passed in favour of the Contractor
directing RMC to pay Rs.6,41,24,500/-. The summary of the arbitral Award is
as under: -
Claims and order of the learned Arbitral Tribunal-
Sl. Claim Brief Description Amount of Whether If Allowed Remarks If
No. of Claims Claim (In Rs.) Claim for What any
No Allowed amount
or
Rejected
or
modified
1 Claim Failure to make Rs.1,71,95,156 Allowed Rs.1,71,95,156
No. 1 payments for the
monthly bills
submitted towards
tipping fees for
collection and
transportation of
MSW for the
period for the
period for
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01.04.2011 to
31.12.2013
2. Claim Failure to make Rejected
No. 2 payments towards
investment over
Capital Grant for
the vehicles,
equipment and
assets engaged in
C&T operations.
3. Claim Failure to make Rejected
No. 3 payments towards
investment over
Capital Grant for
development of T
&
D facility
4. Claim Illegal encashment Rejected Encashment
No. 4 of Performance (appropriat not illegal.
Security Bank ed towards Respondent
Guarantee of the general was entitled
Contractor by the damages) to invoke
Respondent Bank
Guarantee.
5. Claim Claim for Rejected
No. 5 reimbursement of
additional cost
incurred by the
Contractor on
account of Force
Majeure, change in
law and
Government
policies resulting
in material adverse
effect on the
operating cost of
the Contractor
6. Claim Termination Rejected
No. 6 charges due to
RMC Event of
Default as per
Article 9.2 (f) (i)
7. Claim Accrued losses due Rejected Contractor
No. 7 to non-production itself is
of compost & RDF guilty of
during the breach of
Operational Period guilty of
(April 11 to Dec. contract.
13) due to delay in
handing over of
land for MSW
Waste Processing
Project.
8. Claim For opportunity Rejected
No. 8 losses due to
cancellation of the
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contract during the
remaining
concession period
(Jan 14 to Mar 14)
9. Claim Loss of Goodwill Rejected
No. 9 & Reputation of
the company
10. Claim Interest on the Allowed Contract
No. above sums from envisages
10 the date the same 15 %
became due till the interest.
date of payment.
11. Claim On account of Rs.25,00,000/-
No. costs of
11 Arbitration
Arbitral Fee not Rs.30,00,000/-
paid by
Respondent
Nominal Damages INR 2,00,00,000/
Counter-Claims and order of the learned Arbitral Tribunal-
Counter-Claim No. Particulars Amount Award
Counter Claim No. A Loss/damage/injury to Rejected.
Respondent's image in the
eyes of Government and
public.
Counter Claim No. B Refund of Rs.18,00,96,225 Rejected.
paid towards C &T and P &D
operations alongwith SBI
Prima Lending Rate the
amount of loss incurred upon
Capital expenditure.
Counter Claim No. C Refund of Rs.17,65,166/- on Counter claim for
account of expenditure Rs.17,65,166/- Allowed.
towards initiation of Special
drive for Zone I, II and III due
to lockout in the Contractor
Company
Counter Claim No. D Legal expenses likely to be Rejected.
incurred on account of the
Respondent being impleaded Held-the matter is still
as a party in MSW pending pending in a proceeding
Labour Court Ranchi wherein before Labour Court,
labour employed by the Ranchi. The counter
Contractor are claiming Contractor is to show that it
unpaid wages to the extent of is not a necessary party nor it
Rs.1 Crore. is liable to pay.
Counter Claim No. E Refund of Rs.37,00,000/- on Rejected.
account of direction given to
the Respondent to pay the said
sum pursuant to n Audit
carried out by the CAG.
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Counter Claim No. F Sum of Rs.125 Crore for Rejected.
preparation of DPR.
Counter Claim No. G Refund of sum of Rs.100 Rejected.
crore incurred by the
Respondent on account of
preparation of fresh tender
and DPR for the new
incumbent, considering after
the closure of JuNURM
Scheme, all the grants under
the said Scheme have been
withdrawn.
Counter Claim No. H Refund of Rs.24,85,73,552/- Rejected.
paid to the Contractor towards
tipping fee under the
JuNURM Scheme.
Counter Claim No. I Refund of Rs.100 Crores on Rejected
account of loss due to
cancellation of the remaining
period of Concession period
(January 2014 to March
2014).
Counter Claim No. J A sum of Rs.10,00,00,000/- Rejected.
on account of loss of goodwill
and reputation along with 15
% interest.
Counter Claim No. K A sum of Rs.50,00,000/- for Rejected.
frivolous litigation.
Counter Claim No. L Pre Arbitration, Pendent elite Rejected.
and Future Interest of 25 %
General Damages INR 3,50,00,000/-
The Section 34 Application of RMC
12. The RMC filed an application under Section 34 of the Arbitration and
Conciliation Act, 1996 before the Additional Judicial Commissioner-III-cum-
Presiding Officer, Commercial Court, Ranchi which was initially numbered as
Commercial Suit Case No. 04 of 2018 and later re-numbered as Commercial
Arbitration Case No. 11 of 2023.
13. As many as 61 grounds were raised by the RMC before the Commercial
Court.
14. The Contractor refuted the said contentions of RMC in Commercial
Court contending that grounds raised by the RMC in the Section 34
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application are outside the scope of Section 34 of the Act; some of the
grounds require re-appreciation of facts/evidence which cannot be done in the
Section 34 application and the arbitral tribunal has dealt with these aspects in
detail.
15. It was also contended that the arbitral tribunal is a sole judge of the
quantity and quality of evidence before it and factual conclusions arrived at by
the arbitral tribunal cannot be questioned.
16. According to the Contractor, contractual interpretation is the
prerogative of the arbitral tribunal and ought not to be interfered with unless,
it is shown to be of such a nature that it shocks the conscience of the Court
and that the arbitral tribunal has found that there is a breach by both the RMC
and the Contractor. The Contractor therefore prayed for the dismissal of the
application under Section 34 filed by the RMC with cost.
The decision of the Commercial Court
17. The Commercial Court noted the 44 decisions cited by both sides
before it.
18. It rejected the plea of limitation raised by the Contractor who contended
that the application under Section 34 is time-barred.
19. The Commercial Court considered the said decisions and concluded
that under Section 34 of the Act scope of challenge to an arbitral award is very
narrow and no party should be permitted to re-argue or re-agitate the
submissions raised before the arbitrator; and a possible view by the arbitrator
on facts has necessarily to pass Muster as the arbitrator is the sole judge of the
quantity and quality of evidence.
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20. It also held that every error of law committed by the arbitral tribunal
would not fall within the expression patent illegality and a patent illegality
should be such as to go to the root of the matter.
21. According to it, no re-appreciation of evidence is permitted, since the
Court does not sit in appeal against the arbitral award; contractual
interpretation is the sole prerogative of the arbitral tribunal; and determination
of damages need not necessarily be done and the guest estimates (honest guess
work) is permitted, where damages are awarded.
22. While applying the above principles to the arbitral award challenged
before it by the RMC, in Para V at page 59 of its order, the Commercial Court
noted that of all the grounds mentioned in Section 34, no ground has been
advanced except the argument that it is against public policy of India with its
explanation and that the term public policy of India covers a wide
connotation.
The Commercial Court then contradicted itself in Para VI by saying
that the counsel for the RMC had not stated much in explicit terms about the
award being against the public policy.
23. It also stated that much of the argument advanced by the RMC was
devoid of merit and cannot be considered in isolation.
24. It then referred to Para 230 of the arbitral award where the arbitral
tribunal was considering the claims made by the Contractor regarding "Failure
to make payments towards investment over Capital grant for the vehicles,
equipment and assets engaged in C & T Operations" i.e. the Contractor had
contended that it had procured a large number of vehicles and incurred to
expenditure of Rs.1.68 crores.
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The arbitral tribunal rejected the said claim and observed at Para 230
that the registration numbers of the vehicles provided by the Contractor to
RMC on verification showed that some of the registration numbers were of
two wheelers and others were found to be non-existent.
The arbitral tribunal held that the Contractor was guilty of
committing fraud and fraud would vitiate all solemn acts and so the
Contractor is not entitled to any amount regarding this claim.
The Commercial Court applied this finding on that particular claim
No.2 regarding supply of vehicles to the entire award and set aside the entire
arbitral award even on other claims awarded in it's favor by the arbitral
tribunal such as 'tipping fee for collection and transportation of MSW',
nominal damages and costs, which is entirely different and which are covered
by other claims.
Also the Commercial Court set aside even that portion of the award of
the arbitral tribunal awarding certain counter claims in favor of the RMC.
The Contractor's Appeal under Section 37 of the Act
25. Challenging the arbitral award, the Contractor has filed Commercial
Appeal No. 3 of 2024.
RMC's Appeal under Section 37 of the Act with application under
Section 5 of the Limitation Act
26. To the extent the Commercial Court set aside the entire award including
the award of counter claims by the arbitral tribunal to the RMC, the RMC
filed Commercial Appeal No. 16 of 2024 but with a delay of 320 days and had
filed I.A. No. 12521 of 2024 for condonation of the said delay under section 5
of the Limitation Act,1963.
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Consideration by the Court
27. We may point out that claim 1 dealt with 'delay in payment of tipping
fee' which is governed by Article 7.3 of the concessionaire agreement.
The arbitral tribunal held that non-payment of the tipping fee for
December, 2013 and delay in payment of the tipping fee from April, 2011 to
August, 2011 is established and in this regard there was a breach of contract
on the part of the RMC.
28. The claim regarding 'supply of vehicles' has nothing to do with claim
for 'non-payment of the tipping fee' made by the Contractor before the
arbitral tribunal and the former had admittedly not been granted by the arbitral
tribunal to the Contractor on the ground of fraud.
29. When the claims are unrelated to each other, on the basis of a fraud
with regard to the claim regarding procurement of vehicles, the Commercial
Court could not have interfered with the arbitral award with regard to the
award of the claim to the Contractor regarding tipping fee.
30. In our opinion, this is a perverse approach.
31. Also, the arbitral tribunal had granted Rs.2 crores by way of nominal
damages to the Contractor instead of Rs.9,62,04,313/- towards another claim
for C&T operations and also costs of Rs.55 lacs.
32. The counsel for the Contractor contended that this aspect has been dealt
with in Para 475 and is not linked in any way with the 'supply of vehicles
aspect' and the Commercial Court erred in interfering with the award of
damages of Rs.2 crores on this count. We agree with the said submission.
33. The award of costs of Rs.55 lacs was made in favor of the Contractor
on the ground that the RMC, despite the mandate of the arbitral tribunal,
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refused to pay the arbitral fee of Rs.30 lacs to each of the members of the
arbitral tribunal, which the Contractor had to pay, and it was therefore held
entitled to the said amount by the arbitral tribunal.
Cost of Rs. 25 lacs was also awarded to the Contractor against the
RMC.
34. This aspect of award of costs of Rs.55 lacs has also no relation to the
findings of the arbitral tribunal about fraud being made by the Contractor with
regard to claim of 'procurement of vehicles'.
35. We are therefore satisfied that the award of the arbitral tribunal, in so
far as the Contractor is concerned, was erroneously interfered with by the
Commercial Court in a perverse manner.
36. Therefore to the extent the Commercial Court interfered with the award
of the arbitral tribunal in favour of the Contractor, its judgment is set aside.
Commercial Appeal No.3 of 2024 is allowed.
I.A. No. 12521 of 2024 In/and Commercial Appeal No. 16 of 2024
37. Coming to the appeal filed by the RMC as per Section 13 (1-A) of the
Commercial Court's Act, 2015, an appeal can be preferred from a judgment of
a Commercial Court at the level of District Judge exercising original civil
jurisdiction to the Commercial Appellate Division of the High Court within 60
days from the date of judgment or order.
38. This aspect came to be considered in the judgment of the Supreme
Court in the State of Maharashtra-Vs.-Bose Brothers Engineers &
Contractors Private Limited1.
(2021) 6 SCC 460
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In the said judgment the Supreme Court considered the provisions
of Commercial Court's Act as well as the Arbitration & Conciliation Act,
1996 and concluded that the object and context of the said statute is speedy
disposal of appeals filed under Section 37 of the Arbitration and Conciliation
Act, 1996; the delay beyond 90 days, 30 days or 60 days, respectively, is to be
condoned by way of exception and not by way of Rule; in a fit case in which a
party has otherwise acted bona fide and not in a negligent manner, a short
delay beyond such period can, in the discretion of the court, be condoned.
In Para 15 of the said judgment, the Supreme Court held that the
expression 'sufficient cause' in section 5 of the Limitation Act, 1963 is not
elastic enough to cover long delays beyond the period provided by the appeal
provision itself; and that the expression sufficient cause is not itself a loose
panacea for the ill of pressing negligent and stale claims.
39. In other words, the Supreme Court indicated that in exercise of power
under Section 5 of the Limitation Act, 1963, a delay beyond the period of 60
days from the date on which the appeal could have been filed, can be
condoned i.e. delay below 120 days from the date of pronouncement of the
judgment by invoking Section 5 of the Limitation Act, 1963.
40. But where there is negligence, inaction or lack of bona fides, such
power ought not to be exercised. It also held that merely because the
Government is involved, a different yardstick for condonation of delay cannot
be laid down.
41. In Jharkhand Urja Utpadan Nigam Limited and Another-Vs. M/s.
Bharat Heavy Electricals Limited, Commercial Appeal No. 1 of 2025 a
Division Bench of this Court has also taken the same view by following the
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judgment of the Supreme Court and held that the rule laid down by the
Supreme Court equally apples to instrumentalities of Government like the
applicant in the Commercial Appeal No. 16 of 2024 i.e. the RMC.
42. In I.A. No. 12521 of 2024 filed under section 5 of the Limitation
Act,1963 for condonation of delay of 320 days in filing the Commercial
Appeal, the stand of the RMC is that the judgment dt. 05.01.2024 of the
Commercial Court was challenged by the Contractor in Commercial Appeal
No. 3 of 2024 which was taken up on 16.10.2024; and at that time, the
applicant in the delay application revisited the judgment of the Commercial
Court and discovered that the entire award including counter claims granted in
its favour had been set aside, though there was no discussion in the entire
judgment of the Commercial Court as far as counter claims are concerned.
43. It is also contended that the delay in filing the appeal is not intentional
but bona fide, and the applicant was prevented by sufficient cause from filing
the appeal within time, that it was pursuing the matter diligently and so the
delay in filing the appeal of 320 days is to be condoned.
44. The explanation offered by the applicant, RMC for filing the appeal
with a delay of 320 days is not bona fide because no valid reason is found
therein.
45. When the judgment of the Commercial Court was received by its
counsel in the said court and forwarded to it, then itself, the applicant or its
counsel should have detected the error in the judgment of the Commercial
Court, and taken steps to file the appeal within 60 days or within 120 days
from 05.01.2024.
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46. However, the appeal was filed on 21.11.2024, more than six months
later than the last date for filing the appeal.
47. We therefore hold that the applicant, RMC did not provide any
sufficient cause for condoning the said period of delay of 320 days in filing
the Commercial Appeal No. 16 of 2024 against the judgment of the
Commercial Court dt. 05.01.2024 in Commercial Arbitration Case No. 11 of
2023.
48. Therefore, I.A. No. 12521 of 2024 in Commercial Appeal No. 16 of
2024 is dismissed. Consequently, Commercial Appeal No. 16 of 2024 is
dismissed.
49. However, Commercial Appeal No. 3 of 2024 filed by the Contractor is
allowed for the reasons indicated above. No costs.
(M. S. Ramachandra Rao, C.J.)
(Rajesh Shankar, J.)
APK
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