CASE NAME- UNION OF INDIA, REPRESENTED BY DEPUTY CHIEF ENGINEER, EAST COAST RAILWAY, BHUBANESWAR vs. B. B. SENAPATI
CASE NO.- ARBA No.7 of 2020
DATE OF JUDGMENT- 08.01.2024
CORAM- JUSTICE D. DASH
FACTS OF THE CASE-
The Appellant entered into an agreement to complete project work on a railway section. The Respondent contends that despite their efforts, the work was delayed due to factors such as a cyclone, rising diesel rates, and obstructions at the work site. The Respondent also faced challenges due to heavy rain and mischievous activities by miscreants. The Appellant threatened to terminate the contract due to the work not being completed, but the Respondent explained the impediments. The completion period was extended due to these issues. The Appellant issued a notice of termination of contract, despite the period for completing the work being extended to 5. The work could not be finished due to reasons beyond the control of the Respondent. It is claimed that the Appellant terminated the contract abruptly without considering the circumstances.
ISSUES OF THE CASE-
Whether the order remitted by District Judge was valid even when the matter to the Arbitral Tribunal award was set aside?
CONTENTIONS OF APPELLANT-
Appellant stated that again on Claim No.3, the Tribunal has taken that eight months period despite seeing that a period of thirteen months the portion of title was occupied by another agency, which caused hurdles for the Respondent to execute the work. It is contended that without another valid and justifiable reason the Tribunal has arbitrarily reduced the award by 50% though it has taken cognizance of the fact that the Respondent sustained loss for keeping his man and machinery idle with the materials kept nearby. Rejection of the Claim No.5 has been challenged to be arbitrary and so also the non-award of interest under Claim No.6. When the Tribunal has erroneously accepted the stand of the Appellant that it has not received any interest from the Bank to the Fixed Deposit Receipt (FDR) of Rs.2, 50,000/- and only received the interest for the fixed deposit of Rs.50, 000/-
CONTENTIONS OF RESPONDENT-
Respondents contended that- “So, as per the above discussion, it is found that the Award made by the learned Tribunal in respect of Claim Nos.3,4,5 & 6 of the impugned Award dated 01.02.2013 are patently illegal and no based on materials on record besides being against the public policy of India. Further, the findings in respect of Claim Nos.3 to 6 are found not be in consonance with the observation of this Court vide ARBP No.205/2008 in its order dated 20.04.2012. Hence the impugned Award dated 01.02.2013 passed by the learned Arbitrators being found to be unsustainable in law is required to be set aside on the foregoing reasons and since the major part of the Award are not in accordance with law and not sustainable, the entire Award dated 01.02.2013 is liable to be set aside and the matter is to be remitted back to fresh adjudication by the Tribunal within a reasonable period of time as the dispute relates to the year 2000 and in the meantime already nineteen years have elapsed. Hence it is ordered.”
CONCLUSION-
In the arbitration decision, claims 1 and 2 were undisputed and accepted. However, claim 3 did not fully account for labor costs and only considered expenses for eight months. Claim 4 was rejected due to the absence of a price variation clause in the contract, despite its presence in the agreement. Claims 5 and 6 for loss of profit and interest were not awarded, lacking valid reasons. The decision is criticized for non-application of mind and being contrary to public policy. Section 34(4) of the Arbitration and Conciliation Act, 1996 gives the court discretion to remit a matter to the Arbitral Tribunal for further proceedings. The court may exercise this discretion based on the grounds raised in the application under Section 34(1) of the Act and the reply thereto. While the court can give the arbitrator an opportunity to provide reasons or fill gaps in the award, it may not do so if there is a patent illegality in the award or if contentious issues are not addressed. Additionally, the arbitrator cannot alter the award itself based on further evidence.
With the obtained facts and circumstances, the learned District Judge having set aside the award is not right in remitting the matter to the same Arbitral Tribunal for fresh adjudication. In the wake of aforesaid, the Appeal stands allowed and the impugned order is hereby set aside.
“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”
Written by- ALOK G. CHHAPARWAL
