Punjab-Haryana High Court

Union Of India vs M/S Shekhar Enterprises on 20 January, 2025

              FAO-2808-2023
                       2023 (O&M)


                                          Sr. No.107
                        IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                                       CHANDIGARH

                                                            FAO
                                                            FAO-2808-2023 (O&M)
                                                            Date of Decision : 20.01.2025

              Union of India                                ...
                                                            ...Appellant
                                               Versus
              M/s Shekhar Enterprises and another           ...Respondent
                                                            ...Respondents

              CORAM : HON'BLE MS. JUSTICE LAPITA BANERJI

              Present :        Mr. Arun Gosain, Advocate,
                               for the appellant.

                       Mr. Vishal Sodhi, Advocate,
                       for the respondents.
                               respondent
                              ***
              LAPITA BANERJI,
                     BANERJI J. (Oral)

Under Challenge in the present appeal is the impugned

judgment and order dated January 02, 2023 passed by the learned District

Judge, Pathankot.

2. Learned District Judge vide impugned order, refused to

interfere with the award passed by the learned Arbitrator and dismissed the

application under Section 34 of the 1996 Act Act. It was argued by the

applicant-appellant appellant before the learned Court adjudicating the application

under Section 34 of the Arbitration and Conciliation Act, 1996 (for short

"1996 Act") that the learned Arbitrator misdirected himself by not taking

into consideration Clause 11 of the arbitration agreement relating to time,

delay and extension of the contract and unjustly/unfairly relied upon clauses

7 and 9 of the said agreement. The learned learned Arbitrator was of the view that

the Union of India-appellant India appellant had to make good the amount that was claimed

by the claimant-contractor claimant against claim Nos.3(a), s.3(a), 3(b), 5(b) 5(b), 5(c), 8 and 9

with interest @10% per annum from March 9, 2012 i.e. 6 months after the

submission of the final bill by the contractor up to the date of the award.

FAO-2808-2023 2023 (O&M)

The appellant was given a period of 3 months to make the payment. In the

event the entire awarded amount was not paid within the aforesaid period of

3 months,, the entire amount as due was directed to carry future interest @

12% per annum from the day after the date of publication of award to the

date of actual payment.

3. By the impugned order, the learned District Judge came to the

finding that there was no infirmity in the aforesaid award and the appellant

could not bring the challenge within the purview of the grounds set out in

Section 34 of the 1996 Act. Since Court hhearing an application under

Section 34 could not sit in appeal over the award passed by the learned

Arbitrator while dealing with the application under Section 34 of the 1996

Act, in view of the law laid down by the Hon'ble Supreme Court of India in

"Rashtriya riya Ispat Nigam Ltd. Vs. M/s Dewan Chand Ram Saran Saran" 2012 (3)

RCR (Civil) 720, 720, the award was not interfered with.

4. Learned counsel for the appellant submits that apart from the

grounds mentioned in the application under Section 34 of the 1996 Act, the

learned Arbitrator committed a jurisdictional error since the second

extension was not granted by the Court and was only mutually agreed upon

by the parties.

5. Issue notice to the respondents.

6. Mr.Vishal Sodhi, Advocate appears and accepts notice on Mr.Vishal

behalf of the respondents and submits that by passing the impugned order,

the learned District Judge did did not commit any error since after appreciation

of evidence, even if an alternative view to the view taken by the learned

Arbitrator was possible, the award could not be interfered with. Further more,

he submits that the extension of mandate of learned Arbitrator was done by

FAO-2808-2023 2023 (O&M)

mutual consent of the parties and at this this appellate stage, no issue could be

raised regarding the said fact. The appellant has challenge challenged the award on

the ground of expiry of the mandate mandate of the learned Arbitrator for the first

time before this Court Cou hearing the appeal under Section 37 of the 1996 Act.

7. He relies on the decisions decision passed by a coordinate Benc Bench of the

Delhi High Court dated 17.09.2004 17.09.20 in 'Shyam Shyam Telecom Ltd. Vs. Arm Ltd.

Ltd.'

and the Bombay High Court dated 01.08.2008 in 'M/s Mascon

Multiservices and Consultants Pvt. Ltd. Vs. Bharat Oman Refineries Ltd.

and Another'..

8. Heard the parties and perused the material on record.

9. It appears that the learned Arbitrator considered clauses 7, 9

and 11 of the contract ontract between the parties an and after detailed reasoning

granted the aforesaid claims.

claim It could not be said that the award wa was against

the Public Policy of India or that the learned Arbitrator misdirected himself

in any manner or that the learned Arbitrator committed a jurisdictional

error.

ror. Therefore, there was no scope of interference by the Court

adjudicating the dispute under Section 34 of the 1996 Act. A beneficial

reference can be made to the scope of the 34 proceedings in the judgment of

the Supreme Court passed in i 'Associate Build uilders Vs. Delhi Development

Authority', (2015) 3 SCC.

SCC The relevantt extract is set out herein below:-

"An An arbitral tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person could do. It was further held that it has been opined by this court that that when it comes to setting aside of an award under the public policy ground, it would mean that the

FAO-2808-2023 2023 (O&M)

award should shock the conscience of the court and would not include what the court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice"."

"justice"."

10. The scope of interference in Section 337 of the 1996 Act is

extremely limited and the court cannot go beyond the stipulations of

Section 34 of the 1996 Act. A beneficial reference can be made to the

judgment of the Supreme Court in "Konkan Konkan Railway Corporation Limited

Vs. Chenab Bridge Project Undertaking"

Undertaking (2023) 9 SCC 85

85. The relevant

extract of the same is reproduced hereunder:-

hereunder:

"14.

14. Analysis: At the outset, we may state that the jurisdiction of the Court under Section 37 of the Act, as clarified by this in MMTC Ltd Vs. Vedanta Ltd., (2019) 4 SCC 163 is akin to the jurisdiction of the court under Section 34 of the Act. Scope of interference interference by a court in an appeal under Section 37 of the Act, in examining an order, setting aside or refusing to set aside an award, is restricted and subject to the same grounds as the challenge under Section 34 of the Act.

15. Therefore, the scope of jur jurisdiction under Section 34 and Section 37 of the Act is not akin to normal appellate jurisdiction. It is well-settled well settled that courts ought not to interfere with the arbitral award in a casual and cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle courts to reverse the findings of the Arbitral Tribunal."

11. This Court also relies upon the reasoning of Shyam's (supra)

and M/s Mascon Multiservices (supra) to come to the finding that once th the

parties themselves submit to the jurisdiction of the learned Arbitrator and

expressly waived their rights to challenge the mandate of the Arbitrator Arbitrator,

which had come to an end by efflux efflux of time, th they should not be permitted to

take that ground to challenge the award at the stage of setting aside of the

award under Section 34 or at the stage of an appeal filed under Section 37

of the 1996 Act. In the present case, the parties entered into reference on

FAO-2808-2023 2023 (O&M)

July 14, 2016. The first extension was made by the consent of the parties till

December 31, 2017.

12. Before the expiry of the mandate on December 31, 2017, the