Bangalore District Court

And Advocate For vs No.1) On The Award Amount on 16 August, 2021
Com.AS.No.73/2011

IN THE COURT OF LXXXII ADDL.CITY CIVIL & SESSIONS
JUDGE, AT BENGALURU (CCH.83)

THIS THE 16TH DAY OF AUGUST 2021

PRESENT:
SRI.DEVARAJA BHAT.M., B.COM, LL.B.,
LXXXII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.

Com.AS.No.73/2011

BETWEEN:

M/s Mangalore Refinery &
Petrochemicals Ltd., A
Company registered under
the
Companies Act
1956,
having its place of
business at (P.O.)
Kuthethoor, via Katipalla,
Mangalore - 575 030,
Karnataka.

: PLAINTIFF.

(Represented by M/s GKM
Associates - Advocates.)
AND
1. M/s. Matharoo
Associates, A Sole
Proprietary Firm
represented by Sri.
Gurjeet Singh Matharoo
being its Sole Proprietor
having its place of
business at 24-E, Capital
Commercial Center,
Com.AS.No.73/2011

Ashram Road, Ahmadabad
- 380 009.

2. National Institute of
Design, A Public Trust
registered under the
Bombay Public Trusts Act
and the Indian Societies
Registration Act, having
its Office near Sardar Patel
Bridge, Paldi, Ahmadabad
-380 009, Gujarat.

3. Hon'ble Mr. Justice P.
Gururajan, Sole Arbitrator,
Former Judge, Hon'ble
High Court of Karnataka,
5th Floor, Chitrapur
Apartments, 15th Cross,
Malleshwaram, Bengaluru
- 560 055.

: DEFENDANTS

(Defendant No.1 is
represented by M/s Gerahalli
Law Offices - Advocates,
Defendant No.2 is
represented by M/s Khaitan
Co LLP -advocates)

Date of Institution of the 15.09.2011
suit
Nature of the suit (suit on
pronote, suit for Petition for setting aside Arbitral
declaration & Possession, Award
Suit for injunction etc.)
Com.AS.No.73/2011

Date of commencement of
recording of evidence - Nil -
Date on which judgment 16.08.2021
was pronounced
Date of First Case - Not held -
Management Hearing
Time taken for disposal 27 days
from the date of
conclusion of arguments
Total Duration Year/s Month/s Day/s
09 11 01

(DEVARAJA BHAT.M),
LXXXII Addl. City Civil & Sessions Judge,
Bengaluru.

JUDGMENT

This is a Petition filed by the Plaintiff under
Section 34
of
the Arbitration & Conciliation Act, 1996 for setting aside the
Arbitral Award dated 18.06.2011 passed by the learned Sole
Arbitrator.

2. For the sake of clarity and convenience, the parties are
hereinafter referred by their ranks and status, i.e., M/s
Mangalore Refinery & Petrochemicals Ltd., as Plaintiff and M/s
Mathroo Associates as the Defendant.
Com.AS.No.73/2011

3. The Defendant had invoked the Arbitration Agreement and
preferred certain claims against the Plaintiff. In response to the
statement of Claim preferred by the Defendant, the Plaintiff
along with its response to the Statement of Claim also preferred
Counter-Claim against the Defendant.

4. The Brief Facts leading to the case are as follows:-

That the Plaintiff is a Public Sector Undertaking and is a
subsidiary of Oil & Natural Gas Commission (ONGC) of
Government of India, that the Defendant is a registered
Architect and is practicing the profession of Architecture under
the name and style of "Mathroo Associates", that the Defendant
No.2 is a formal party in the Arbitral Proceedings and hence, is
being added as Defendant No.2, that the Plaintiff desired
certain designs to be built in for the proposed Retail Outlets at
Mangaluru and Ahmadabad, which designs were ready with the
Defendant No.2, that the Defendant was recommended and
selected as a contract for the design of the Retail Outlets by the
Defendant No.2 and accordingly, worked for the Defendant No.2
at the designing stage, that several other parties were also
involved in the designing stage in addition to the Defendant,
that on 17.01.2005, a Work Order bearing No.WQA-025 was
Com.AS.No.73/2011

placed by the Plaintiff with the Defendant, for carrying out work
with respect to the Retail Outlets at Mangaluru and Ahmadabad,
the terms and conditions of which were accepted in totality by
the Defendant, that a Work Order was also issued on
08.06.2006, bearing No.WQA - 132, in respect of Panvel Retail
Outlet, that Clause-5.1 of the Work Order dated 17.01.2005
provided that Retail Outlet at Mangaluru would be handed over
to the Plaintiff in working condition, complete in all aspects on
or before 08.03.2005, that however with respect to the Retail
Outlet at Ahmadabad, it was specified in Clause 5.2 that the
same would be handed over to the Plaintiff within eight weeks
from the date of handing over the site, that the payments were
released from time to time by the Plaintiff as per the Contract,
that the last payment was released by the Plaintiff on
20.04.2005 i.e., within a month of completion of work by the
Defendant on 19.03.2005, that as per records, the Plaintiff has
paid the Defendant a sum of Rs.4,74,27,772/- by 20.04.2005,
which exceeds and covers the complete value of the work done
by the Defendant against the Retail Outlet at Mangaluru and
the Plaintiff is not liable to pay any further amount towards the
said Contract, that on the other hand, the Plaintiff was entitled
to receive from the Defendant a sum of Rs.16,14,370/- as and
by way of refund for excess payments made, that in respect of
Ahmadabad Retail Outlet, the Plaintiff had furnished the
Com.AS.No.73/2011

Defendant a mobilisation advance of Rs.22,55,463/- , that as
the Plaintiff could not get statutory clearances, the project did
not commence and hence, there was no question of 'handing
over' of the site to the Defendant and the amount furnished
towards mobilisation advance was adjusted by the Plaintiff in its
accounts and appropriated towards payments to be made in
respect of Mangaluru Project, that there arose a dispute
between the parties in respect of payments and the Defendant
preferred Arbitration, that the Plaintiff filed Counter-Claim for
Rs.26,40,669/- from the Defendant, that after recording
evidence and hearing the arguments, the learned Sole
Arbitrator has passed the Impugned Award on 18.06.2011 and
partly allowed the Claim of the Defendant and dismissed the
Counter-Claim of the Plaintiff as 'barred by time'.

5. Being aggrieved by the said Arbitral Award, the Plaintiff
has challenged the same on several grounds, which will be
discussed later in the body of the Judgment.

6. The Defendant has filed a detailed Statement of Objections
on 29.01.2013, and the contentions taken by the Defendant in
the said Statement of Objections will be considered while
discussing the various grounds urged by the Plaintiff, in the
body of the Judgment. The 2nd Defendant has also filed his
Com.AS.No.73/2011

detailed Statement of Objections on 06.02.2013.

7. I have heard the arguments of the Advocate for the
Plaintiff and Advocate for Defendant. The Advocate of the
Plaintiff has filed Written Arguments on 18.02.2020. The
Advocate for the Defendant has filed Written Arguments on
18.02.2020.

8. Based on the above contentions of both parties, following
Points arise for my consideration:-

1. Whether there are grounds to set aside the
Impugned Award under
Section 34
of the Arbitration
& Conciliation Act?

2. What Order?

9. My findings on the above points are as follows:-

Point No.1:- In the Affirmative.

Point No.2:- As per the final Order for
the following reasons.

REASONS

10. Point No.1: - The Defendant has preferred a Claim
Petition before the Learned Arbitrator for the following reliefs:-
Com.AS.No.73/2011

(a) To award a sum of Rs.4,89,61,730/- payable to the
Claimant (i.e., the Defendant No.1) as damages/compensation
and dues etc., up to November 2008.

(b) To award 30% amount (plus surcharge etc.) on the
actual "Award Amount", awarded by the Arbitral Tribunal,
towards the "Income Tax" payable by the Claimant (i.e., the
Defendant No.1) on the Award Amount, as stipulated in Clause
No:4 of the Work Order (Contract) dated 17.01.2005.

(c) To award interest at 18% per annum from December
2008 onwards till the date of recovery of all dues.

(d) To Award Cost of the Arbitration Proceedings, as per the
Cost Memo filed by the Claimant (i.e., the Defendant No.1), on
conclusion of the proceedings or as decided/determined by the
Arbitral Tribunal itself.

(e) To Award any pecuniary relief or reliefs, as deemed fit
and proper, by the Learned Arbitrator.

11. The Plaintiff has preferred Counter Claim before the
Learned Arbitrator.
Com.AS.No.73/2011

12. The Learned Arbitrator has partly allowed the claims of
the Defendant and dismissed the Counter Claim of the Plaintiff
in the Impugned Award.

13. The Plaintiff has challenged the said Impugned Award in
this proceeding. The Hon'ble High Court in the Judgment
dated 17.04.2021 in Com.A.P.No.25/2021 (Union of India
vs. M/s Warsaw Engineers) has laid down certain
guidelines/principles about the writing of Judgments in a
Petition filed under
Section 34
of the Arbitration & Conciliation
Act. Keeping in my mind the said guidelines, I now propose to
examine each and every ground urged by the Plaintiff
specifically with reference to the submissions made by both
Advocates.

14. The First ground is that the Impugned Award is ex-facie
erroneous, opposed to public policy, patently illegal and
contrary to Justice. This ground being a general ground, the
same will be discussed later, after discussing about all other
specific grounds.

15. The Second ground is that the Arbitrator erred in failing to
appreciate that the present claim filed by the Defendant was
barred by limitation.
Com.AS.No.73/2011

(a) According to the Defendant the right to sue arose in
favour of the Defendant against to the Plaintiff on or about
20.04.2005, when after the last payment of Rs.4,58,58,702/- by
the Plaintiff, balance amount due and payable to Defendant was
withheld by the Plaintiff, that as per
Section 43 (2)
of the
Arbitration & Conciliation Act, the Arbitral proceedings for the
purpose of limitation are deemed to have commenced on the
day on which the request for the dispute to be referred to
Arbitration is received by the Plaintiff as provided under
Section
of the Arbitration & Conciliation Act, that in the present case
the request of the Defendant to refer the dispute to arbitration
was addressed to Plaintiff on 10.07.2007 as per Ex.C28, that
was received by the Plaintiff on or about 12.07.2007 as per
Ex.C30, that therefore, the Arbitral proceedings has
commenced with in the period of 3 years from the day of right
to sue arose under
Article 137
of the
Limitation Act
and the
claims are not barred by limitation.

(b) The Learned Arbitrator has framed Issue No.2 about the
said facts and discussed the effect of
Section 43 (2)
and
Section
of the Arbitration & Conciliation Act, and has held that the
claim of the Defendant is well within the limitation. The said
finding is neither perverse nor contrary to any law. Hence, the
said ground is not available for the Plaintiff under Sub-
Section
Com.AS.No.73/2011

(2) and Sub-Section (2-A) of
Section 34
of the Arbitration &
Conciliation Act. Thus, the challenge flanked by the Plaintiff
calling for the setting aside of Arbitral Award on this count is
thwarted and rejected.

16. The Third ground is that the learned Arbitrator has ex
facie erred in failing to appreciate that the signing of the
Clearance Certificate and Completion Certificate did not mean
that the Plaintiff had admitted the amount of the Work Order
value claimed by the Defendant as per the terms of the
Contract between the parties.

(a) In order to appreciate this ground, the facts of the
case have to be discussed. The Plaintiff intended to establish
oval shaped proto type retail outlet of dispensing of petrol and
diesel and other petroleum products all over India since they
are the subsidiary of ONGC. On the advice of ONGC, the Plaintiff
decided to interest the construction of retail outlet unit to the
Defendant. As an experimental basis, they have decided to
entrust the construction of outlets in two places one at
Mangaluru and another at Ahmadabad. On approval the same
was communicated to the Defendant as per Ex.R1. The
Defendant categorically undertaken that they will assists the
Plaintiff technically in obtaining building permission and
Com.AS.No.73/2011

sanction though the responsibility of obtaining the sanction will
be that of the Plaintiff as could be seen from Ex.R2. Work Order
was placed on the Defendant as per Ex.C1. Value of the work
was modified incorporating certain additional work and total
was increased up to Rs. 5,15,43,302.52 + taxes. Retail outlet at
Mangaluru was completed on 18.03.2005. The Work Order was
changed as per Ex.C7, Ex.C8, Ex.C9 and Ex.C10 from time to
time. The Work Order as per Ex.C10 the amount agreed is Rs.
5,07,55,403. The Site Clearance Certificate and Completion
Certificate were issued as per Ex.C13 & 14 on 18.03.2005. In
the Clearance Certificate, it was mentioned actual work
executed is Rs. 5,15,43,302.52. However, the same is not taken
as the value of work in the Award as could be seen from Page
No. 59 to 61 and 87 & 88 of the Award. The Learned Arbitrator
has taken Rs. 4,66,95,599/- as the value of the Mangaluru
Project. Therefore, this ground is highly misconceived. Hence,
the said ground is not available for the Plaintiff under Sub-
Section (2) and Sub-Section (2-A) of
Section 34
of the
Arbitration & Conciliation Act. Thus, the challenge flanked by
the Plaintiff calling for the setting aside of Arbitral Award on this
count is thwarted and rejected.
Com.AS.No.73/2011

17. The Fourth ground is that the learned Arbitrator ought to
have appreciated that the Defendant issued a Final Bill for the
total Order value of Rs.4,66,95,599/- which has been fully paid
by the Plaintiff after making requisite deductions and
adjustments.

(a) The Defendant has denied that Rs. 4,66,95,599/- was
the final bill or that the Plaintiff has paid the same amount or
that the deductions are justified. As could be seen from Ex.C21
the Plaintiff paid Rs. 4,51,72,309/-. The same is also discussed
at Para No. 15.4 in Page No. 85 of the Award and that the
Learned Arbitrator has clearly held that Rs. 4,66,95,599/- is the
billed amount in terms of Ex.C1 and an amount of Rs.
4,51,72,309/- has been paid to the Claimant/Defendant. The
Plaintiff has not rebutted the said findings by showing any other
documents and hence he has not established his contentions
under this ground. Hence, the said ground is not available for
the Plaintiff under Sub-Section (2) and Sub-Section (2-A) of

Section 34
of the Arbitration & Conciliation Act. Thus, the
challenge flanked by the Plaintiff calling for the setting aside of
Arbitral Award on this count is thwarted and rejected.

18. The Fifth ground is that the learned Arbitrator has ex-
facie erred in failing to appreciate that all the deductions made
Com.AS.No.73/2011

in respect of Mangaluru Project by the Plaintiff were correct and
proper.

(a) By a Letter dated 27.06.2006, as per Ex.C21 the
Plaintiff had resorted to some deductions. Among the same, the
deduction based on Ex.R7 for Rs. 5,67,544/-, is rejected by the
Learned Arbitrator at Page No. 59 & 60 of the Award. The
reason for rejection is that the author of Ex.R7 is not examined
and that the same is not counter-signed by anybody. The said
reasoning cannot be considered as perverse. The another
deduction towards error in Invoicing for Rs. 2,69,353/- is allowed
by the Learned Arbitrator and discussed at Para No. 10.10 in
Page No.60 of the Award. Similarly, another deduction towards
Crane Hiring Charges for Rs. 45,300/- is allowed by the Learned
Arbitrator and discussed at Para No. 10.11 in Page No. 61 of the
Award. However, the deduction towards Mobilization Advance of
Rs. 22,55,463/- is rejected by the Learned Arbitrator and
discussed at Para No. 10.12 & 10.13 in Page No. 61 & 62 of the
Award. All these aspects were considered in detail by
appreciating the evidence on record and hence the same
cannot be considered as perverse. Hence, the said ground is not
available for the Plaintiff under Sub-Section (2) and Sub-Section
(2-A) of
Section 34
of the Arbitration & Conciliation Act. Thus,
Com.AS.No.73/2011

the challenge flanked by the Plaintiff calling for the setting
aside of Arbitral Award on this count is thwarted and rejected.

19. The Sixth ground is that the learned Arbitrator has ex-
facie erred in holding that there was no clause providing a
deduction for one project bill to another bill and that each
project is separate in character despite there being a common
order.

(a) The Learned Advocate for the Plaintiff has argued that
the Ex.R.2/ L.O.I. was accepted on 12.01.2005 wherein the
Defendant had also undertaken to assist the Plaintiff technically
in obtaining building permission and sanction, that as per
Clause 5.2, it was agreed that the retail outlet at Ahmadabad
will be handed over to the Plaintiff within eight weeks from the
date of handing over of the Site to the Defendant, that in this
regard, the Plaintiff had paid a sum of Rs. 22,55,463/- towards
mobilisation advance for Ahmadabad Project, that the said
amount of mobilisation advance was adjusted towards the
project at Mangaluru. The said adjustment of mobilisation
advance of Ahmadabad project of Rs. 22,55,463/- is rejected by
the Learned Arbitrator as there was no provision in the Work
Order dated 17.01.2005 for adjustment of advance given
against one project against amounts due under another
project.
Com.AS.No.73/2011

(b) The Learned Advocate for the Plaintiff has attacked
the same by relying on a decision reported in A.I.R. - 1963 -
Karnataka - 64 (
Life Insurance Corporation of India vs. T.
Subramanyam
) , wherein it is held that the mode of payment
of debt may be more than one, it may be by actual payment, it
may be by adjustment or it may be by any other means as
agreed to by the debtor and creditor.

He has also relied on
another decision reported in A.I.R. - 1964 - M.P. - 231 (
State
of Madhya Pradesh vs. Raja Balbhadra Singh
), wherein it
is held that on general principles a person is entitled to pay
himself that amount which is due to him from another if he has
in his hand, money belonging to that other, provided that his
dues are legally recoverable and that although that the
question will be adjudged adjusted by the court of law when it
arises, he not obliged to sue for the recovery of the money
which he is in already in possession of the said money.

(c) The Learned Advocate for the Defendant has argued
that the Learned Arbitrator has considered the said aspects in
detail at Para No. 10.12 and 10.13 of the Award and hence the
rejection of the said claim based on finding of facts which
cannot be considered in this proceedings as held in 2010 (1) -
S.C.C. - 409 (Ravindrakumar Gupta and Company vs.
Union of India), 2012 (1) - S.C.C. - 594 (P.R. Shah,
Com.AS.No.73/2011

Shares and Stock Brokers Private Limited vs. B.H.H.
Securities Private Limited and Others
), and 2015 (5) -
S.C.C. - 739 (
Swan Gold Mining Limited vs. Hindustan
Copper Limited
. By relying on the said decisions the Learned
Advocate for the Defendant has argued that the finding of fact
and the interpretation cannot be substituted by this court by
sitting as an Appellate Court merely because another view is
possible to be given.

(d) It is to be noted that the Arbitrator is a creature of
contract and he cannot travel beyond the terms of the contract.
When he has given a finding that there was no terms in the
contract between the parties to adjust the mobilisation advance
of one project as against another project and hence the said
adjustment is contrary to the terms of the contract, the said
finding cannot be reversed in this proceedings just because
another view is possible to be taken. Therefore the ratio of the
above-mentioned decisions which are relied by the Learned
Advocate for the Plaintiff is not applicable to the facts of the
present case. Hence, the said ground is not available for the
Plaintiff under Sub-Section (2) and Sub-Section (2-A) of
Section
of the Arbitration & Conciliation Act. Thus, the challenge
flanked by the Plaintiff calling for the setting aside of Arbitral
Award on this count is thwarted and rejected.
Com.AS.No.73/2011

20. The Seventh ground is that the learned Arbitrator has
ex-facie erred in holding that the sum of Rs.22,55,463/- paid
towards mobilisation advance for the Ahmadabad Project
cannot be adjusted in respect of the Mangaluru Project, despite
noting that the Ahmadabad Project was not taken up at all by
the parties.

(a) The Learned Advocate for the Plaintiff has argued that
on 15.04.2006 the Town Planning Department submitted
Ex.C34/ Letter to the Municipal Commissioner informed that the
plan cannot be sanctioned in view of 11 KV Electrical Grid Line
passing through and distance of 80 meter form Road has not
maintained, that a note was also made indicating that the plan
can be approved subject to conditions stipulated, that ONGC
addressed Ex.C40/ Letter to AMC on 28.04.2006 to grant
permission to maintain distance of 50 meters from plot
boundary on a road junction after giving undertaking to comply
with the conditions imposed, that on 01.05.2006 the note was
submitted to the Municipal Commissioner informing about the
conditions incorporated who clarified that the distance of 50
meter instead of 80 meter requires approval from the State
Government and they cannot give any permission, that the
Defendant addressed Ex.R.5/ Letter on 23.06.2006 to the
Plaintiff indicating that the conditions imposed by the AMC is
Com.AS.No.73/2011

not feasible to implement and suggested an alternative to have
the project at a different site, that in view of restrictions
imposed by the State Authorities and prohibition under law, the
plan was not sanctioned, that the alternative site suggested by
the Defendant was not viable and project could not be
implemented, that the retail outlet could not be constructed
without obtaining the license and sanctioned plan in accordance
with AMC Act and bye-laws, that the plan was not sanctioned in
view of the location of the property and the distance between
the road and the plot, that it was impossible to implement the
project as per the specification, that the contract was frustrated
as per the Force Majeure Clause contained in Ex.C1, that the as
the contract was frustrated the pass of advance amount paid
for the said project was adjusted towards Mangaluru Project and
the Defendant was requested to refund the balance amount.

(b) The Learned Advocate for the Plaintiff has further
argued that the Learned Arbitrator ought to have appreciated
the well established position in law that in the absence of
pleadings and/ or evidence of any loss, a party was not entitled
to the compensatory relief purported to be claimed.
In support
of his arguments he has relied on the decision reported in 2015
(3) - S.C.C. - 49 (
Associate Builders vs. Delhi
Development Authority
), which particularly deals with the
Com.AS.No.73/2011

fact that when the Arbitrator wanders outside the work/
Contract and deals with the matter, the Award should be set
aside as one which is unreasonable and shock the conscience of
the court. He submits that the said principle is applicable to the
present case and hence the impugned award is in contravention
of public policy of India being in contravention of the
fundamental policy of Indian Law.

(c) The 1st Defendant has contended that it is factually
incorrect that the Ahmadabad project was not taken up at all by
the parties, that the work was undertaken but prevented from
doing so due to non-compliance of 3 conditions for re-issuance
of Raja Chitti (permission) has indicated in Ex.C36/Letter dated
08.05.2006 issued by the Municipal Corporation, that the
fulfillment of the said requirements were the sole responsibility
of the Plaintiff, that as for as adjustment of mobilisation
advance is concerned, the Plaintiff cannot judge its own cause
in as much as it cannot under law and equity to derive a right to
adjust amount paid for one project against amount due under
another project when such right not under the contract and
when the two projects are independent of each other. He has
further contended that about running amount payment is
concerned is has no bearing on the issue raised, that the
Plaintiff had no right or authority to adjust Rs. 22,55,463/- of
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Ahmadabad project against payments due to the 1 st Defendant
under Mangaluru project as was done under Ex.C21/Letter
dated 27.06.2006, one and half year after completion and
handover of Mangaluru Project on 18.03.2005, that the conduct
of the Plaintiff was completely illegal and without authority

(d) As per the finding of the Learned Arbitrator the
Ahmadabad Project was taken up and drawings were provided
time to time and other works were also undertaken and hence
rejected the said adjustment at Para No. 74 & 75 of the Award.
The Learned Arbitrator after appreciating the oral evidence of
RW.1 & RW.2 and has observed that from the material on record
it is clear that the Claimant/Defendant has produced drawings
and those drawings were also approved to a certain extent by
AMC, that AMC has not given final approval on account of
inaction on the part of the Respondent No.1/ the present
Plaintiff in the matter, that the Respondent No.1/ the present
Plaintiff has also not terminated, canceled or stated anything
with regard to any further action to be taken by the
Claimant/Defendant in continuation of the project, that on the
other hand it is admitted before the Learned Arbitrator that the
project is virtually given up or abandoned on account of want of
statutory approval, that the Respondent No.1/ Plaintiff has thus
proved that the project in Ahmadabad never took place in the
Com.AS.No.73/2011

light of no permission by the AMC. After the said observations,
the Learned Arbitrator has given the finding as follows:-

"In the circumstances, I am of the view that the
Claimant has done some work and the contract has been
unilaterally abandoned without notice to the Claimant.
The Claimant is therefore entitled for some
compensation in the given circumstances."

(e) Further while giving such a finding at Para No. 13.4 of
the Award at Page No. 75 of the Award, the Learned Arbitrator
has mentioned that in fact he had seem the place at the time of
examination of RW.2. Much argued by the Learned Advocate for
Plaintiff about the said observation/ finding about his visit and
has argued that the personal knowledge of the Arbitrator was
imported in the Award as against the evidence on record, which
is not permissible. However, the Learned Arbitrator has clearly
mentioned that he had visited the spot at the time of
examination of RW.2, who is the witness of the Plaintiff himself.
When such being the case, the Plaintiff is estopped from
contending otherwise.

(f) Therefore, the material on record, the Learned
Arbitrator has given such a finding and hence the same is not
perverse. Hence, the said ground is not available for the Plaintiff
under Sub-Section (2) and Sub-Section (2-A) of
Section 34
of the
Com.AS.No.73/2011

Arbitration & Conciliation Act
. Thus, the challenge flanked by
the Plaintiff calling for the setting aside of Arbitral Award on this
count is thwarted and rejected.

21. The Eighth ground is that the learned Arbitrator has ex
facie erred in failing to appreciate that the Mangaluru and
Ahmadabad Projects were on running account evident from the
details of payments and bank statements at Ex.R.1.

(a) This ground is nothing but repetition of the earlier
grounds, i.e., Ground No. 6 & 7. I have already discussed in
detail about the said facts while answering Ground No. 6 & 7.
Hence for the same reasons, I am of the opinion that the finding
of the Learned Arbitrator is not perverse. Hence, the said
ground is not available for the Plaintiff under Sub-Section (2)
and Sub-Section (2-A) of
Section 34
of the Arbitration &
Conciliation Act. Thus, the challenge flanked by the Plaintiff
calling for the setting aside of Arbitral Award on this count is
thwarted and rejected.

22. The Ninth ground is that the learned Arbitrator has erred
in failing to appreciate that the adjustment of Rs.22,55,463/-
been rightly permitted, the Plaintiff would have been entitled to
receive the sum of Rs.7,32,173/- rather than being held liable to
Com.AS.No.73/2011

make payment of Rs.12,08,710/- and the said disallowance of
adjustment/deduction by the learned Arbitrator constitutes a
failure of justice.

(a) The Invoice No. 8 & 9 as per Ex.C15 & 16 was issued
towards the work at Mangaluru. The amount claimed is Rs.
1,76,92,652 i.e., after deducting the paid amount of Rs.
3,38,50,650 in the claimed amount of Rs. 5,15,43,302.52. The
Learned Arbitrator has upheld the deduction of Rs. 45,300/-
towards crane hiring charges.

(b) The Learned Advocate for the Plaintiff has argued that
the retail outlet at Mangaluru was completed on 18.03.2005,
that the Work Order was changed as per Ex.C7 to Ex.C10 from
time to time, that the value of the Work was modified
incorporating certain additional work and total was increased to
Rs. 5,15,43,302.52 + taxes, that Site Clarence Certificate and
Completion Certificate were issued as per Ex.C13 and Ex.C14 on
18.03.2005, that in the Clearance Certificate, it was mentioned
that the actual value of work executed is Rs. 5,15,43,302.52/-,
that the Ex.C15 & Ex.C16 invoices were issued towards the
work at Mangaluru, that the amount claimed is Rs.
1,76,92,652/-, that on 21.06.2005 a meeting was convened and
it was decided that the total amount will be Rs. 4,76,75,599/-,
Com.AS.No.73/2011

that thereafter the Defendant sent revised bill and on
negotiation they have given deduction on supervision charges
and reduced the amount to Rs. 4,66,95,599.01, that on
27.06.2006 Ex.C21/ Letter was issued intimating that the
amount payable for Mangaluru Project has been completely
paid after adjusting the advance amount paid towards
Ahmadabad R.O. and the Defendant has to refund the excess
amount, that the Plaintiff sent Ex.C30/ Letter on 04.08.2007
furnishing the details and requested to refund excess amount of
Rs.16,14,370/-. He has further argued that there was a mistake
in measurement and the same was noticed that there is a
mistaken addition of Rs.5,67,544/- and that the same requires
to be deducted out of the amount payable, that there was an
arithmetical error while tracing invoice amounting to Rs.
2,69,353/-, that while sending Ex.C1/ Letter the said amount
was deducted along with Debit Note for Rs. 45,300/-, that the
total amount claimed after adjustment of aforesaid amount and
advance amount paid for Ahmadabad Project is Rs. 16,14,370/-,
that the Statement indicating the same is attached to Ex.C21,
that the actual amount payable works out to Rs. 4,58,58,702/-.

(c) The Learned Arbitrator has held that there is no
evidence on record to substantiate any fraudulent promise,
Com.AS.No.73/2011

pressurization etc., leading to the above mentioned meeting
dated 21.06.2005 at Page No. 53 to 57 of the Impugned Award.

(d) The disbursement of Rs. 22,55,463/- took place in
May 2005. The counter claim seeking refund of the amount was
filed on 16.05.2009. Hence, there is a delay of 4 years hence
the same was rejected as time barred by the Learned Arbitrator.
The said findings cannot be considered as perverse. Hence, the
said ground is not available for the Plaintiff under Sub-Section
(2) and Sub-Section (2-A) of
Section 34
of the Arbitration &
Conciliation Act. Thus, the challenge flanked by the Plaintiff
calling for the setting aside of Arbitral Award on this count is
thwarted and rejected.

23. The Tenth ground is that the learned Arbitrator has ex-
facie erred in failing to direct the Defendant to refund the sum
of Rs.22,55,463/- to the Plaintiff herein.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 9. I have already discussed in detail
about the said facts while answering Ground No. 9. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Com.AS.No.73/2011

Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.

24. The Eleventh ground is that the learned Arbitrator has
committed an error apparent on the face of the Impugned
Award by completely ignoring the issue of refund of the sum of
Rs.22,55,463/- and failing to direct the Defendant to refund the
said mobilisation advance of Rs.22,55,463/-, or alternatively to
adjust the same towards the payments due.

(a) This ground is nothing but repetition of the earlier
ground , i.e., Ground No. 9. I have already discussed in detail
about the said facts while answering Ground No. 9. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.
Com.AS.No.73/2011

25. The Twelfth ground is that the learned Arbitrator has
erred in granting liberty to the Defendant to claim payment of
tax arrears subject to production of proof of payment and to the
satisfaction of Defendant.

(a) The Learned Advocate for the Plaintiff has argued that
having concluded that the arguments of the Defendant about
the said tax arrears did not appeal to the Learned Arbitrator and
there was no material to claim in respect of the said taxes he
has erred in grant liberty to make future claims by the
Defendant, that the grant of liberty constitutes an act beyond
the jurisdiction of the Arbitrator and is contrary to law and
opposed to Public Policy of India.

(b) The Learned Advocate for the Defendant has argued
that the Learned Arbitrator has given finding at Para No. 12.1 to
12.6 and he has also referred to Clause 4 of Ex.C1 and Ex.C2.
The Defendant has denied that the grant of liberty constitutes
an act beyond the jurisdiction of the Learned Arbitrator.
According to the Defendant it is a clear mandate under Clause 4
of the Work Order dated 17.01.2005 that the Plaintiff is entitled
to all taxes, duties and levies will be paid extra at actual, that in
the Arbitral proceeding the Defendant had produced various
details for a tax claim of Rs. 48,27,025/- of which the Learned
Com.AS.No.73/2011

Arbitrator has granted Rs. 5,70,648/- towards refund of works
tax with interest thereon at 18% from 3.11.2006 till realisation.
The Plaintiff had contended that unless assessment order is
produced, no reimbursement towards taxes paid under Clause 4
could be made. The Respondent has contended at the time of
hearing of the matter various tax assessments were pending or
not completed, hence the Tribunal has granted liberty to
Defendant in the regard which is just and proper, and that the
Learned Arbitrator as instead of granting reimbursement of
amounts towards taxes has deferred it subject to submission of
valid documents which is equitable having regard to Clause 4 of
the Work Order.

(c) Under Clause 4 of Work Order dated 17.01.2005, it is
mentioned that "All taxes duties and levies will be paid at
actual". In the Arbitral proceedings the Defendant has produced
various details for a tax Claim of Rs. 48,27,025/-, of which the
Learned Arbitrator has granted only Rs. 5,70,648/- towards
refund of works tax with interest thereon at 18% from
3.11.2006 till realization. The Plaintiff has contended unless
Assessment Orders are produced on record no reimbursement
towards taxes paid under Clause 4 could be made. At the time
of hearing of the matter of various tax assessments were
pending or not completed. Hence the Learned Arbitrator has
Com.AS.No.73/2011

granted liberty to the Defendant in this regard. The Learned
Arbitrator instead of granting reimbursement of amounts
towards taxes has deferred it subject to submission of valid
documents. The said direction cannot be considered as contrary
to the terms of contract or contrary to the Public Policy, as
contended by the Plaintiff. Hence, the said ground is not
available for the Plaintiff under Sub-Section (2) and Sub-Section
(2-A) of
Section 34
of the Arbitration & Conciliation Act. Thus,
the challenge flanked by the Plaintiff calling for the setting
aside of Arbitral Award on this count is thwarted and rejected.

26. The Thirteenth ground is that the learned Arbitrator has
erred in purporting to grant liberty to the Defendant to make
future claims upon the Plaintiff, which constitutes an act beyond
jurisdiction of the learned Arbitrator and is contrary to law.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 12. I have already discussed in detail
about the said facts while answering Ground No. 12. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
Com.AS.No.73/2011

setting aside of Arbitral Award on this count is thwarted and
rejected.

27. The Fourteenth ground is that the learned Arbitrator has
erred and has acted in a patently illegal manner in purporting to
reserve the right of the Defendant to produce documentary
evidence and in directing the Plaintiff to look into those
documents in respect of claims for tax, despite holding that
there was nothing on record to support the claim in that regard.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 12. I have already discussed in detail
about the said facts while answering Ground No. 12. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.

28. The fifteenth ground is that the learned Arbitrator erred
in holding that the Plaintiff had not placed any acceptable
arguments for denial of the claim of Works Contract Tax.
Com.AS.No.73/2011

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 12. I have already discussed in detail
about the said facts while answering Ground No. 12. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.

29. The Sixteenth ground is that learned Arbitrator has erred in
holding that the material on record would reveal that the three
conditions for re-issuance of the RC had not been complied with
by the Plaintiff, without elucidating the basis for arriving at the
said conclusion or how the same was revealed from the
material on record.

(a) The Defendant has contended as per Ex.C36/ Letter
dated 08.05.2006, the Plaintiff has to comply with three
conditions for re-issuance of Raja Chitti, that the fulfillment of
which was the sole responsibility of the Plaintiff and that the
Plaintiff did not comply with the conditions which was a material
Com.AS.No.73/2011

breach of Ahmadabad project by the Plaintiff that prevented the
Defendant from completing the project.

(b) The Learned Advocate for the Defendant has argued
that the Learned Arbitrator has referred to Ex.C.36 at Para No.
13.2 and based on the said document, the Learned Arbitrator
has given finding at Para No. 13.3.

(c) On perusal of said findings of the Learned Arbitrator
and my observations, discussions and findings, while answering
seventh ground and for the same reasons, the said findings are
not perverse. Hence, the said ground is not available for the
Plaintiff under Sub-Section (2) and Sub-Section (2-A) of
Section
of the Arbitration & Conciliation Act. Thus, the challenge
flanked by the Plaintiff calling for the setting aside of Arbitral
Award on this count is thwarted and rejected.

30. The Seventeenth ground is that the learned Arbitrator
erred in failing to appreciate the fundamental condition of the
Work Order in respect of Ahmadabad Project which was that the
work would commence and be completed within eight weeks
from the "handing over of the site" and hence, as the said
handover had never taken place and the contract had never
Com.AS.No.73/2011

fructified and thus there was no question of the Defendant
having done any work in respect of thereof.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 16. I have already discussed in detail
about the said facts while answering Ground No. 16. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.

31. The Eighteenth ground is that learned Arbitrator erred in
holding that there was breach of contract by the Plaintiff and
has failed to appreciate that in respect of Ahmadabad Project,
the contract would effectively come into operation only upon
handover of the site and hence, no claim could be made in
respect of any work alleged to have been done prior to the
handover of the site.

(a) The Learned Advocate for the Plaintiff has argued
that the award is also bad for the reason of wrong application of
Com.AS.No.73/2011

Section 73
of the Contract Act, that it was necessary for the
Learned Arbitrator to consider that there was no breach or
violation of any of the terms of the contract by the Plaintiff in
the facts and circumstances of the case, that as recorded at
Page No. 76 of the Award, the Learned Arbitrator has assumed
that the Plaintiff committed breach of contract, that the
Learned Arbitrator went on to say that as per
Section 73
of the
Contract Act that the Plaintiff is liable to pay damages to the
Defendant despite the fact that there was no such averments in
the statement of claims and there was no piece of evidence to
determine so, that the Learned Arbitrator should have applied

Section 56
of the Contract Act and hence the Impugned Award
is unsustainable and liable to be set aside.

(b) In support of the said arguments, the Learned
Advocate for the Plaintiff has relied on a decision reported in
A.I.R. - 1954 - S.C.- 44 (
Satyabrata Ghose vs.
Mugneeram Bangur and Company and Another
), wherein
it is held that the word impossible has been used not only in the
sense of physical or literal impossibility, but also covers cases
where the performance may be impractical, useless from the
point of view of object and purpose, which the parties had in
view.
Com.AS.No.73/2011

(c) He has also relied on a decision reported in A.I.R. -
2007 - Orissa - 56 (
Syed Khursed Ali vs. State of Orissa
and another
). In the said case the Petitioner applied for a
Certificate under the Cow Slaughter Act, which was not granted
and therefore could not supply beef as per the agreement. The
Hon'ble High Court held that the Doctrine of frustration of
venture will be applicable to the facts of the case where
doctrine is based not upon the existence of any actual
impossibility in fact but upon the existence in circumstances of
the case, of any implied condition, which must be absolutely
necessary to give effect to the transaction which the parties
must have intended.

(d) He has also relied on a decision reported in 2007 (3)

- ARBLR - 314 (Delhi) (
Delhi Jal Board vs. Esskay Kohli
),
wherein is held that where the obtaining of permission was a
requirement of law, it was not open for any of the parties to
have waived that condition and insist on performance of
contrary to the said provision, that the condition was a vital
one, it became impossible for the parties to complete the
transaction has contemplated by the parties in its absence.

(e) According to the Defendant, the Plaintiff has issued
Ex.C4/ Letter dated 11.02.2005, with approved drawings and
Com.AS.No.73/2011

Raja Chitti for the Ahmadabad project in acknowledgment of
handing over of the site under the Work Order with the direction
to Defendant to commence the project which is on record and
hence the contention that the handover of the site was not took
place is denied. He has further contended that the Defendant
commenced the work and the Plaintiff also released
mobilisation advance of Rs.22,55,463/- in favour of Defendant
on 20.01.2005/-, that various works undertaken by the
Defendant are part of record.

(f) The Defendant has contended that failure of the
Plaintiff to take steps in pursuance to letter dated 08.05.2006
was a material breach of the terms of the Work Order of
Ahmadabad project as the Defendant had undertaken work and
was ready and willing to do the project. According to the
Defendant admittedly the Plaintiff failed to take any steps in
pursuance to Ex.C36/Letter and hence the unilateral action of
not taking any steps in pursuance to Ex.C36 is a material
breach of the terms, as Defendant had taken necessary steps to
execute the project and was ready and willing to do but was
prevented due to breach of the Plaintiff.

(g) On perusal of the findings of the Learned Arbitrator
with reference to the Ex.C36 and evidence adduced before him
Com.AS.No.73/2011

and my observations, discussions and findings, while answering
seventh ground and for the same reasons, the said findings are
not perverse. Hence, the said ground is not available for the
Plaintiff under Sub-Section (2) and Sub-Section (2-A) of
Section
of the Arbitration & Conciliation Act. Thus, the challenge
flanked by the Plaintiff calling for the setting aside of Arbitral
Award on this count is thwarted and rejected.

32. The Nineteenth ground is that the learned Arbitrator has
erred in holding that the Plaintiff is liable for non-grant of
permission by the Ahmadabad Municipal Corporation, that
since the non-grant of permission was beyond the control of the
Plaintiff, the Plaintiff could not be held liable for any
consequence arising there from.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 18. I have already discussed in detail
about the said facts while answering Ground No. 18. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
Com.AS.No.73/2011

setting aside of Arbitral Award on this count is thwarted and
rejected.

33. The Twentieth ground is that the Sole Arbitrator wrongly
placed reliance on
A.T. Brij Paul Singh
's case as
in that case

where the contractor had executed a part of the works contract
and hence it was held that he would be entitled to damages by
way of loss of profit and that in the present case the work had
not commenced and hence the same is not applicable to the
facts of the present case.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 18. I have already discussed in detail
about the said facts while answering Ground No. 18. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.

34. The Twenty-first ground is that the learned Arbitrator
erred in holding that in the present case the facts would permit
Com.AS.No.73/2011

10% loss of profit to be awarded and that there is no reasoning
or finding given by the learned Arbitrator to support the said
computation of percentage of loss of profit, which is totally
arbitrary and without any basis.

(a) This ground is nothing but repetition of the earlier
ground , i.e., Ground No. 18. I have already discussed in detail
about the said facts while answering Ground No. 18. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.

35. The Twenty-second ground is that the learned Arbitrator
has erred in failing to appreciate that the Judgment of the
Hon'ble Supreme Court clearly holds that the claim for loss of
profit ought to be proved by evidence.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 18. I have already discussed in detail
about the said facts while answering Ground No. 18. Hence for
Com.AS.No.73/2011

the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.

36. The Twenty-third ground is that the learned Arbitrator
ought to have appreciated the well established position of law
that in the absence of pleadings and/or evidence of any loss, a
party was not entitled to the compensatory relief purported to
be claimed.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 18. I have already discussed in detail
about the said facts while answering Ground No. 18. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.
Com.AS.No.73/2011

37. The Twenty-fourth ground is that the learned Arbitrator
has erred in granting sums towards loss of profit, supervision
fees and architectural charges without any evidence of actual
loss having been caused to the Defendant and without any
computation, pleadings or evidence to support the frivolous
claims.

(a) This ground is nothing but repetition of the earlier
ground , i.e., Ground No. 18. I have already discussed in detail
about the said facts while answering Ground No. 18. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
setting aside of Arbitral Award on this count is thwarted and
rejected.

38. The grounds mentioned at 25 to 28 are related to the
supervision fees and architectural consultancy fees. In order to
avoid repetition of facts I discuss the same jointly.
Com.AS.No.73/2011

39. The Twenty-fifth ground is that the learned Arbitrator has
erred in awarding the Defendant a sum of Rs.3,00,000/- as and
by way of supervision fees.

40. The Twenty-sixth ground is that the grant of the so-called
nominal sum of Rs. 3,00,000/- is admittedly not supported by
any pleadings or proof, and the same constitutes an arbitrary
and unsustainable exercise of jurisdiction by the learned
Arbitrator.

41. The Twenty-seventh ground is that the learned Arbitrator
has erred in holding that the Defendant "must have done some
work with regard to designing the drawings as an Architect",
without there being any material or documents on record to
support the said findings.

42. The Twenty-eighth ground is that the learned Arbitrator
erred in granting architectural charges to the tune of
Rs.5,61,093/- without giving any reasoning, findings or
explanation as to the basis on which the measure of 2% was
determined, which appears to be purely at the arbitrary
discretion of the learned Arbitrator.
Com.AS.No.73/2011

(a) The Defendant has contended that the Work Order
stipulates for the supervision fees and the Council of the
Architecture (Professional Conduct) Regulations, 1989 provides
for architectural fees. The Claimant/Defendant has claimed a
total sum of Rs. 4,89,61,730/- as damages payable to him,
which includes the said supervision fees and architectural fees
as could be seen from the calculations made at Para No. 12 of
the Claim statement. When such being the case, the contention
of the Plaintiff that there are no pleadings about the same
cannot be accepted. Further, at Para No. 13.10 of the Award,
the Learned Arbitrator has in detail discussed about supervision
fees and has granted a nominal fee with regard to said aspect.
Similarly at Para No. 13.11 & 13.12 of the Award he has
discussed about Architectural fees also. By considering the said
aspects, the said finding of the Learned Arbitrator is not
perverse. Hence, the said ground is not available for the Plaintiff
under Sub-Section (2) and Sub-Section (2-A) of
Section 34
of the
Arbitration & Conciliation Act. Thus, the challenge flanked by
the Plaintiff calling for the setting aside of Arbitral Award on this
count is thwarted and rejected.

43. The grounds mentioned in 29 & 30 are co-related to
Panvel Project and hence in order to avoid repetition of facts, I
discuss the same jointly.
Com.AS.No.73/2011

44. The Twenty-ninth ground is that the learned Arbitrator
erred in grating the claim relating to the Panvel Retail Outlet to
the tune of Rs.3,56,720/- by relying upon the evidence of
Defendant No.1, while failing to appreciate that the Defendant
had furnished no basis for claiming the said amount.

45. The Thirtieth ground is that the learned Arbitrator
erroneously awarded the aforesaid sum of Rs.3,56,720/- merely
on the say-so of the Defendant, while failing to appreciate the
fact that the only work done in respect of the Panvel Project for
which a bill (Ex.C-20) has been raised by the Defendant was for
a sum of Rs.84,160/-, which has admittedly been received by
the Defendant.

(a) The Learned Advocate for the Plaintiff has argued that
the Panvel Project is not the subject matter of L.O.I and it was
also not a subject matter of Arbitration, that among ten issues
framed by the Learned Arbitrator did not include any issues
about Panvel Project, that the Impugned Award deals with
dispute not contemplated by and not falling within the scope of
the submission to Arbitration and is totally a case of Arbitrator
wandering beyond his jurisdiction, that Ex.C23/ Work Order in
respect of a two-storied building at Panvel was issued on
08.06.2006 and the amount claimed is Rs. 1,68,360/-, that no
Com.AS.No.73/2011

evidence has been produced to substantiate the claim of the
Defendant or to prove the extent of work done on this, except
the say of CW.1 nothing is available on record, that it was
categorically stated by the Plaintiff that the Defendant was paid
to the extent of work done by him, that the Defendant during
his cross-examination has admitted that the Plaintiff paid Rs.
84,180/- for the said work, that after realizing that the
Defendant totally failed to establish that he did any work in
commensuration of the said claim, that the Learned Arbitrator
awarded an amount of Rs. 3,56,720/- and 18% interest thereon
and the same is in contravention of Public Policy and
fundamental policy of Indian Law.

(b) The Defendant has contended that as per the
evidence on record he had claimed consultancy fee for the
designing work as per Ex.C19, that the professional consultancy
work entailed nineteen drawings as per Ex.C59, that the bill for
the professional service of RS 3,56,720/-, was raised at Ex.C31,
that there is no rebuttal to the work done for the Panvel project
and accordingly the Learned Arbitrator was allowed the said
claim.

(c) The learned Arbitrator has discussed about Panvel
Project at Para No. 14.1 and after referring to Ex. C59, Ex.C31,
Com.AS.No.73/2011

and Ex.C19 & Ex.C20 with the evidence of Sri. Ajay Kumar,
Engineering charge as held that the Claimant/Defendant is
entitled for a sum of Rs. 3,56,720/- for Panvel Project. He has
also observed that the Plaintiff has stated that he has paid the
Claimant to the extent of work with respect to Panvel Project
and there are no dues, but failed to prove the said aspects. The
said findings cannot be considered as perverse and against to
the public policy as contended by the Plaintiff. Hence, the said
ground is not available for the Plaintiff under Sub-Section (2)
and Sub-Section (2-A) of
Section 34
of the Arbitration &
Conciliation Act. Thus, the challenge flanked by the Plaintiff
calling for the setting aside of Arbitral Award on this count is
thwarted and rejected.

46. The Grounds No. 31 to 35 and 39 & 40 are co-related in
respect of Award of Interest by the Learned Arbitrator and
hence in order to avoid repetition of facts, I discuss the same
jointly.

47. The Thirty-one ground is that the learned Arbitrator erred
in holding that interest @ 18% per annum under
Section 31(7)

of the Arbitration & Conciliation Act, would apply to both per-
reference and also pendente lite interest, as the said
Section
Com.AS.No.73/2011

only refers to post Award interest at 18% per annum and
therefore, the finding in this regard is contrary to law.

48. The Thirty-two ground is that the learned Arbitrator erred
in holding that because the Plaintiff had claimed interest @ 18%
per annum, it is ipso facto implied that the Plaintiff accepted
18% per annum to be reasonable rate.

49. The Thirty-three ground is that the learned Arbitrator
erred in taking into account and/or awarding pre-reference
interest when admittedly no such prayer was made by the
Defendant, the learned Arbitrator erroneously exercised
jurisdiction which is contrary to law and public policy.

50. The Thirty-four ground is that the learned Arbitrator erred
in failing to appreciate that the Defendant has held the
Plaintiff's mobilisation advance paid towards the Ahmadabad
property to the tune of Rs.22,55,460/- had has earned
significant interest thereon till date and hence, the interest
awarded to the Defendant should have been much lower than
18% which has been granted by the Arbitrator.

51. The Thirty-five ground is that the learned Arbitrator erred
in holding that the Defendant had claimed interest for the pre-
Com.AS.No.73/2011

reference period from April 2005 till November 2008, when the
prayers and pleadings in the Statement of Claim nowhere
reflect a claim for pre-reference interest and hence, the award
of pre-reference interest is erroneous exercise of jurisdiction by
the learned Arbitrator, which is contrary to law as being beyond
the pleadings of the parties.

52. The Thirty-Ninth ground is that the learned Arbitrator
erred in awarding pre-reference interest when the same was not
prayed for by the Defendant.

53. The Forty ground is that the learned Arbitrator erred in
directing the interest to be paid on the Works Contract Tax from
the date of Assessment Order dated 03.11.2006, when
admittedly the Assessment Order was produced for the first
time before the learned Arbitrator on 31.07.2010 and was not
furnished to the Plaintiff prior thereto, is unconscionable and
opposed to the public policy.

(a) The Learned Advocate for the Plaintiff has argued
that the grant of Interest which has not been prayed for is an
erroneous exercise of jurisdiction by the Learned Arbitrator and
is contrary to law and public policy that the Arbitrator has lost
Com.AS.No.73/2011

site of the fact that the Plaintiff is a Government Company and
by any stretch of imagination awarding of 18% Interest or any
Interest against it, it is highly unjustified in the facts and
circumstances of the case, wherein no fault of the Plaintiff is
found by the Learned Arbitrator from the evidence adduced
before him by both the parties. The Learned Advocate for the
Plaintiff has further argued that while erroneously holding that
the Plaintiff has retained the money legally payable to the
Defendant from 2005 till date, the Learned Arbitrator erred in
failing to appreciate that the Defendant has held the Plaintiff's
mobilisation advance paid towards Ahmadabad property to the
tune of Rs.22,55,460/- and he has earned significant interest
thereon dill date, that in the said circumstances the award
granting such unconscionable and unimaginable interest is in
conflict with the most basic motions of justice.

(b) The Defendant has contended that even though
under
Section 31(7)
of the Arbitration & Conciliation Act,
interest at 18% per annum is to be imposed for pendente lite,
the same rate can also be imposed for the pre-reference period,
that in the Statement of Claim pre-reference interest at 18% per
annum has been specifically prayed for from April 2005.
Com.AS.No.73/2011

54. In this case, there are no terms in the contract for the
payment of interest. The Learned Arbitrator at Para No. 15.3 of
the Award has observed that since there is no quantification of
interest is available in terms of contract, interest at 18% per
annum in terms of
Section 31(7)
of the Act is payable by the
Plaintiff and that this interest at 18% per annum would apply to
both pre-reference and also pendente lite interest. At Para No.
15.4 the Learned Arbitrator has observed that the Claimant has
claimed interest for pre-reference period from April 2005 till
November 2008, pendente lite interest from December 2008 till
date of Award and future interest after award till realization.

55. However, in the Statement of Claim filed by the
Claimant/Defendant in Prayer Column, at Column No. (c), he
has claimed to award interest 18% per annum from December
2008 till the date of recovery of all dues. However at Para No.
12 the Claimant/Defendant has calculated the amount to be
awarded and in the said calculation he has claimed interest at
18% per annum from April 2005 to November 2008.

56. Under
Section 31 (7)
of the 1996 Act, the power of the
Arbitral Tribunal to award interest has been clearly provided.

Section 31(7)(a)
of the 1996 Act deals with interest that the
Arbitral Tribunal can award "for the whole or any part of the
Com.AS.No.73/2011

period between the date on which the cause of action arose and
the date on which the award is made". This period thus includes
the entire period prior to making of the award which is, for case
of reference referred to as pendente lite. The interest can
therefore be awarded by the Tribunal, for example from the
date when the first claim is raised by the contractor or when a
legal notice is issued or when the arbitration clause is invoked
or the protest against the non- clearance of certain amounts as
part of a bill. Thus, the entire period from the date when the
cause of action arises till the date of award i.e., passing through
all stages of correspondence, invocation of arbitration clause,
reference is made, Arbitration Tribunal entering reference,
pendency of proceedings, and passing of the award is included
in the scope of this clause.

57.
Section 31(7)(b)
of the 1996 Act, however refers to
interest payable "from the date of award to the date of
payment" i.e. the period after the passing of the award which is
for case of reference referred to as future interest.

58.
In the decision reported in (2009) 12 - S.C.C. - 26
(
Sayeed Ahmed & Company vs. State of Uttar Pradesh &
Others
), the Hon'ble Supreme Court has categorically held that
Com.AS.No.73/2011

by virtue of
Section 31(7)
, there exists no difference between
pre-reference period and the pendente lite period. The relevant
portion of
the said decision
is as follows:-

"13. The legislature while enacting the

Arbitration and Conciliation Act, 1996
,
incorporated a specific provision in regard to
award of interest by arbitrators. Sub-section(7)
of
Section 31
of the Act deals with the
arbitrator's power to award interest. Clause (a)
relates to the period between the date on which
the cause of action arose and the date on which
the award is made. Clause(b) relates to the
period from the date of award to date of
payment. The said sub- section (7) is extracted
below :

"31. (7)(a) Unless otherwise agreed by the
parties, where and insofar as an arbitral award is
for the payment of money, the Arbitral Tribunal
may include in the sum for which the award is
made interest, at such rate as it deems
reasonable, on the whole or any part of the
money, for the whole or any part of the period
between the date on which the cause of action
arose and the date on which the award is made.

(b) A sum directed to be paid by an arbitral
award shall, unless the award otherwise directs,
carry interest at the rate of eighteen per cent per
annum from the date of the award to the date of
payment."

Having regard to sub-section (7) of
Section
Com.AS.No.73/2011

31 of the Act, the difference between pre-

reference period and pendente lite period has
disappeared insofar as award of interest by
arbitrator. The said Section recognises only two
periods and makes the following provisions :

(a) In regard to the period between the date
on which the cause of action arose and the date
on which the award is made (pre-reference
period plus pendente lite), the Arbitral Tribunal
may award interest at such rate as it deems
reasonable, for the whole or any part of the
period, unless otherwise agreed by the parties.

(b) For the period from the date of award to
the date of payment the interest shall be 18%
per annum if no specific order is made in regard
to interest. The arbitrator may however award
interest at a different rate for the period
between the date of award and date of payment.

14. The decisions of this Court with
reference to the awards under the old
Arbitration
Act
making a distinction between the pre-

reference period and pendente lite period and
the observation therein that arbitrator has the
discretion to award interest during pendente lite
period in spite of any bar against interest
contained in the contract between the parties are
not applicable to arbitration governed by the

Arbitration and Conciliation Act
1996."

59. Thus, as per this decision, the difference between the

Arbitration Act, 1940
and 1996 Act is clear insofar as it relates
Com.AS.No.73/2011

to the periods for which the interest can be awarded prior to the
passing of the award, no longer exists. In the decision reported
in (2010) 8 - S.C.C. - 767 (Sree Kamatchi Amman
Constructions vs. Divisional Railway Manager (Works),
Palghat Ors). the Hon'ble Supreme Court upheld the
discretion of the Arbitral Tribunal in refusing to award interest
for the pendente lite period.
Thereafter, in the decision reported
in (2015) 9 - S.C.C. - 695 (
Union of India vs. Bright Power
Projects (India) Private Limited
), the Hon'ble Supreme
Court considered Clause 13(3) of the contract therein. The said
Clause 13(3) is set out herein below:-

"No interest will be payable upon the
earnest money and the security deposit or
amounts payable to the contractor under the
contract, but government securities deposited in
terms of sub-clause (1) of this clause will be
repayable with interest accrued thereon"

60.
In the context of this clause, the Hon'ble Supreme Court
as distinguished the earlier decision reported in (1992) 1 -
S.C.C. - 508 (
Secretary, Irrigation Department,
Government of Orissa & Others vs. G.C. Roy
), which was
decided under the 1940 Act and observed in Para 13, 17 and 21
which read as under:
Com.AS.No.73/2011

"13.
Section 31(7)
of the Act, by using the
words "unless otherwise agreed by the parties",
categorically specifies that the arbitrator is
bound by the terms of the contract so far as
award of interest from the date of cause of
action to date of the award is concerned.

Therefore, where the parties had agreed that no
interest shall be payable, the Arbitral Tribunal
cannot award interest.

...

17. It is also pertinent to note that
G.C.
Roy
's case had been decided on 12-12-1991 on
the basis of the provisions of the
Arbitration Act

1940, which was not operative at the time when
the dispute on hand was decided by the Arbitral
Tribunal.

...

21. For the afore-stated reasons, we set
aside the impugned judgment and the award so
far as it pertains to payment of interest pendente
lite and direct that no interest would be paid on
the amount payable under the contract to the
respondent from the date of the reference till the
date of the award."

61.
In the decision reported in (2016) 6 - S.C.C. - 36 (
Union
of India vs. Ambica Construction
), which was rendered by a
three Judge Bench of the Hon'ble Supreme Court, the Court was
considering the power of the Arbitrator to award pendente lite
Com.AS.No.73/2011

interest when the contract contains a bar under the 1940 Act.

The Hon'ble Supreme Court considered the above-mentioned
judgments in (1992) 1 - S.C.C. - 508 (
Secretary, Irrigation
Department, Government of Orissa & Others vs. G.C.
Roy
), (2009) 12 - S.C.C. - 26 (
Sayeed Ahmed & Company
vs. State of Uttar Pradesh & Others
), (2010) 8 - S.C.C. -
767 (Sree Kamatchi Amman Constructions vs. Divisional
Railway Manager (Works), Palghat Ors) and (2015) 9 -
S.C.C. - 695 (
Union of India vs. Bright Power Projects
(India) Private Limited
), and observed as under:-

"22. In our opinion, it would depend upon
the nature of the ouster clause in each case. In
case there is express stipulation which debars
pendent lite interest, obviously, it cannot be
granted by the arbitrator. The award of pendent
lite interest inter alia must depend upon the
overall intention of the agreement and what is
expressly excluded.

..............................

25. ....
Section 31(7)(a)
of the 1996 Act
confers the power on the arbitrator to award
interest pendent lite, "unless otherwise agreed
by parties". Thus, it is clear from the provisions
contained in
Section 31(7)(a)
that the contract
between the parties has been given importance
and is binding on the arbitrator. The arbitration
clause is also required to be looked into while
Com.AS.No.73/2011

deciding the power of the arbitrator and in case
there is any bar contained in the contract on
award of interest, it operates on which items and
in the arbitration clause what are the powers
conferred on the arbitrator and whether bar on
award on interest has been confined to certain
period or it relates to pendency of proceedings
before the arbitrator.

...

28. ...It is apparent from various decisions

referred to above
that in G.C. Roy the
Constitution Bench of this Court has laid down
that where the agreement expressly provides
that no interest pendente lite shall be payable on
amount due, the arbitrator has no power to
award interest.

...

34. Thus, our answer to the reference is
that if the contract expressly bars the award of
interest pendent lite, the same cannot be
awarded by the arbitrator. We also make it clear
that the bar to award interest on delayed
payment by itself will not be readily inferred as
express bar to award interest pendent lite by the
Arbitral Tribunal, as ouster of power of the
arbitrator has to be considered on various
relevant aspects referred to in the decisions of
this Court, it would be for the Division Bench to
consider the case on merits."
Com.AS.No.73/2011

62. It is relevant to point out that the above-mentioned
decision reported in (2016) 6 - S.C.C. - 36 (
Union of India
vs. Ambica Construction
), was a case decided under the
1940 Act but a reference in respect of the various decisions of
the two Judge Benches of the Hon'ble Supreme Court which had
taken varying views and only the reference was answered.

63. Thereafter, the Hon'ble Supreme court in the decision
reported in (2017) 9 - S.C.C. - 611 (
Sri Chittaranjan Maity
vs. Union of India
), considered a case where there were
various claims which were raised and amounts awarded even
beyond security deposit and earnest money. This is evident
from a perusal of the table in paragraph 10 of
the said
judgment
. On the issue of interest, the Hon'ble Supreme Court
considered
Section 31(7)(a)
of the 1996 Act and clause 16 of
the GCC. The relevant portion is as follows:-

"19.
In
Sayeed Ahmed and Co. vs. State of
Uttar Pradesh and Others
(2009) 12 SCC 26, this
Court noted that the 1940 Act did not contain any
provision relating to the power of the Arbitrator
to award interest. However, now a specific
provision has been created Under
Section 31(7)

(a) of the 1996 Act. As per this Section, if the
agreement bars payment of interest, the
Arbitrator cannot award interest from the date of
Com.AS.No.73/2011

cause of action till the date of award. The Court
has observed that in regard to the provision in
the 1996 Act, the difference between pre-

reference period and the pendente lite interest
has disappeared insofar as award of interest by
the Arbitrator is concerned.
Section 31(7)(a)

recognizes only two periods, i.e. pre- award and
post-award period.

20. In Sree Kamatchi Amman Constructions
v. Divisional Railway Manager (Works), Palghat
and Ors. (2010) 8 SCC 767, this Court was dealing
with an identical case wherein Clause 16 of the
GCC of Railways had required interpretation. This
is the same Clause 16(2) of the GCC prohibiting
grant of interest which is also applicable in the
facts of the present case. The Court held that
where the parties had agreed that the interest
shall not be payable, the Arbitral Tribunal cannot
award interest between the date on which the
cause of action arose to the date of the award.

21.
In
Union of India vs. Bright Power
Projects (India) Private Limited
(2015) 9 SCC 695,
a three- Judge Bench of this Court, after referring
to the provisions of
Section 31(7)(a)
of the 1996
Act, held that when the terms of the agreement
had prohibited award of interest, the Arbitrator
could not award interest for the pendente lite
period. It has been held thus:
Com.AS.No.73/2011

"10. Thus, it had been specifically
understood between the parties that no interest
was to be paid on the earnest money, security
deposit and the amount payable to the
contractor under the contract. So far as payment
of interest on government securities, which had
been deposited by the Respondent contractor
with the Appellant is concerned, it was
specifically stated that the said amount was to
be returned to the contractor along with interest
accrued thereon, but so far as payment of
interest on the amount payable to the contractor
under the contract was concerned, there was a
specific term that no interest was to be paid
thereon.

11. When parties to the contract had
agreed to the fact that interest would not be
awarded on the amount payable to the
contractor under the contract, in our opinion,
they were bound by their understanding. Having
once agreed that the contractor would not claim
any interest on the amount to be paid under the
contract, he could not have claimed interest
either before a civil court or before an Arbitral
Tribunal." Therefore, it is clear that the Appellant
is not entitled for any interest on the amount
awarded by the Arbitral Tribunal"

64. Thereafter, in the decision reported in (2018) 7- S.C.C.

- 664 (
Raveechee and Co. vs. Union of India
), the Hon'ble
Supreme Court was considering a case where the Arbitrator had
Com.AS.No.73/2011

awarded interest @ 12% p.a. on the award excluding the
amount of security deposit. The relevant portion of
the said
decision
is as follows:-

"8. In the present case, the Arbitral Tribunal
giving effect to the purport of Clause 16(3) did
not award any interest on security deposits. The
clause in terms states that no interest will be
payable on earnest money, security deposits or
on any amounts payable to the contractor under
the contract.

The Arbitrators in their award have relied
on Clause 16(3) of the contract to deny interest
on the security deposit. The Arbitrators held that
what was intended under Clause 16(3) barred the
grant of interest on earnest money, security
deposit and amounts payable to the appellant, it
does not in any way bar grant of interest pendent
lite."

65. The legal position, upon a cumulative reading of all the
judgments can be summarized as under:

i) There is no distinction between the pre-

reference and pendente lite period under the 1996 Act
as held in (2009) 12 - S.C.C. - 26 (
Sayeed Ahmed &
Company vs. State of Uttar Pradesh & Others
).

ii) If the contract has a specific stipulation in
Com.AS.No.73/2011

respect of award of interest, the same would be
applicable and the Arbitral Tribunal under
Section 31(7)

would be bound by the same as held in (2015) 9 -
S.C.C. - 695 (
Union of India vs. Bright Power
Projects (India) Private Limited
).

iii) The express exclusion in a contract has to be
determined after a reading of a clause and the overall
intention of the agreement as also the exact exclusion
as held in (2016) 6 - S.C.C. - 36 (
Union of India vs.
Ambica Construction
).

iv) In respect of security deposit, earnest money
deposit and other amounts payable under the contract,
no interest is payable as held in (2017) 9 - S.C.C. -
611 (
Sri Chittaranjan Maity vs. Union of India
).

v) Though in respect of security deposit, earnest
money deposit and amounts payable under the
contract, no interest is payable, in respect of
unascertained damages, the same would not be an
amount payable under the contract, hence interest
would be payable as held in (2018) 7- S.C.C. - 664
(
Raveechee and Co. vs. Union of India
).
Com.AS.No.73/2011

66. The above conclusions are arrived at after looking at the
factual background and the findings in the decisions of the
Hon'ble Supreme Court
referred to above
.

67. In view of
Section 31(7)(a)
of the 1996 Act, if there is an
agreement between the parties, insofar as award of interest is
concerned, then the said agreement prevails. The power of
Arbitrator to award pendente lite interest is contemplated and
recognized, only "where justified". Under such circumstances,
on the amounts awarded, no pre-award interest is payable. The
arbitral award in the present case grants interest to the
Claimant, pre-reference and pendente lite. The said amount of
interest is liable to be set aside.

68. The Thirty-sixth ground is that the learned Arbitrator
having come to a finding that the Defendant had not
commenced the Ahmadabad Project or done any work and
having disallowed the deduction of mobilisation advance from
the amounts paid by the Plaintiff towards the Mangaluru Project,
ought to have granted the counter-claim of the Plaintiff thereby
refunding the balance sum from the mobilisation advance.
Com.AS.No.73/2011

(a) This ground is nothing but repetition of the earlier
grounds, i.e., Ground No. 6, 7, 9 & 11. I have already discussed
in detail about the said facts while answering the said Grounds.
Hence for the same reasons, I am of the opinion that the finding
of the Learned Arbitrator is not perverse. Hence, the said
ground is not available for the Plaintiff under Sub-Section (2)
and Sub-Section (2-A) of
Section 34
of the Arbitration &
Conciliation Act. Thus, the challenge flanked by the Plaintiff
calling for the setting aside of Arbitral Award on this count is
thwarted and rejected.

69. The Thirty-seventh ground is that the learned Arbitrator
has erred in holding that the counter-claim was barred by
limitation, since the counter-claim had been filed within less
than 3 years from the date of assertion of the deductions.

(a) This ground is nothing but repetition of the earlier
ground, i.e., Ground No. 9. I have already discussed in detail
about the said facts while answering the said Ground. Hence for
the same reasons, I am of the opinion that the finding of the
Learned Arbitrator is not perverse. Hence, the said ground is
not available for the Plaintiff under Sub-Section (2) and Sub-
Section (2-A) of
Section 34
of the Arbitration & Conciliation Act.
Thus, the challenge flanked by the Plaintiff calling for the
Com.AS.No.73/2011

setting aside of Arbitral Award on this count is thwarted and
rejected.

70. The Thirty-eighth ground is that the learned Arbitrator
erred in failing to apply the Judgments of the Hon'ble Supreme
Court which laid down the proposition that limitation would
commence from the date of assertion and denial of payment.

71. On the entire reading of the Award passed by the learned
Arbitrator he has discussed about various decisions including
A.I.R - 1984 - S.C. - 1703 (A.T. Brij Paul Singh & Others vs.
State of Gujarath), 1986 (3) - S.C.C. - 522 (
Zodiac Electricals
Private Limited vs. Union of India & Others
), A.I.R. - 1988 - S.C.-
107 (
Major(Retd) Inder Singh Rekhi vs. Delhi Development
Authority
), A.I.R - 2009 - S.C. - 170 (
National Insurance
Company Limited vs. Boghara Polyfab Private Limited
), and
Other several decisions. Further he has discussed about
limitation to the Counter Claim of the Plaintiff in detail.
Therefore, the said findings cannot be considered as perverse.
Hence, the said ground is not available for the Plaintiff under
Sub-Section (2) and Sub-Section (2-A) of
Section 34
of the
Arbitration & Conciliation Act. Thus, the challenge flanked by
the Plaintiff calling for the setting aside of Arbitral Award on this
count is thwarted and rejected.
Com.AS.No.73/2011

72. The Forty-first ground is that the learned Arbitrator
exceeded his jurisdiction in purporting to reserve liberty for the
Defendant to claim payment of tax arrears subsequent to the
Arbitration.

(a) This ground is nothing but repetition of the earlier
grounds, i.e., Ground No. 12, 14 & 40. I have already discussed
in detail about the said facts while answering the said Grounds.
Hence for the same reasons, I am of the opinion that the finding
of the Learned Arbitrator is not perverse. Hence, the said
ground is not available for the Plaintiff under Sub-Section (2)
and Sub-Section (2-A) of
Section 34
of the Arbitration &
Conciliation Act. Thus, the challenge flanked by the Plaintiff
calling for the setting aside of Arbitral Award on this count is
thwarted and rejected.

73. Now, among the several grounds urged by the Plaintiff,
only on the grounds relating to the pre-reference and pendente
lite interest, the Award is liable to be set-aside. When such
being the case, whether the Award can be set-aside only for
the said portion or whether the Award can be modified about
the said aspect, is to be considered.
Com.AS.No.73/2011

74.
Section 34
of Arbitration and Conciliation Act 1996
indicates that the power of the Courts is limited to setting aside
the arbitral awards, strictly in terms of the specific grounds
urged before the Court.
The Act
contains no provision that
allows the Courts to either modify the arbitral awards or grant
additional/alternative reliefs that the arbitral tribunal did not
grant.
The Act
provides only two mechanisms for making
changes in the arbitral award passed by the arbitral tribunal.
The first being provided under
Section 33
, whereby the arbitral
tribunal is empowered to make clerical and technical
corrections in the arbitral award that it deems fit after receiving
the request for the same from the parties to the proceedings.
The second mechanism is under
Section 34(4)
, whereby the
Courts can adjourn the proceedings for setting aside arbitral
awards and provide an opportunity to the arbitral tribunal to
take appropriate actions to eliminate the grounds for setting
aside such arbitral awards. Thus, even during the pendency of
the proceedings under
Section 34
, the defects in the arbitral
award can only be cured by the arbitral tribunal. In view of the
above, it is clear that that power to make changes in the
arbitral award only resides with the arbitral tribunal, and the
Courts cannot make any such changes in the arbitral award
under any circumstance whatsoever. The Courts should
recognize that while opting to resolve disputes through
Com.AS.No.73/2011

arbitration, the parties consciously choose to exclude the
Court's jurisdiction. Thus, the exercise of modifying or altering
the arbitral award by the Courts not only goes against the
scheme of the Act but also defeats the objective of the
arbitration process. Therefore, after the dispute between the
parties is resolved through arbitration, the Courts should
recognize that their role is limited to setting aside arbitral
awards based on the specific grounds enshrined under
Section
and should refrain from making any modifications in the
arbitral awards.

75. It is further to be noted that this court has no jurisdiction
to remand the matter to the Arbitrator also. For the said aspect,
I wish to refer a decision reported in I.L.R. - 2016 - KAR -
4136 (DB) (
Bhaskar Industrial Development Limited vs.
South Western Railways
), wherein it is held that the power of
the Court under
Section 34
of the Act is not to remand the
matter to the Arbitral Tribunal after setting aside the Arbitral
Award.

The said principle of law is upheld by the Hon'ble
Supreme Court in the decision reported in 2018 (11) - S.C.C. -
328 (
Kinnari Mullick and another vs. Ghanshyam Das
Damani
), wherein it is held as follows:-

"The power of the Court to remand the matter to
the Arbitral Tribunal is only to adjourn the Proceedings
Com.AS.No.73/2011

for the limited purpose mentioned in
Section 34 (4)
i.e.,
to give the Arbitral Tribunal an opportunity to resume
the Arbitral Proceedings or to take such other action as
in the opinion of the Arbitral Tribunal, will eliminate the
grounds for setting aside the Arbitral Award. The
conditions required to be satisfied for such remand
are :-

(i) There is a written request made by a party to the
Arbitration Proceedings;

(ii) The Arbitral Award has not already been set
aside;

(iii) The challenge to the Award has been set up
under
Section 34
about the deficiencies in the Arbitral
Award which may be curable by allowing the Arbitral
Tribunal to take such measures which can eliminate the
grounds for setting aside the Arbitral Award."

76. Therefore, there is no scope to remand the matter to the
Arbitrator.

77. Further, in view of the decisions reported in 2019 (15) -
S.C.C. - 131 (
Ssangyong Engineering & Construction Co.
Ltd. vs. National Highways Authority of India Ltd.
), and
2020 (5) - S.C.C. - 164 (
South East Asia Marine
Engineering & Constructions Limited vs. Oil India
Limited
), this Court has no power to modify, revive or vary the
Arbitral Award under
Section 34
of the Arbitration & Conciliation
Com.AS.No.73/2011

Act, 1996.

Further, in a latest decision reported in 2021 -
S.C.C. Online - S.C. - 473 (
National Highways vs. M.
Hakeem
), decided on 20-07-2021, the Hon'ble Supreme Court
has held that if one were to include the power to modify an
award in
Section 34
, one would be crossing the Lakshman
Rekha.

78. In view of my above discussions, observations and
findings, I am of the opinion that the Award of the Learned
Arbitrator is liable to be set aside on the ground that the same
is contrary to the Public Policy and also there is patent illegality
in the findings of the learned Arbitrator. Further, I make it clear
that I have discussed only about the findings given by the
learned Arbitrator in the light of the contentions taken by both
parties without re-appreciating the oral or documentary
evidence placed before the Learned Arbitrator. All my findings
are based on the legal aspects and the development of case
law on the said subject. When such being the case, I have no
other option except to set aside the entire Award passed by the
learned Arbitrator. Therefore, I answer this Point in the
"Affirmative".
Com.AS.No.73/2011

79. Point No. 2 :- Therefore, I proceed to pass the
following Order.

ORDER
The Petition filed under
Section 34
of
the Arbitration and Conciliation Act, 1996,
is allowed.

The Arbitral Award dated 18.06.2011 is
hereby set-aside.

The 1st Defendant shall pay the cost of
this proceeding to the Plaintiff.

The Office is directed to send copy of
this judgment to both parties to their
email ID as required under Order XX Rule
1 of the Civil Procedure Code read with

Section 16
of the Commercial Courts Act.

(Dictated to the Stenographer typed by her, corrected and
then pronounced by me in open Court on this the 16th day
of August 2021.).

(DEVARAJA BHAT.M),
LXXXII Addl. City Civil & Sessions Judge,
Bengaluru.
Com.AS.No.73/2011

The Judgment is pronounced in
Open Court. The operative portion of
the said Judgment is as follows :-

ORDER
The Petition filed under

Section 34
of the Arbitration
and Conciliation Act, 1996, is
allowed.

The Arbitral Award dated
18.06.2011 is hereby set-

aside.

The 1st Defendant shall pay
the cost of this proceeding to
the Plaintiff.

The Office is directed to
send copy of this judgment to
both parties to their email ID
as required under Order XX
Rule 1 of the Civil Procedure
Code read with
Section 16
of
the Commercial Courts Act.

(vide my separate detailed
Judgment dated 16.08.2021 ).

(Typed to my dictation)

LXXXII ACC&SJ, B'LURU.