Uttarakhand High Court

State Of Uttarakhand & Others ...... ... vs Sandesh Kumar on 21 March, 2024

                                          Reserved Judgment

    IN THE HIGH COURT OF UTTARAKHAND
                AT NAINITAL

            HON'BLE THE CHIEF JUSTICE MS. RITU BAHRI
                                AND
               HON'BLE MR. JUSTICE RAKESH THAPLIYAL


                   Reserved on : 06.03.2024
                   Delivered on : 21.03.2024

              APPEAL FROM ORDER NO. 406 OF 2022


State of Uttarakhand & others             ......          Appellants


Versus


Sandesh Kumar                             ......           Respondent

                             WITH


              APPEAL FROM ORDER NO. 407 OF 2022


State of Uttarakhand & others             ......          Appellants


Versus


Sandesh Kumar                             ......           Respondent



Counsel for the appellants    :   Mr. Shailendra    Singh    Chauhan,
                                  learned counsel

Counsel for the respondent    :   Mr. Rajat Mittal, learned counsel



The Court made the following:

JUDGMENT:

(per Hon'ble the Chief Justice Ms. Ritu Bahri)

The State has come up in both the appeals

against the common judgment and order dated

11.05.2022, passed by the Additional District Judge

(Commercial) Dehradun, whereby arbitration case No.

96 of 2019 and Arbitration Case No. 97 of 2019, filed by

the appellants against the award dated 28.07.2016,

passed by the single Arbitrator Mr. M.Z. Haq, in, were

rejected. The two appeals before us have arisen out of

common judgment and order, therefore, they are being

decided together for the sake of brevity and

convenience.

2) Brief facts leading to filing of both the appeals

are that the appellants instituted aforementioned

arbitration cases under Section 34 of the Arbitration and

Conciliation Act, 1996 against the award dated

28.07.2016, passed by the single Arbitrator Mr. M.Z.

Haq. The contention of the appellants is that the

arbitration cases were filed before the Arbitrator on

11.08.2015. Opposite party submitted its written

statement and counter-claim on 03.11.2015. The

contract in question was executed between the parties

for expansion and development of Kotdwar to Haridwar

motor road. Opposite party presented a bank guarantee

of Rs.20,53,300/-. The work commenced on 24.02.2012

and has to be completed on 31.03.2013. It is contended

that the opposite party was handed over the possession

of work place, but he failed to bring the resources,

labour and machinery on the pretext that work had to be

undertaken in forest area, whereas the fact was that

necessary permission had already been taken for said

work in the forest area. The road was in existence since

1960. Opposite party left the work, and when the

payment of his bank guarantee was sought, he instituted

a suit under Section 09 of the Arbitration and

Conciliation Act. It is also contended that the opposite

party had taken back the bank guarantee during

pendency of the said suit due to which the appellants

had to suffer losses. The appellants had to invite bid

afresh and made to pay Rs.426.42 lakhs to the other

contractor. It is further contended that the Arbitrator by

admitting the claim petitioner and Rs.34,09,920/- for

counter-claim of the appellants had passed the award in

question.

3) The appellants in their arbitration cases took

the ground that the Arbitrator had not framed issues and

no conclusion has been drawn in it and as such the

appellants had to suffer due to miscarriage of justice. It

is also contended that the procedure prescribed on

03.08.2015 had not been complied with; no evidence

was there for award on account of overhead expenses;

there was no evaluation formula alleged for it. It is

alleged that the Arbitrator was negligent for misconduct

as violated the public policy, and without appreciating

the evidence regarding loss of machinery, had passed

the award in question. No evidence was brought on

record to show that the contractor ever brought any

machinery at the work place, or he was the owner of any

machinery and passed the award regarding the loss of

working labour. Opposite party had failed to produce

any evidence to show that labour had been employed by

him at the work place. The Arbitrator had passed the

award on account of loss and profit without any

evidence. It is alleged that the Arbitrator further had

not taken decision that the opposite party had violated

the contract, whereas sufficient evidence were available

on record in this regard. Lastly, it is contended that

there was no reason apparent on record for releasing the

bank guarantee, and the interest had been paid without

having any jurisdiction to do so. It is further alleged

that the award in question is against the law and is

contrary to the public policy of India and induced by

deceit and is against the moral ethics of substantial

principle of justice. Therefore, the award passed in

favour of the opposite party is liable to be set aside.

4) The Additional District Judge (Commercial)

Dehradun dismissed both the arbitration cases filed by

the appellants on the following grounds :

i) The appointment of Mr. M.Z. Haq as a single Arbitrator was as per the consent of both the parties, and a letter had already been issued by the Rural Development Department regarding appointment of the single Arbitrator.

ii) The respondent had initiated the arbitral proceedings after the proceedings under Clause 25 of the contract had been done.

iii) Prior to issuance of notice for arbitration, a letter has been sent to the adjudicator on 05.02.2015 (copy enclosed as Annexure-7 to the arbitration petition), and after that on account of non- decision by the adjudicator within the time stipulated, the respondent had taken a decision to initiate arbitration proceedings.

iv) As per Clause 19, sub-sections (2) and (3) of the Arbitration and Conciliation Act, the parties failed to follow the procedure to be followed by the arbitral tribunal in conducting its proceedings.

v) The issues in the present case were framed by the Arbitrator from 12.10.2015 till 23.01.2016, and these issues were proposed by the contractor as well as the State. Since the State did not push for framing of the issues proposed by it, and had consented to the procedure adopted by the Arbitrator, the award cannot be challenged on the above said grounds.

vi) With respect to concluding the arbitral proceedings within one year, it has been held that

arbitral proceedings were initiated on 03.11.2015, which were well within one year.

vii) The last ground for challenging the award was that the award is liable to be set aside as reasons for giving the award have not been explained.

5) The Commercial Court after perusing the

award in question dated 28.07.2016 observed that the

arbitral tribunal having considered the supporting

documents, the arguments and evidence in support

thereof, and after giving detailed consideration had

passed the award in question. While passing the award,

the table which was presented by the contractor before

the single Arbitrator depicting basis of loss on account of

overhead expenses, machinery, decrease in value, loss

in labour was made the basis for accepting the claim and

passing of the award. As per the judgment, all claims of

the contractor have been considered in accordance with

law, and reasons have been given for rejecting the

grounds taken by the appellants in challenging the

award.

6) After perusing the impugned judgment, the

scope of Section 37 of Arbitration and Conciliation Act,

1996, has to be examined for interfering in the arbitral

award. The scope for interference under Section 37 of

the Arbitration and Conciliation Act is very limited. The

Hon'ble Apex Court in Larsen Air Conditioning and

Refrigration Company Vs Union of India and others,

2023 SCC OnLine SC 982, has held that in appeal,

Section 37 of the Act grants narrower scope to the

appellate court to review the findings in an award, if it

has been upheld, or substantially upheld under Section

34.

7) Finally, the main ground for consideration is

with regard to the applications seeking condonation of

delay in both the appeals. Counsel for the appellants

has placed reliance on the judgments of the Division

Bench of this Court passed in Appeal against Order No.

346 of 2022, Haryana Vidyut Parsaran Nigam Limited &

another Vs M/s Mahavir Transmission Udyog Pvt. Ltd. &

another, decided on 02.11.2022; as well as in Appeal

from Order No. 127 of 2021, State of Uttarakhand &

others Vs M/s Hillways Constructions Company Pvt. Ltd.,

decided on 07.03.2022. Reliance has also been placed

on the judgment passed by learned Single Judge of this

Court in Appeal from Order No. 09 of 2022, Jishan Ali Vs

Arbitrator NHAI / Collector, decided on 05.03.2022.

8) However, in the instant case, the State has

come up in two separate appeals against the common

order of the Commercial Court, and there is delay of 91

days and 151 days, respectively, in preferring these

appeals. The judgment delivered by Kerala High Court

in the case of Muhammed Shafeek Vs M/s Tasty Nut

Industries, Kilikolloor, Kollam & others, rendered in

C.M. Appln. No. 01 of 2023 in COML. Appeal No. 3 of

2023, decided on 17.10.2023, cannot be made basis to

condone said delay. The issue of delay has already been

considered in a number of judgments. One such

judgment of the Division Bench of this Court was

rendered in Appeal from Order No. 127 of 2021, State

of Uttarakhand & others Vs M/s Hillways Constructions

Company Pvt. Ltd., decided on 07.03.2022, wherein

after examining the provisions of Section 13(1A) of the

Commercial Courts Act, which only provides condonation

of delay of 30 days and 60 days, the application for

condonation of delay of 85 days was dismissed, taking

note of the judgment of Hon'ble Apex Court rendered in

Government of Maharashtra (Water Resources

Department) represented by Executive Engineer Vs

Borse Brothers Engineers and Contractors Pvt. Ltd.,

(2021) 6 SCC 460, wherein in para 63 it has been held

as under :

"Given the aforesaid and the object of speedy disposal sought to be achieved both under the Arbitration Act and the Commercial Courts Act, for

appeals filed under section 37 of the Arbitration Act that are governed by Articles 116 and 117 of the Limitation Act or section 13(1-A) of the Commercial Courts Act, a 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, always bearing in mind that the other side of the picture is that the opposite party may have acquired both in equity and justice, what may now be lost by the first party's inaction, negligence or laches."

9) Borse Brothers (supra) case has been followed

in another Division Bench judgment passed by this Court

on 02.11.2022, in Appeal against Order No. 346 of

2022, Haryana Vidyut Parsaran Nigam Limited &

another Vs M/s Mahavir Transmission Udyog Pvt. Ltd.

& another, where delay of 908 days was sought to be

condoned in an appeal filed under Section 37 of the

Arbitration and Conciliation Act, 1996. Even this appeal

was dismissed. Also, in Appeal from Order No. 09 of

2022, Jishan Ali Vs Arbitrator NHAI / Collector,

decided on 05.03.2022, learned Single Judge of this

Court taking note the proposition of law laid down in the