Larsen And Toubro Limited vs Geodesic Techniques Private ...
2021 Latest Caselaw 3456 Kant

                           1



     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 21ST DAY OF OCTOBER 2021

                       PRESENT

         THE HON'BLE MR. JUSTICE ALOK ARADHE

                         AND

     THE HON'BLE MR.JUSTICE S. VISHWAJITH SHETTY

                 COMAP NO.31 OF 2021
BETWEEN:

LARSEN AND TOUBRO LIMITED
(CONSTRUCTION DIVISION)
NO.19, KUMARA KRUPA ROAD
1ST AND 2ND FLOORS
BENGALURU - 560 001.
REPRESENTED HEREIN BY ITS
AUTHORISED SIGNATORY
MR. C.A. VENKATESH.
                                        ... APPELLANT
(BY MR. R.V.S. NAIK, SR. COUNSEL FOR
    MR. VIDUR NAIR AND
    MR. T. SURYANARAYANA, ADVS.,)

AND:

1.     GEODESIC TECHNIQUES PRIVATE LIMITED
       NO.4, 4TH CROSS
       PEENYA INDUSTRIAL ESTATE
       1ST STAGE, PEENYA
       BANGALORE - 560 058
       REPRESENTED BY ITS
       MANAGING DIRECTOR
       MR. SRINIDHI ANANTHARAMAN.
                             2



2.     JUSTICE R.V. RAVEENDRAN (RETD.)
       SOLE ARBITRATOR
       NO.8/2, KRISHNA ROAD
       BASAVANAGUDI
       BANGALORE - 560 004.
                                   ... RESPONDENTS

(BY MR. S. SRIRANGA, ADV., C/R1)

                          ---

       THIS COMAP IS FILED UNDER SECTION 13(1A) OF
COMMERCIAL COURTS ACT, 2015 R/W SECTION 37 OF THE
ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO
CALL FOR RECORDS IN COM.A.S. NO.80/2016 AS WELL AS
THE ARBITRAL RECORDS WHICH ARE BEFORE THE TRIAL
COURT. SET ASIDE THE IMPUGNED JUDGMENT AND DECREE
DATED 05.12.2020 PASSED BY THE LXXXIII ADDL. CITY
CIVIL AND SESSIONS JUDGE, BENGALURU (CCH-84) (TRIAL
COURT) (ANNEXURE-A) DISMISSING COM.A.S.NO.80/2016 &
ETC.
       THIS COMAP COMING ON FOR FINAL HEARING, THIS
DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:


                        ORDER

This appeal takes an exception to judgment dated

05.12.2020 passed by the Commercial Court by which

objections preferred by the appellant under Section 34

of the Arbitration and Conciliation Act, 1996 (hereinafter

referred to as 'the Act' for short) have been dismissed.

2. Facts leading to filing of this appeal briefly

stated are that the appellant is a private limited

company and is engaged in the business of construction

and of primarily designing and building steel structures.

The appellant was awarded a contract of Engineering

Procurement and Construction Contract for expansion of

Bangalore International Airport Limited (hereinafter

referred to as 'the BIAL' for short) on 31.05.2011. The

scope of the work involved Engineering Procurement and

Construction work of three storied RCC Structure,

Structural Steel Roof with Roof coverings on east - west

and southern sides of existing terminal building and

steel canopy on the northern side. The appellant sub

contracted the structural Steel Roof work to the

respondent for a consideration of Rs.110 Crores. A letter

of intent dated 29.09.2011 (Ex.C3) was issued. The

aforesaid letter of intent was amended on 15.10.2011.

3. Thereafter, a tripartite agreement dated

25.01.2012 (Ex.R1) was executed between BIAL, the

appellant and the respondent viz., the sub contractor.

Under the agreement, the respondent had to complete

the work within 10 months from 04.10.2011 i.e., upto

03.08.2012. The possession of the site was handed over

to the appellant on 31.08.2013.

4. During the execution of the work, in order to

secure the progress of the work, the appellant and the

respondent agreed that the appellant would secure the

structural steel and consumables required by the

respondent for the contract work and that the appellant

may engage the services of other sub contractors in this

behalf on payment of requisite charges by the

Respondent.

5. However, there was delay in completion of

the work. The disputes arose between the parties.

Thereupon the respondent filed an application under

Section 11(6) of the Arbitration and Conciliation Act,

1996 seeking appointment of an . The aforesaid

application was allowed by this court by an order dated

03.09.2014 and a sole was appointed. The proceeding

before the commenced on 13.12.2014. The parties filed

respective pleadings and adduced oral and documentary

evidence. The appellant examined three of its officers as

RW1 to RW3 and adduced documents viz., Ex.R1 to

Ex.R72 in evidence, whereas, the respondent examined

three of its officers as CW1 to CW3 and tendered

documents viz., EX.C1 to Ex.C278 in evidence.

6. The arbitral tribunal passed an award on

06.02.2016 and directed the appellant to pay a sum of

Rs.5,32,83,419/- along with interest at the rate of 18%

per annum and cost of Rs.12,00,000/- as well as stamp

duty of Rs.3,26,985/- paid by respondent No.1 on the

award under the Karnataka Stamp Act, 1957. The

appellant filed objections under Section 34 of the Act

before the Commercial Court. The Commercial Court

vide judgment dated 05.12.2020 has dismissed the

objections preferred by the appellant. In the aforesaid

factual background, this appeal has been filed.

7. Learned Senior counsel for the appellant

while inviting the attention of this court to objections

preferred by the appellant under Section 34 of the Act

submitted that though various objections were raised,

the Commercial Court in a cryptic and cavalier manner

without adverting to the objections raised by the

appellant has dismissed the petition under Section 34 of

the Act. It is further submitted that while passing the

impugned judgment, the Commercial Court has neither

adverted tot eh grounds nor the contentions raised by

the appellant. It is also argued that interest at the rate

of 18% has been awarded for pendente lite and for a

period thereafter, without assigning any reasons, which

cannot be sustained in the eye of law. Learned Senior

counsel has taken us through the impugned judgment of

the Commercial Court and has submitted that the

matter deserves to be remitted to the Commercial Court

for decision on the objections preferred by the appellant

afresh. In support of aforesaid submissions, reliance has

been placed on decisions in 'SSANYONG

ENGINEERING AND CONSTRUCTION COMPANY

LIMITED VS. NATIONAL HIGHWAYS AUTHORITY

OF INDIA', (2019) 15 SCC 131, 'DYNA

TECHNOLOGIES PVT. LTD. VS. CROMPTON

GREAVES LTD.', 2019 SCC ONLINE SC 1656, 'V4

INFRASTRUCTURE PRIVATE LIMITED VS. JINDAL

BIOCHEM PRIVATE LIMITED', FAO (OS) (COMM)

107/2018, 'ASSOCIATE BUILDERS VS. DELHI

DEVELOPMENT AUTHORITY', (2015) 3 SCC 49,

'P.SHEIK BATCHA ROWTHER AND OTHERS VS.

N.R.ALAGAPPAN SERVAI', AIR 1959 MAD 12,

'ORIENTAL STRUCTURAL ENGINEERS PRIVATE

LIMITED VS. STATEOF KERALA', (2021) 6 SCC 150

and 'UNION OF INDIA VS. WARSAW ENGINEERS

AND OTHERS', COMAP NO.25/2021.

8. On the other hand, learned counsel for the

respondent submitted that a division bench of this court

in UNION OF INDIA VS. WARSAW ENGINEERS

supra in para 12 has held that there is a two stage

process in considering the challenge under Section 34 of

the Act. It is pointed out that first stage is that a Judge

should advert to the grounds agitated at the time of

hearing and thereafter, he has to examine whether

grounds urged are available under Section 34(2)(a) of

the Act and if such grounds are available, to consider

each and every ground. It is also submitted that in para

7 of the judgment, the Commercial Court has adverted

to the grounds raised and in para 21 has recorded a

finding that no ground enumerated under Section

34(2)(a) of the Act for interference with the award

passed by the is made out. It is further submitted that

the judgment passed by the Commercial Court is in

consonance with the principles laid down by division

bench of this court in WARSAW ENGINEERS supra. It is

further submitted that the grounds raised in this appeal

do not fall within the ambit of Section 34(2)(a) of the

Act. In support of aforesaid submissions, reliance has

been placed on decisions in 'NATIONAL HIGHWAYS

AUTHORITY OF INDIA VS. M.HAKEEM & ANR.',

2021 SCC ONLINE SC 473, 'PATEL ENGINEERING

LTD VS. NORTH EASTERN ELECTRIC POWER

CORPORATION LTD.,', (2020) 7 SCC 167,

'SSANGYONG ENGINEER AND CONSTRUCTION

COMPANY LTD. VS. NATIONAL HIGHWAYS

AUTHORITY OF INDIA', (2019) 15 SCC 131,

'NATIONAL HIGHWAYS AUTHORITY OF INDIA VS.

ITD CEMENTATION INDIA LTD.', (2015) 14 SCC 21,

'ASSOCIATE BUILDERS VS. DELHI DEVELOPMENT

AUTHORITY', (2015) 3 SCC 49, and 'NATIONAL

HGIHWAYS AUTHORITY OF INDIA VS. R.N. SHETTY

& COMPANY', 2014 SCC ONLINE DEL 3392.

9. We have considered the submissions made

by learned counsel for the parties and have perused the

record. The scope of interference with an award passed

by an arbitrator is confined to the grounds mentioned in

Section 34(2) of the Act. One more ground has been

incorporated to challenge the award by Amendment Act

2015 with effect from 23.10.2015 viz., 'Public Policy of

India'. The scope of interference with an arbitral award

is well settled. In this connection, reference may be

made to decision of Supreme Court in 'DYNA

TECHNOLOGIES PVT. LTD. supra, wherein in

paragraphs 24 and 25 of the aforesaid decision, it has

been held as under:

24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards 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. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under 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. 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.

25. Moreover, umpteen number of judgments of this Court have categorically held that the Courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.

10. A division bench of this court in UNION OF

INDIA VS. M/S WARSAW ENGINEERS AND

ANOTHER vide judgment dated 17.04.2021 has held as

follows:

12. We have also referred to the decision of the Apex Court which holds that the scope of interference is confined to specific grounds which are available under Section 34 of the said Act of 1996. It is also well settled that the Court should not interfere with an award merely because another view on facts and interpretation of contract exists. When a Judge dealing with the petition under Section 34 of the said Act of 1996 hears the petition on merits, firstly, he must advert to the grounds agitated at the time of hearing in support of the petition under Section 34 of the said Act of 1996. He has to examine whether the grounds urged are available under sub-section (2) and sub-

section (2A) of Section 34 of the said Act of 1996. If the grounds pleaded are

available under Section 34 of the said Act of 1996, the next step will be to consider each and every ground pressed into service on merits and to come to conclusion whether the grounds have been established.

13. Therefore, it is necessary for a Judicial Officer dealing with the petition under Section 34 of the said Act of 1996 to precisely record the submissions made by the counsel for the petitioner in support of the petition under Section 34 of the said Act of 1996. It is also necessary to precisely record the submissions made by way of reply to the specific grounds pleaded by the petitioner. It is not necessary to make verbatim reproduction of oral or written submissions. The gist of every ground agitated and reply to it by the rival party needs to be incorporated. This helps the Judges to deal with every ground urged.

    14.   Thereafter,          each        and     every
ground    will    have         to    be     separately

considered. It is necessary for the Judicial Officer to firstly consider whether the ground agitated is covered by any of the grounds set out under Section 34 of the said Act of 1996. If according to the learned Judge the ground agitated is not available for challenge in accordance with Section 34 of the said Act of 1996, the Judicial Officer will have to record the reasons for the said conclusion. If he is of the view that the ground agitated is available under Section 34 of the said Act of 1996, he will have to consider whether the said ground is established and record reasons in that behalf.

15. Now coming to the issue of decisions relied upon by the parties, it is not necessary for the Judicial Officer to quote the relevant parts of the said decisions. What is more important is that the judgment should show that the Judicial Officer has adverted to the ratio of the judgment. Only after adverting the ratio of the judgment, the Judicial Officer can come to a conclusion whether the same

can be applied to the facts of the case before him.

16. Thus, while dealing with the petition under Section 34 of the said Act of 1996, for arriving at a correct conclusion, the Judicial Officer, as stated earlier, must precisely record the submissions canvassed in support of the petition and the submissions canvassed for opposing the petition. It is not necessary to reproduce the submissions verbatim. The substance of the grounds urged must be briefly recorded. As a remedy of an appeal is available against the judgment and order in a petition under Section 34 of the said Act of 1996, recording of the submissions made across the Bar helps the Appellate Court to decide the appeal properly. If the submissions are not properly recorded, it gives a scope to an argument that a particular submission was made before the concerned Court but the same has not been considered. If such submissions are made, as per the settled

law, the Appellate Court has to relegate the aggrieved party to the same Court for making an appropriate application as the Appellate Court cannot decide what transpired before the Court which has passed the impugned order.

17. In the present case, we find that the submissions made in support of the petition under Section 34 of the said Act of 1996 are not properly recorded. There is a cursory reference to only one or two submissions in paragraph 17 of the judgment.

18. As stated earlier, the jurisdiction under Section 34 of the said Act of 1996 is not an appellate jurisdiction. The exercise of jurisdiction is confined to the grounds set out in Section 34 of the said Act of 1996.

19. In the facts of the case, we find that after having gone through the impugned judgment and order, it is very difficult for us to know what were the

precise submissions made in support of the petition and for opposing the petition. As the submissions are not properly recorded, the learned Judge has dealt with the issue in a very cryptic manner.

11. It is well settled in law that reason is the

heartbeat of every conclusion and absence of reasons

renders the orders lifeless. The requirement of assigning

reasons ensures transparency and fairness in decision

making. The reasons act as a link between the mind of

the decision maker and the issue, which arises for

determination. The Supreme Court has emphasized the

requirement of new recording of reasons in support of

the conclusions in 'BHAGAT RAJA VS. UNION OF

INDIA AND OTHERS', AIR 1967 SC 1606, and it has

been held that reasons recorded in support of the

conclusions must be explicit and intelligible. It has

further been held that reasons have to be proper,

relevant, germane and should deal with arguments

advanced, points raised and issues involved. The

requirement of assigning the reasons also helps the

appellate court in ascertaining as to the grounds, which

weighed with the authority in coming to a particular

conclusion. [See: 'VISHNU DEV SHARMA VS.

STATEOF U.P. & ORS', (2008) 3 SCC 172].

12. Now we may advert to the impugned

judgment. Paragraphs 1 to 6 contain the narration of

facts. In paragraph 7 of the impugned judgment

reference has been made to main grounds of challenge

to the impugned award. Paragraph 8 refers to the

averments contained in statement of objections.

Paragraphs 9 and 10 refers to points for consideration.

In paragraphs 12 to 17 again facts have been stated . In

paragraphs 17 to 20, the Commercial Court has referred

to certain admitted facts and other facts. In paragraphs

21 to 26, the point for consideration has been answered.

From close scrutiny of paragraphs 21 to 26 of the

judgment, it is evident that neither the contentions nor

the grounds raised by the appellant have been dealt

with by the Commercial Court. Thus, the Commercial

Court without assigning any reasons in a cryptic and a

cavalier manner has recorded the conclusion that the

award passed by the cannot be considered as erroneous

or opposed to Public Policy of India. It has further been

held that the appellant has failed to make out any

cogent grounds to set aside the arbitral award and the

award passed by the is neither perverse, unfair nor

unreasonable. From close scrutiny of paragraphs 21 to

26, it is evident that the Commercial Court has not

assigned any reasons for recording the conclusions. The

Commercial Court has also not dealt with various

contentions and grounds raised in the petition under

Section 34 of the Act.

13. The Commercial Court, therefore, cannot

record the conclusion without assigning reasons that no

ground for interference under Section 34 of the Act is

made out. In paragraph 14 of the judgment in Warsaw

Engineers, a division bench of this court has held that

each and every ground has to be separately considered

to find out whether it is covered by any of the grounds

set out under Section 34 of the Act. However, the

aforesaid exercise cannot be carried out without

assigning the reasons.

14. The Commercial Court without considering

the ratio of the judgments relied upon by the parties has

simply recorded the conclusion that the judgments relied

upon by the appellants are not applicable to the facts of

the case. The Commercial Court has not assigned any

reasons for recording a conclusion that the grounds for

interference under Section 34 of the Act is not made

out. Therefore, though this court is conscious of the fact

that normally the appellate court could be slow to pass

an order of remand, yet in the facts of the case, we are

left with no option but to remand the case as no reasons

have been assigned by the Commercial Court for

arriving at the conclusion that grounds as enumerated

under Section 34 of the Act are not made out.

15. For the aforementioned reasons, the

judgment dated 05.12.2020 passed in COM

A.S.No.80/2016 is quashed and the matter is remitted

to the Commercial Court. The parties shall appear before

the Commercial Court on 28.10.2021 for fixing the date

of hearing. It will not be necessary for the Commercial

Court to issue notice to the parties of the date fixed by

it. Taking into account the fact that the petition was

filed in the year 2016, the Commercial Court shall make

an endeavor to conclude the proceeding within a period

of four months from the date of appearance of the

parties.

In view of the disposal of the main appeal itself, all

pending applications do not survive for consideration.

Accordingly, the same are disposed of.

In the result, the appeal is disposed of.

Sd/-

JUDGE

Sd/-

JUDGE SS