Case Note & Summary
The case arises from a construction contract between Raheja Universal Pvt. Limited (appellant) and B.E. Billimoria & Co. Limited (respondent) for a project called 'Raheja Waterfront' in Mangalore. The respondent submitted a tender for general building and civil work, and the appellant issued a letter of acceptance on 3 March 2012 and a work order on 13 March 2012. The contract was terminated by the appellant on 27 December 2012 due to a delay of 120 days in completion. The respondent challenged the termination and filed an arbitration petition. An arbitrator was appointed on 4 January 2013. The arbitrator passed an award on 27 March 2014, upholding the appellant's deduction of liquidated damages. The respondent filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the award. The learned Single Judge set aside the award on 27 October 2015, holding that the deduction of liquidated damages was wrong. The appellant appealed under Section 37. The Division Bench allowed the appeal, holding that the Single Judge exceeded the scope of Section 34 by reappreciating evidence and substituting his own view. The arbitrator's findings were plausible and not perverse, and thus the award did not warrant interference. The appeal was allowed, and the Single Judge's order was set aside, restoring the arbitral award.
Headnote
A) Arbitration Law - Appeal under Section 37 - Scope of Interference - Section 37, Arbitration and Conciliation Act, 1996 - The appeal challenges the Single Judge's order setting aside the arbitral award on the claim for wrong deduction of liquidated damages - The Court held that the Single Judge exceeded the scope of Section 34 by reappreciating evidence and substituting his own view, whereas the arbitrator's view was plausible and not perverse - Held that the award did not warrant interference (Paras 1-11). B) Arbitration Law - Liquidated Damages - Termination of Contract - Delay in Construction - Sections 34 and 37, Arbitration and Conciliation Act, 1996 - The contract was terminated due to delay of 120 days - The arbitrator found that the appellant was entitled to deduct liquidated damages as per the contract - The Single Judge set aside the award on the ground that the deduction was wrong - The Division Bench restored the award, holding that the arbitrator's findings were based on evidence and were plausible (Paras 2-10). C) Arbitration Law - Perversity - Reappreciation of Evidence - Section 34, Arbitration and Conciliation Act, 1996 - The Single Judge reappreciated the evidence and came to a different conclusion, which is not permissible under Section 34 - The Court held that the arbitrator's view was a possible view and not perverse, and thus the award could not be set aside (Paras 8-11).
Issue of Consideration
Whether the learned Single Judge was justified in setting aside the arbitral award on the ground that the deduction of liquidated damages was wrong, despite the arbitrator's findings being plausible and not perverse.
Final Decision
The appeal is allowed. The judgment of the learned Single Judge dated 27 October 2015 is set aside. The arbitral award dated 27 March 2014 is restored. The Notice of Motion (Stamp) No. 3175 of 2015 is disposed of accordingly. No order as to costs.
Law Points
- Section 37 of Arbitration and Conciliation Act
- 1996
- Section 34 of Arbitration and Conciliation Act
- Liquidated damages
- Termination of contract
- Delay in construction
- Perversity
- Plausible view
- Interference with arbitral award
