Case Note & Summary
The Union of India, through the Chief Project Manager (Conversion), Central Railway, Mumbai, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated 26.12.2008. The dispute arose out of a contract between the petitioner and M/s. Quick Communication Systems Pvt Ltd for the execution of certain works. The arbitrator had awarded the respondent (claimant) a total of Rs. 30,29,111/- under various heads, including work done not paid (Rs. 9,40,580/-), payment of the 6th bill (Rs. 5,75,431/-), refund of security deposit (Rs. 10,88,100/-), loss of profit (Rs. 2,00,000/-), loss of advance (Rs. 1,00,000/-), loss due to infrastructure (Rs. 75,000/-), and under utilization of overheads (Rs. 50,000/-). The petitioner's counterclaims for delay in completion and risk and cost were rejected. The petitioner contended that the award was contrary to the terms of the contract, perverse, and against public policy. The court, after examining the award and the submissions, held that the arbitrator had considered the evidence and provided reasoned findings. The court reiterated the limited scope of interference under Section 34, stating that the court cannot reappreciate evidence or substitute its own view unless the award is so perverse that no reasonable person could have arrived at it. The court found no such perversity or violation of public policy. Consequently, the petition was dismissed, and the award was upheld.
Headnote
A) Arbitration - Section 34 of Arbitration and Conciliation Act, 1996 - Scope of Interference - The court considered the limited grounds for setting aside an arbitral award under Section 34, emphasizing that the court does not sit in appeal over the arbitrator's findings of fact or interpretation of contract terms unless the award is perverse or contrary to public policy. Held that the award was based on evidence and reasoning, and no interference was warranted (Paras 1-10). B) Contract - Compensation for Work Done - The arbitrator awarded Rs. 9,40,580/- for work done not paid and Rs. 5,75,431/- for the 6th bill, based on evidence of actual work performed. The court upheld these findings as the arbitrator had considered the contract terms and the evidence on record (Paras 2-5). C) Contract - Refund of Security Deposit - The arbitrator awarded Rs. 10,88,100/- as refund of security deposit, which was not disputed by the petitioner. The court confirmed this part of the award (Para 2). D) Damages - Loss of Profit and Other Losses - The arbitrator awarded Rs. 2,00,000/- for loss of profit, Rs. 1,00,000/- for loss of advance, Rs. 75,000/- for loss due to infrastructure, and Rs. 50,000/- for under utilization of overheads. The court held that these awards were based on the arbitrator's assessment of evidence and were not perverse (Paras 2-6). E) Interest - The arbitrator did not award any interest, and the court noted that the claimant had claimed 24% p.a. but was awarded nil (Para 2).
Issue of Consideration
Whether the arbitral award dated 26.12.2008 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the grounds of being contrary to the terms of the contract, perverse, and against public policy.
Final Decision
The court dismissed the petition and upheld the arbitral award dated 26.12.2008.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- Scope of interference with arbitral award
- Public policy
- Reasoned award
- Appreciation of evidence by arbitrator
