Container Corporation Of INDIA Limited vs. M/S Watrana Traction Company
Original PDF →Facts
The Appellant, Container Corporation of India Limited, issued a tender for mechanized cargo handling services. The Respondent, Watrana Traction Company, was the successful bidder and a contract was executed on September 18, 2017, for four years. The Respondent faced financial difficulties due to lower-than-projected container volumes, partly attributed to changes in the Container Cargo Logistics System (CLS) software. The Respondent requested a waiver of penalties, upward revision of rates, or compensation. When these were not resolved, the Respondent sought arbitration. The Appellant initially agreed to termination but later modified its stance, demanding continued service. The Respondent insisted on arbitration. The Appellant eventually approached the Delhi International Arbitration Centre for arbitrator appointment. The Arbitrator rendered an award on January 20, 2021, in favor of the Respondent. The Appellant challenged this award before the learned Single Judge, who upheld the Arbitral Award by a judgment dated January 17, 2022. The present appeal challenges both the Arbitral Award and the Single Judge's judgment.
Held
The Court held that the Arbitrator acted beyond his jurisdiction by awarding damages for alleged lapses or delay in handing over the work site, which was contrary to Clause (vi) of the general conditions of the contract. This clause explicitly prohibits claims for damages in such scenarios and limits the recourse to extending the time for completion. The Arbitrator's decision to ignore these binding contractual conditions amounted to a manifest disregard of the contract and an arbitrary award. The Court found that the Arbitrator's departure from the contract was not only a misconduct but could also be considered mala fide. The awarding of damages was on the face of it against the terms of the contract. The Court also noted that the Respondent's argument regarding the alteration of the tender was unsustainable as no written amendment was made to the contract. Therefore, the Arbitral Award was set aside on this ground.
Key Issues
1. Whether the Arbitrator acted beyond his jurisdiction by awarding damages for alleged lapses or delay in handing over the work site, contrary to the terms of the contract, specifically Clause (vi) of the general conditions of the contract which prohibits claims for damages in such cases and only allows for extension of time? (Section 37(1)(b) of the Arbitration & Conciliation Act, 1961, and Section 13 of the Commercial Courts Act, 2015). Petitioner's Arguments: The Appellant argued that the Arbitrator ignored specific contractual clauses prohibiting damages for delays in handing over the work site, thereby acting beyond jurisdiction and in manifest disregard of the contract. They relied on the judgment in "Joshi Technology International Inc. v. Union of India & Ors." to argue that the contract could not be deemed altered without written amendment. Respondent's Arguments: The Respondent contended that the tender itself was altered during contract performance due to changes in CLS software, deviating from the original tender conditions and operational premises. They argued that the belated introduction of CLS software constituted a substantive change in operational conditions, making the contract modification. They also pointed to the reduced estimated volume in a subsequent tender in 2019 as evidence of their genuine grievances.
Sections Cited
Section 37(1)(b), Section 13
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
2 Impugned Judgment
3 Award upheld the Award, which had ben rendered by a sole Arbitrator.
BRIEF FACTS :
The Apelant isued a Notice Inviting Tender for providing Mechanized Cargo Handling and Inventory Management Services at Inland Container Depots. The Respondent submited an online bid, was declared the sucesful bider, and was isued a Leter of Intent dated 1.09.2017 4 .
A Contract dated 18.09.2017 5 was thereafter executed, under which the Respondent undertok to provide the services fo r a period of four years, with an option for extension by one year.
In compliance with the LOI, the Respondent furnished a Bank Guarante 6 of Rs. 25,0,0/ - .
The records indicate that the Respondent could not deploy
certain machinery as agred, resulting in the imposition of a penalty
by the Apelant .
The Respondent vide leter dated 21.04.2018 sought a waiver of the penalty, citing ongoing loses incured in performing the obligations under the Contract. This was folowed by a further leter dated 15.05 .2018, wherein the Respondent reiterated its request for a waiver of the penalty and raised concerns regarding its financial position. Specificaly, the Respondent stated that its biling for the month of April was lower than its fixed expenses, and furthe r requested permision to remove certain resources to aleviate its financial burden until such time as the volumes of containers stabilized.
4 LOI
5 Contract
6 BG 7. A subsequent leter dated 14.06.2018 was sent by the Respondent, reiterating its grievance regarding the low volum es of containers, which had rendered it unsustainable for them to continue. The Respondent specificaly raised the isue that the bilable amounts for imports had decreased to 40% of the projected volume and made a specific request that the Container Cargo Logistics System 7 data for al import containers, including Gren Chanels/RMS containers, be considered for biling purposes. An ancilary isue concerning the refund of penalties, based on the prevailing busines, was also raised therein.
It apears that the isues raised by the Respondent remained unresolved.
By its leter dated 26.07.2018, the Respondent informed the Apelant that , in response to the Tender, it had quoted an amount of Rs. 3,53,83,628/ - , which was aproximately 2.14% low er than the estimated value, based on the data provided in the tender documents. The Respondent stated that the existing contract had become unviable due to heavy loses, as modifications in the CLS software had drasticaly reduced import volumes, causing a significant deviation from the estimated biling. It explained that the quoted rates were highly competitive and given on the asurance of increased busines volumes; however, its biling over nine months and twelve days had reached only about 60% of th e projected contract value. Acordingly, the Respondent sought either an upward revision of the per - unit rates or suitable compensation for the shortfal, so that it could continue rendering services satisfactorily.
7 CLS 10. In the same comunication, in the altern ative, the Respondent requested permision to exit the contract within thre months. It further stated that if neither revision nor termination was agred, an independent sole arbitrator should be apointed under Clause 20 of the Contract to resolve the di sputes. Meanwhile, the Respondent asured that it would not suspend operations and would continue providing services for thre months to facilitate the apointment of a new contractor.
Pursuant to this, the Respondent sent another request dated
2018 on similar lines .
The Apelant, by its Comunication dated 13.09.2018 in response to the Respondent‘s lett (s) , while acepting the Respondent‘s request for terminatio Respondent to continue under the Contract until 25.10.2018 or until the finalization of a new Contract, whichever was earlier. It was also comunicated that , failure to do so would result in the Respondent BG be ing forfeited and the Respondent be ing debared from participating in the next tender.
In response to the said leter, the Respondent, vide leter dated 14.09.2018, requested the Apelant to apoint a Sole Arbitrator in acordance with Clause 20 of the Contract.
The Apelant, however, sent another leter dated 17.10.2018, modifying its earlier leter da ted 13.09.2018, caling upon the Respondent to continue under the Contract until finalization of the new Contract.
The Respondent sent a reminder on 20.10.2018 and again by leter dated 01.1.2018 reiterated its request for apointment of an Arbitrator, in dicating that failing such apointment, it would aproach the High Court for the apointment of an Arbitrator.
The Apelant vide leter dated 16.1.2018 responded by refering to the arbitration clause and stated that the schedule of quantities set forth in Anexure - I of the Contract were merely aproximations of the expected volumes and there was no dispute that could be refered to arbitration.
The Apelant, thereafter, aproached the Delhi International Arbitration Centre for the apointment of a Sole Arbitrator. The learned Arbitrator , after entering upon reference and considering the pleadings, evidence and submisions of both parties, rendered its Award on 20.01.2021. The relevant portion of the said award is produced herein below : -
—Point No. ( i ) & (iv)
(i)
Whether the Claimant is entitled for a sum of Rs.2,08,94,29.7/ - against the loses sufered by the Claimant due to the aleged change of tender conditions? OPC ; (iv) Whether the Claimant is entitled to the amounts as stated in points 1 to 3 in view of the clauses 1.1 and 1.2 of Chapter I of the Tender Documents? Onus on Parties .
Since both these points are interlinked and interconected, the same are being taken together for discusion.
The prime contention in respect of los of busines raised by the Claimant is that there was a change in the biling patern on acount of a change in CLS software which amounted to a change in the tender conditions. It is the case of the Claimant that de spite ful coperation by the Claimant even beyond the contractual obligations, there was no response from the Respondent to adres the genuine grievances raised by them. The LOI dated 1.09.2017 and Clause 8 of Chapter I of the Tender Documents provided that the Claimant should comence the work within 30 days from the date of LOI. The Claimant has urged that mobilizing the manpower and machinery within the span of 30 days was itself chalenging, however, the Claimant was forced by the Respondent to com ence the work within 7 days of the LOI. Procurement of the suplies and mobilizing them to the contractual site within a short period made the Claimant sufer huge loses. Despite the Claimant's coperation, the Respondent levied the penalty of Rs.1,49,0 / - for the delay in the work. The Claimant, vide leters dated 20.04.2018 and 15.05.2018, requested the Respondent to waive such penalty as the Claimant was already performing the Contract under loses and had deployed extra equipment for smoth runing of operations.
The Claimant refered to Clauses 3 and 4 of Chapter IV of the Tender Documents and contended that the terms and conditions of the Contract were vague and one - sided. It is urged that the language of Clause 3 is vague as it states that in case o f any change in volume or any insuficient work, the Claimant shal not be eligible for any compensation. For instance, Clause 3 does not mention any particular volume, it gives a blanket ambit to the Respondent to escape the liability. Similarly, under Cl ause 4, it was only the Respondent who was entitled to terminate the Contract with a 7 days' notice period. The Claimant has placed reliance on these clauses to show the biasnes of the terms of the Contract.
The Claimant submits that the Contract should b e read in entirety, i.e., inclusive of al Tender Documents and Anexures. Refering to the estimated cost i.e., Rs.3,61,59,917/ - per anum, the Claimant submits that the estimated cost is the maximum cost, which the Respondent has to levy yearly. The same estimation was considered as a basis by the Claimant to calculate al its costs including profits i.e., Rs.3,53,81,782/ - per anum. The taly of the Claimant's computation can be drawn from the inventory of work, marked and anexed as Anexure - I to the T ender Documents.
The Claimant has urged that the quantities listed in the Anexures are used as a basis for deciding the financial bid. The Respondent was liable to provide the stipulated volume to the Claimant for covering their costs. Clause 6 of Chapter I of the Tender Documents further confirms the fact by stating that the tender rate should be in parity with the schedule of rates (Anexure I). Thus, it is urged that it is wrong on the part of the Respondent to argue that the Respondent has no liabilit y in providing specified busines to the Claimant.
Conversely, the Respondent refered to Sub Clauses 1.1 and 1.2 of Clause 1, Chapter I of the Tender Documents. As per theseclauses, the scope of the work is subject to variation and adjustments depending on the patern and volume of work. Aditionaly, the terms related to rates, general conditions, or any alteration canot be the mater of dispute and in case it requires any interpretation or asistance, the same can be sought from the Tender Acepting A uthority of the Respondent. The Respondent submits that these were the expres conditions of the Contract, which must be adhered to.
Acording to the Respondent, it was the duty of the Claimant to ases the busines potential before submiting the bid und er the initial tender. Instead of making an actual asesment, the Claimant simply made a vague asumption based on the Respondent's estimation of the busines from the Tender Documents. Moreover, the estimation of work volume was not a guarante, rather i t was an estimation based on the prior experience of the Respondent. It worked wel for the first 8 months of the Contract. Post March 2018, there was a drop in the volume of busines for which the Respondent could not be blamed.
The Respondent further arg ued that when the 305/507 Contract are expres, the Tribunal canot find the construction of the Contract on implied terms. In suport of their contention, reliance is placed on FCI v. Chandu Construction , (207) 4 SC 697, State of Rajasthan v. Nav Bharat Construction Co ., (206) 1 SC 86 and Vidarbha Irigation Development v. M/S Anoj Kumar Agarwala , 2019 SC OnLine SC 89. 51. In FCI (supra), the Hon'ble Supreme Court held that the Arbitrator is the creature of the contract and is bound to operate within the a mbit of the contract. The relevant paras are extracted herein below:
"
It is trite to say that the arbitrator being a creature of the agrement betwen the parties, he has to operate within the four corners of the agrement and if he ignores the specifi c terms of the contract, it would be a question of juri ictional eror on the face of the award, faling within the ambit of legal misconduct which could be corected by the Court. We may, however, hasten to ad that if the arbitrator comits an eror in the construction of contract, that is an eror within his juri iction. But, if he wanders outside the contract and deals with maters not aloted to him, he comits a juri ictional eror (se: and Anr. and Rajasthan State Mines & Minerals Ltd. Vs. Eastern Enginering Enterprises & Anr.).
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Therefore, it neds litle emphasis that an arbitrator derives his authority from the contract and if he acts in disregard of the contract, he acts without juri iction. A deliberate departure from contract amounts to not only manifest disregard of his authority or a misconduct on his part, but it may tantamount to a mala fide action [Also se: Asociated Enginering Co. Vs. Gove rnment of Andhra Pradesh &Anr. (supra)] "
In Nav Bharat Construction (supra), the Hon'ble Supreme Court held that an Arbitrator neds to adjudicate the dispute within the four wals of the contract. In the name of justice, the Tribunal canot deliver an Award contrary to the contract. If it does so, the same is liable to b e set aside. The relevant paragraphs are reproduced below:
"
In the same maner, Mr. Mohta tok us through a large number of other claims to show that they were contrary to the terms of the Contract. As stated above it is not necesary, for the purpose s of this Judgment, to set out in detail the submision of Mr. Mohta in respect of other claims refered to by him.
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There can be no dispute to the wel - established principle set out in these cases. However, these cases do not detract from the law laid down in Bharat Coking Coal Ltd's case or Continental Construction Co. Ltd's case (supra). An arbitrator canot go beyond the terms of the contract betwen the parties. In the guise of doing justice he canot award contrary to the terms of the contract. If he does so."
Similarly, in the later decision of the Hon'ble Supreme Court in Vidarbha Irigation (supra), it was stated as folows:
"15) The law on the subject is wel setled. In Bakshi Court held:
"
The law is setled that an esential condition of a tender has to be strictly complied with.
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17) It is clear even on a reading of this judgm ent that the words used in the tender document canot be ignored or treated as redundant or superfluous - they must be given meaning and their necesary significance."
The Respondent in this background submits that the parties are bound by the specific terms of the Contract and the same canot be given a go - by by either of the parties or by the Arbitral Tribunal.
There is no dispute about the fact that in Sub Clauses 1.1 and 1.2 of Clause 1, Chapter I of the Tender Documents, it was specificaly provid ed that the Contract is subject to variation and the work under this Contract canot form a basis of the dispute. The relevant clause regarding the scope of work is reproduced as under:
"
SCOPE OF WORK
1 The scope of work indicated in the paras below is only a guide. The actual requirements are subject to variations/ adjustments depending on the patern and volume of trafic.
2 The scope of work described in this chapter shal not be a basis for any dispute with regard to rates or for alteration of t erms and conditions including General Conditions. Doubts, if any, about the interpretation of any of the clauses in this chapter shal be refered to the Tender Acepting Authority of Container Corporation of India Ltd. whose decision in the mater shal b e final and aceptable to the tenderer I contractor."
Further, it is wel setled that the Tribunal canot ignore the terms of the Contract. The question for consideration is whether the terms of the Contract have ben changed unilateraly in a maner tha t has placed the Claimant at a disadvantageous position during the curency of the Contract. To adres this isue, it is important to analyse the leters exchanged betwen the parties and also the cros - examination of the witneses.
At this point, the Cla imant refered to Question Nos. 13 and 14 dealing with the estimated cost in the cros - examination of the Respondent's witnes, RW - 1 Ms. Kiran Sharma. The said questions are reproduced hereunder:
"Q.13 How do you prepare the estimated minimum value of work ? Ans. As per my knowledge, volume is based on the last year volume. Volume is always anticipated.
Q.14 Is it corect that cost of the contract is finalised on the basis of the estimated minimum value of work which is mentioned as Anexure I in the present contract?
Ans. Cost of the contract is based on estimated volume of work."
As mentioned by the RW - 1 Ms. Kiran Sharma, the minimum value of work has ben decided based on the past year's volume. This is the general practice under a similar type of tender a nd the Respondent has ben folowing the same practice as wel. It is dificult to evaluate the actual volume and cost even before runing the Contract, thereby, estimated volume and costs are provided in the Contract for the Contractor to make an informed choice. Even these estimations are based on certain parameters to give a relevant indication of work under the Contract. Generaly, previous tenders and past year activities are considered. Thus, the Respondent's declaration of the estimated volume and co st canot be treated as valueles since the Contractor/tenderer acts upon the same to make the bid.
The Claimant explained the trajectory of change in busines that led to their loses. In April 2013, the Customs Department isued a fresh guideline for cut ting the seal of specific containers subject to inspection. But dehors the guidelines for cuting the seal of specific containers, al the containers since April 2013 and even after the instant Contract came into force and up to April 2018, the Respondent was paying for al the containers pasing through the Gren Chanel irespective of the seal cuting. However, in April 2018, pursuant to the change in the CLS software, the Respondent started paying the Claimant for only those containers whose seals were opened while stil charging al its customers on al the containers. The same is evident from the Page of 47
cros - examination of the Respondent's witnes, wherein the folowing was stated:
"Q.21 Is it corect that the Respondent is stil charging directly from the customer for the containers pasing through gren chanel?
Ans. It is corect."
Although for the customers, the charges for seal cuting were very nominal, however, it made a huge diference overal in the Claimant's colection as they were charging Rs. 70 .90 for 20ft. container and Rs.192.10 for a 40ft. container, as per the Contract betwen the parties. Aditionaly, about 40 - 45% of the import busines was derived from the seal cuting of the containers. Thus, making alterations to the mode of payment in respect of import containers largely afected the Claimant's biling.
It is evident from the answers given to Question Nos. 13 & 14 hereinbefore by RW - 1 Ms. Kiran Sharma that the cost of the tender is finalized based on the estimated minimum value of work . Although, it is only an estimate, however, there is a categorical admision by RW - 1 that the 'estimate' is based on the minimum value of work. This raises the question as to how the estimate went wrong and why even in the subsequent tender, the value of the import containers was les by almost 40% from the previous tender. Is change in CLS Software, a mere coincidence or an intentional act of the Respondent and thereby hiding the containers pasing through the Gren Chanel on which the cuting charges w ere being paid not only since 2013 (when the Gren Chanel was introduced) but even in the instant Contract awarded to the Claimant up to April 2018. 60. Even if the Respondent's representation during the pre - bid meting being not part of the minutes of the meting, is ignored, stil there is overwhelming material on record to show that the change in CLS software by the Respondent amounted to change in the tender conditions as this drasticaly reduced the number of the containers pasing through the Gren Ch anel that is acounted for the invoice. At this juncture, I would like to refer to the leters writen by the Claimant to the Respondent during the curency of the Contract.
The first of such leter is dated 20.04.2018 whereby the Claimant informed the Re spondent about a change in the tender conditions and puting aditional work on the Claimant. Then again by leter dated 15.05.2018, the Claimant made a complaint of change in the tender conditions. The relevant portions of the leter dated 15,05.2018 are reproduced herein below:
"
It is submited that we had aprised you about the busines condition vide folowing leters and your instructions are awaited:
a) Change in Tender/ Busines conditions/lower Volume for Mechanized Cargo Handling & Page of 47
Inventory Manage ment at ICD/TKD dated 20 April 2018 (copy enclosed)
b) Waiver of Penalty for Non - D eployment of Equipments (18 T Hydra & 10 T Forklift) dated 21 April 2018' '(copy enclosed)
c) Condonation of Time for Deployment of equipment as per terms and conditions under the contract for mechanized cargo handling and inventory management at ICD/TKO dated 01 November 2017 (copy enclosed)
The volume of busines has realy gone down as compare to tender conditions and hence we are facing huge loses as the situation is wel kn own to your god organization. The biling income of April is far les than the fixed expenses of ours.
We have proved our comitment and carying out our duties with utmost dedication ….…."
This was folowed by leter dated 14.06.2018, wherein the Clai mant again made a grievance about the change in tender conditions leading to very low volume in the import section. The relevant section of the leter dated 14.06.2018 is reproduced below:
"Dear Sir
This is with reference to our meting in your god ofice
and also our earlier leters dated 20th April, 21st April and 15th May 2018 refers (Copies Enclosed). We are runing the busines at huge loses and wil not be able to pay the salary to our workers in coming months in view of (sic) folowing reasons: -
a) Volume very low in import section leading to low biling thereby not able to sustain fixed cost of the project.
b) Earlier Biling used to be on al containers for seal cuting at least at a very nominal rate of Rs. 170.90 for 20'ft containers and Rs. 192.10 for 40' ft containers but now the same is not hapening because of change in tender conditions, such as now few of the Import containers are cleared through Gren Chanel/ RMS Route.
c) We have quoted our rates with respect to your volume projections in the t ender. We can understand the fluctuation of plus minus 20% but presently, the import bilable amount has gone down to aprox. 40% of projected volume.
d) Til date total penalty paid to Concor is Rs. 343195/ - (Thre Lakhs Forty - thre thousand Page of 47
one hundred nine ty - five) for no serious fault of ours.
It may be noted that we are maintaining a flet of 25 MHE's and aprox. 125 workers. Our fixed cost of this project is Rs. 2,50,0/ - (Rupes Twenty - two Lakhs fifty thousand only).
As we are doing this busines at very low rate, the folowing may be considered on compasionate grounds:
a) The CLS data of Import Container may be fuly considered for biling including Gren Chanel/ RMS Containers.
b) Our penalty amount may be refunded to us knowing the por busines condi tions.
(emphasis suplied)
The Claimant has urged that the time - period from the month of October to January is normaly a lean period in respect of import busines, stil, the Claimant had fairly god volume. The Claimant also atached month - wise volume of busines since the inception of the Contract up to April 2018, to highlight that the volume of the busines had substantialy falen in April 2018. The Claimant put forth the leter dated 26.07.2018, wherein the Claimant again stated about the change in t he CLS software without taking into consideration the trade that has afected the Claimant's biling. The relevant portion of the leter reads as under: - "Further the volume had gone down drasticaly and CONCOR had also implemented few changes in the CL S software without taking into consideration of trade which has afected our biling and we had to face huge loses . As we are not even geting the biling as projected, it is humbly requested to please review the upward revision of Rate per unit or the lo s shal be compensated by CONCOR based on the estimated value of the contract for sustaining & providing satisfactory services to your valuable customers which wil help to increase the prospective volume in future.
Due to the reasons explained above, it is leading us as to the unsustainable status and the present situation is forcing us to discontinue our services unles the Rate per Unit is escalated and Manpower & machine are reduced. Being bound by the Contract terms & conditions several requests had b en made on various ocasions for impr oving the conditions . Further this is also to inform you that til 30th Jun, 2618, our basic biling without: GST is Rs. 1,82,09,672/ - for the period of 9 months and 12 days, which is only 60% of estimated value of the contract if it is taken on anual basis and this los to us is mainly due to changes in tender Page of 47
conditions (deviation in biling in CLS) w.e.f. April 2018 i.e. 6 months after executing the tender.
We had trusted the tender document as it was being prepare d by your expert oficials and aproved by Competent Authority and we had quoted acordingly, and, in such circumstances, we are rendering the services by tweaking/ cuting corners for the expenses and doing the busines at a los of 40%."
The Respondent i n their first response by leter dated 13.09.2018 never refuted any specific averment concerning the change in busines conditions through changes in the CLS software. In RW - 1 Ms. Kiran Sharma's cros - examination, it was admited that the Respondent never tok the responsibility of making the Claimant aware of the new biling system. At this stage, it would be expedient to refer to Question No. 20 of her cros - examination:
"Q.20 Can you show any document or notice on record of the Arbitral Tribunal that th e Respondent has informed the Claimant about the introduction of new system of biling from April, 2018?
Ans. There is no such document. "
In view of the non - refutation of the Claimant's averments regarding the change in the tender conditions by upgrading the CLS software contemporaneous to the raising of the dispute in the aforesaid leters, the averments in the Statement of Defense after a lapse of two years can only be treated as an after - thought.
The Respondent's deliberate avoidance regarding changes in the CLS software is aparent from the Respondent's solitary witnes's cros - examination, wherein contrary to her afidavit (where RW - 1 had specificaly talked about the updated CLS software concerning the procedure of clearance through the Gren Chanel), she stated that she was unaware of the changes in the CLS software. It would be apropriate to reproduce the relevant portion of cro s - examination of this witnes as under:
" Q.17 Is it corect that after March, 2018 the Claimant was denied payment for the seal cuting of the import container which was to pas through gren chanel?
Ans. I have not sen the payment terms of seal cuting of the import containers.
Q.18 I put it to you that a new biling system was introduced in April, 2018 without any prior notice to the Claimant wherein the Respondent stoped paying the Claimant for seal cuting of the import container which was to pas through gren chanel. What do y ou have to say?
Ans. I have no idea about this.
The atention of the witnes was drawn to para 13 of her afidavit in evidence to find out as to when the new biling system was introduced.
Q.19 You have mentioned procedure of clearance of RMS/gren Page of 47
chanel containers in para 13 of your afidavit. When this system was introduced in TKD?
Ans. I have not sen the customs notification and therefore canot tel about the same.
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Q.21 Is it corect that the Respondent is stil charging directly from the customer for the containers pasing through gren chanel? Ans. It is corect.
Q.2 Is it corect that 65 to 70% of the volume of work at TKD of the contractor is from the import contai ners?
Ans. The volume of work of the contractor is both from import and export of containers. I can neither admit nor deny that 65 to 70% of the volume of work is from the import containers. Import busines is more than the export busines.
Q.23 Do you hav e any idea what was the percentage of the import containers pased (sic pasing) through the gren chanel during the curency of the contract with the Claimant?
Ans. I do not have any idea.
Q.24 I put it to you that the volume of work from the import busi nes of the Claimant has gone down 40. to 45% after April, 2018. What do you have to say?
Ans. I canot say about the same.
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Q.38 I put it to you that due to the change in the tender condition by introducing a new system of biling the Claimant sufered heavy loses. What do you have to say?
Ans. I am not aware.
Thus, from the contemporaneous non - refutation of the Claimant's leters regarding the change in the tender conditions coupled with the clear admision and at some places ignorance of RW - 1 Ms. Kiran Sharma amply proves that there was change in the tender conditions by changing the biling patern due to the changes efected in CLS software. Thus, the judgments in Chandu Construction, Nav Bharat Construction Co., and Vidarbha Irigation Development would not come to the Respondent's rescue because it is amply proved that the tender conditions were impliedly changed by the Respo ndent.
This is further fortified from the fact that the Claimant was persuaded, rather forced to continue with the Contract on the threat of invocation of Bank Guarante, blacklisting and debaring them from participation in future tenders, although the subsequen t tender even after being published had to be scraped. Al the more, the tenderer who was awarded the Contract in September 2019 was with 39% les volume in respect of import containers which exactly is the case of the Claimant. Thus, it apears that at t he time of inviting the bid for the instant tender the Respondent themselves Page of 47
were not aware that they were going to change the biling patern by making changes in the CLS software. Otherwise, a tenderer estimation can never go haywire to the extent of al most 40%. Consequently, since the terms of the contract or tender conditions were changed, Sub Clauses 1.1 and 1.2 of Clause 1, Chapter I of the Tender Documents would not stand in the way of the Claimant in claiming the amount based on the estimated vol ume of the busines as projected in the Tender Documents. I, therefore, hold that the Claimant is entitled to be paid the sum of Rs.2,08,94,29/ - on acount of the los of revenue/los sufered by the Claimant due to change in the tender conditions. Points (i) and (iv) are decided acordingly.
Point No. (i)
Whether the Claimant is entitled for a sum of Rs .25,0,0/ - submited as bank guarante en - cashed by the Respondent
arbitrarily and ilegaly? OPC
Vide my findings on points (i) and (iv) above, it is evident that it was the Respondent who was responsible for the change in the biling system which amounted to a change in the tender conditions. Consequently, there was no breach of the Contract on the part of the Claimant. Rather, the Claimant requested t o exit from the Contract on acount of a change in the tender conditions. As stated hereinbefore, the Claimant since April 2018 made various representations to the Respondent pointing out the changes in the CLS software afecting the Claimant's biling. B ut the Respondent neither refuted the Claimant's averments by giving any reply to the various leters refered to hereinabove nor adresed the isue. The Claimant continued to perform their obligation under the Contract despite sufering loses. So much s o, that although the Respondent had initialy informed the Claimant that the Contract would be over either on 25.10.2018 or on finalization of the new Contract, whichever was earlier yet subsequently by leter dated 17.10.2018, the Claimant was asked to co ntinue the work til the new Contractor was awarded the work (not even specifying the date) to which the Claimant duly complied. The Claimant was not only isued a Satisfaction Certificate dated 25.06.2019 but was also permited to participate in the subse quent tender. Thus, the Respondent was not entitled to invoke the Bank Guarante. The invocation of the Bank Guarante in the said circumstances was arbitrary and ilegal.
Admitedly, the Respondent has neither pleaded nor led any evidence to prove that th ey had sufered any los on acount of the Claimant exiting the Contract before completion of the ful term of four years. Al the more, once the Claimant continued to work til the next Contractor was apointed and in the absence of any los proved by the Respondent due to Claimant's earlier exit from the Contract, the Respondent was neither entitled to invoke nor Page of 47
apropriate the amount of the Bank Guarante. In this conection, a reference may be made to the State of Gujarat v. Kothari and Asociates , (20 16) 14 SC 761, wherein the Hon'ble Supreme Court tok a view that the demeanor of the respondent by extending the work tenure for the Apelant sugested two things, either there has ben no breach as the Respondent kept on awarding work to the Apelant; or, even if the Respondent asumes any breach, the act of continuing with the extension to the Apelant sugested that the Respondent has given up on such breach and the presing of the breach has to be imediate in nature. The relevant paragraphs are re produced below:
" 1 . It also apears to us that the contract was clearly not broken as the respondents chose to kep it alive despite its repeated breaches by the apelant State.
x
x
x
12 . The respondent, however, could prima facie be presumed to have acepted a renewal or extension in the period of performance but with the rider that the claim for damages had ben abandoned by it. If this asumption was not to be made against the respondent, i t would reasonably be expected that the respondent should have filed a suit for damages on each of these ocasions. In a sense, a fresh contract would be demed to have ben entered into betwen the parties on the grant of each of the extensions. It is, th erefore, not legaly posible for the respondent to contend that there was a continuous breach which could have ben litigated upon when the contract was finaly concluded. In other words, contemporaneous with the extensions granted, it was esential for t he respondent to have initiated legal action. Since this was not done, there would be a reasonable presumption that the claim for damages had ben abandoned and given a go - by by the respondent. " The Hon'ble Supreme Court explained that for every breach, th ere has to be an imediate legal action i.e., discontinuing the comercial relation. Similarly, in this case despite the termination sought by the Claimant, the Respondent kept moving ahead with the Contract. The reasonable presumption reflects that either the request of termination did not construe as a breach or the Respondent has abandoned their claim of the breach.
Similarly, in the case of Kanchan Udyog Ltd. v. United Spirits Ltd ., (2017) 8 SC 237, the Hon'ble Supreme Court observed that there is a d emarcation betwen expecting a los and sufering a los. A mere alegation of los would not sufice; there has be to a link betwen the cause and the los. The onus is on the party to prove that a breach from one party leads to the infliction Page of 47
of los on the other. The relevant portions of the report are extracted below:
"
In the facts of the present case, it canot be held that the breach alone was the cause for los of anticipated profits, much les was it the primary or dominant reason . In the fa cts of the present case, it canot be held that the breach by the respondent was the cause, much les the dominant cause for los of anticipated profits by the apelant.
In Galo Ltd. [Galo Ltd. v. Bright Grahame Muray, (194) 1 WLR 1360 (CA)] the e mphasis was on the comon - sense aproach, holding that the breach may have given the oportunity to incur the los but did not cause the los, in the sense in which the word "cause" is used in the law . The folowing pasage extracted therein from Chity on Contracts, 26th Edn. (1989) Vol. 2, p. 128 - 29. Para 1785 may be usefuly set out: (WLR p. 1370 A - B)
". The important isue in remotenes of damage in the law of contract is whether a particular los was within the reasonable contemplation of the parti es, but causation must also be proved: there must be a causal conection betwen the defendant's breach of contract and the plaintif's los. The cou rts have avoided laying down any formal tests for causation: they have relied on comon sense to guide deci sions as to whether a breach of contract is a suficiently substantial cause of the plaintif's los ." (emphasis suplied)
Aplying the same causation test borne out of the standards of reasonability to the facts of the present case, the onus was on the Respondent to substantiate their claim with suficient evidence, which would help the Tribunal to draw a nexus betwen the breach and the actual loses sufered by the Respondent. However, the Respondent failed to prove any loses that were borne out of th e termination by the Claimant. So, much so that the Respondent even did not claim to have sufered any los. Since the Respondent failed to prove any los, the isue of reinstatement of the Respondent to the previous position did not arise. Therefore, ther e was no ocasion for invocation of the Bank Guarante.
Likewise, in Kailash Nath Asociates v. Delhi Development Authority and Anr . , (2015) 4 SC 136, the Hon'ble Supreme Court afirmed that the party claiming to be agrieved, has the onus to prove the lo s or any damages. Although, Section 74 of the Contract Act awards compensation for the breach, where the penalty of such breach is pre - determined yet the los has to be Page of 47
proved. The Court further explained that even if the claim of the party is covered und er Section 74, there stil lies a burden on the shoulder of the claiming party to prove the loses arising out of such breach. Aditionaly, al the loses or damages in question must be proved as in the case of Section 73 of the Contract Act.
Furthermore, in the case of Bharat Sanchar Nigam Limited v. Reliance Comunication Ltd. , (2016) 4 CompLJ314 (SC), the thre - judge bench of the Hon'ble Supreme Court reafirmed the position of the law that the los aleged to be sufered by the contractual breach neds to be proved if the party is claiming the compensation for the same. The Hon'ble Supreme Court held as under:
"
In terms of Section 73 of the Act, the party which sufers by any breach of contract is entitled to receive, from the party who has broken the contract, compensation for any los or damage caused to him thereby, which naturaly arose in the usual course of things from such breach. Such compensation is not to be given for any remote or indirect los or damage. Acording to the learned Counsel in terms of Section 73 of the Contract Act to receive compensation for los or damage, the party claiming such compensation must prove the aleged los or damage."
In case of the actual los, the damages are awarded to reinstate the agrieved party in the ir original financial position, provided such damages are the direct outcome of the breach. The onus is on the party to prove that such los ocured to them. Aplying the ratio to the present case, no evidence has ben led by the Respondent that could ref lect any los sufered by the Respondent or that it is the direct outcome of the Claimant's breach. Hence, the Respondent does not qualify for such damages and consequently, encashment of the Bank Guarante and its apropriation by the Respondent was wrong ful.
In the background, some secondary arguments concerning the forfeiture were also placed before this Tribunal. The Claimant refered to Clause - 17 of Chapter IV of the Tender Documents, which rendered an exclusive exit right upon the Respondent with a 60 days' notice. The one - sided clause left the Claimant remediles. Due to this limitation, Claimant vide leter dated 26.07.2018 requested the Respondent for either an increased revised rate or an exit. The relevant portion of the leter is reproduced as un der:
"Since the Clause of Exit i.e. para - 17 is unilateral and has given only CONCOR to terminate the contract with a two - month notice period. The request regarding the severe los due to the reason mentioned above and it is requested to please arange to r e - negotiate the upward revision of Rate on an urgent basis or Exit from the said contract be alowed within thre months from the date of said leter.
Page of 47
In case our request for upward revision is not aranged and exit is not being alowed then it is requeste d to please nominate an independent Sole Arbitrator as per Clause - 20 of the Contract Agrement in terms of the Arbitration and Conciliation (Amendment) Act, 2015, to resolve the grievances & isues related to present contract."
The Claimant wrote another l eter dated 07.09.2018, wherein the Claimant emphasized their inability to continue the Contract. The Claimant asured the Respondent that despite facing the financial crisis, the Claimant wil not leave the work without serving the notice period for the s anctity of the busines relationship. The Respondent, vide leter 13.09.2018 acepted the Claimant's termination w.e.f. 25.10.2018 or finalization of the new Contract, whichever was earlier. In the same leter, the Respondent also intended to forfeit the B ank Guarante under Clause 4 of Chapter IV of the Tender Documents. The Claimant vide leter dated 14.09.2018, chalenged the Respondent's intention of forfeiting the Bank Guarante and explained that the termination granted by the Respondent is on the req uest of the Claimant and not for any default. Therefore, such plea of forfeiture is wrong and untenable. The same contention is suported through the Respondent's leter dated 25.06.2019, whereby the Respondent termed the Claimant's work as satisfactory. T he work satisfaction could also be proved by the fact that generaly during the search of a new Contractor, the usual practice of the Respondent is to isue shorter Contracts i.e., for 3 - 6 months. The same can be confirmed through RW - 1, Ms. Kiran Sharma's cros - examination. However, no such measures were adopted in this case.
Aditionaly, in the second leter dated 17.10.2018, the Respondent changes their stand as was stated earlier in leter dated 13.09.2018. As per the second leter, the Contract which b y earlier leter was to be terminated by 25.10.2018, made to continue til the finalization of the new Contract. Further, the Claimant also participated in the new tender as oposed to the leter dated 13.09.2018. Thus, the Respondent gave a complete go - by to the conditions incorporated in the leter dated 13.09.2018. 7. The Claimant sought the termination to save themselves from incuring further loses, as the Respondent ignored the Claimant's repeated request to alter the rates, which was wel within the ri ghts of the Claimant under Clause 4.5 of Chapter I and Clause 23 of Chapter IV of the Tender Documents. The Respondent's act of changing the tender conditions and denying the revised rate led to the termination of the Contract.
The Respondent relies on C lause 9.6 of Chapter I of the Tender Documents and submits that admitedly, there was no exit clause for the Claimant. Acordingly, the premature termination of the Contract enabled the Respondent to legaly forfeit such security deposit.
Page of 47
Considering the disparity betwen the parties, 323/507 fruitful to place reliance on Union of India and Others v. M/S Graphics Industries Co. and Others , (194) 5 SC 398, wherein the Hon'ble Supreme Court emphasized the principle of fairnes and equality under the contra ctual relationships. The Court held as under: - "10. even in contractual maters public authorities have to act fairly: and if they fail to do so aproach under Article 26 would always be permisible because that would amount to violation of Article 14 o f the Constitution. In suport of this submision, Shri Ganguli has mainly relied upon a two - Judge Bench decision of this Court in Kumari Shrilekha Vidyarthi v. State of U.P. [(191) 1 SC 212 (paras 21 - 28): 191 SC (L&S) 742], of which this aspect of the mater has ben dealt with by stating that the requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act even in contractual maters (se par agraph 24). What has ben stated in paragraph 28 is that it would be dificult and unrealistic to exclude the State actions in contractual maters, after the contract has ben made, from the purview of the judicial review to test its validity on the anvil of Article 14. The Bench thereafter refered to various earlier decisions of this Court on this point including Mahabir Auto Stores v. Indian Oil Corpn. [(190) 3 SC 752] and Dwarkadas Marfatia v. Board of Trustes of the Port of Bombay [ ( 1989) 3 SC 293] ." (emphasis suplied)
It would also be apropriate to refer to the decision of the Hon'ble Supreme Court in Pioner Urban Land & Infrastructure Ltd. v. Govindan Raghavan and Ors , (2019) 5 SC 725, whereby the Court dealt with the one - sided clauses that are unfair and unreasonable to the weaker party. It was held:
" 6.3 .The Law Comision of India in its 19th Report, adresed the isue of Unfair (Procedural & Substantive) Terms in Contract. The Law Comision inter - alia recomended that a legislation be enacted to counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that:
A contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, opresive or unconscionable to one of the parties.
x
x
x
7 In Central Inland Water Transport Corporation Page of 47
Limited and Ors. v. Brojo Nath Ganguly and Ors., (1986) 3 SC 156 this Court held that:
. The Constitution was enacted to secure to al the citizens of this country social and economic justice. Article 14 of the Constitution guarantes to al persons equality before the law and equal protection of the laws. This principle is that the courts wil not enforce and wil, when caled upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable Clause in a contract, entered into betwen parties who are not equal in bargaining power . It is dificult to give an exhaustive list of al bargains of this type.
x
x
x
It wil also aply where a man has no choice, or rather no meaningful choice, but to give his asent to a contract or to sign on the doted line in a prescribed or standard form or to acept a set of Rules as part of the contract, however unfair, unreasonable and unconscionable a Clause in that contract or form or Rules may be.
(emphasis suplied)
Similarly, in Indian Oil Corporation Ltd. v. Nilofer Sidiqui and Ors. , (2015) 16 SC 125, the Hon'ble Supreme Court shed the light on unequal b argaining power of the parties, especialy where one party is the State or instrument of the State. The Court made it evident that although the rights of the parties are flowing through their contractual relation, the maner and the method in which the Con tract is conducted has to be subject to the principle of fairnes and natural justice. The relevant portion of the observations are as folows:
IOCL, being a Government of India Undertaking is bound to act fairly and its conduct is subject to scru tiny on the touchstone of Article 14 of the Constitution of India.
x
x
x
"
So, whatever be the activity of the public authority, in such monopoly or semi - monopoly dealings, it should met the test of Article 14 of the Constitution. If a governmental action even in the maters of entering or not entering into contracts, fails to satisfy the test of reasonablenes, the same would be unreasonable. In this conection reference may be made to E.P. Royapa v. State of Tamil N adu, Maneka Gandhi v. Union of India, Ajay Hasia v. Khalid Mujib Sehravardi, R.D. Shety v. International Airport Authority of India and also Dwarkadas Marfatia and Sons v. Board of Trustes of the Port of Bombay. It apears Page of 47
to us that rule of reason and r ule against arbitrarines and discrimination, rules of fair play and natural justice are part of the rule of law aplicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the maner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonablenes, fair play, natural just ice, equality and non - discrimination in the type of the transactions and nature of the dealing as in the present case."
(emphasis suplied)
The isue of unequal bargaining power in view of standard contract has only academic value in this award. I have already held above that it was the Respondent who had comited a breach of the Contract by changing the tender conditions and stil was denying exit to the Claimant even when the Claimant was sufering huge loses due to the change in the tender condition s. Thus, retaining the exit option by the Respondent was unfair and arbitrary.
As per Clause 9.5 of Chapter I of the Tender Documents, the security deposit can be deducted in whole or in part depending upon the actual los sufered by the Respondent due t o the Claimant's performance. However, no such los has ben proved by the Respondent. The isuance of a Satisfaction Certificate would not have ben there if Claimant was at default. Despite not sufering the los, the Respondent without any intimation to the Claimant, invoked the Bank Guarante and apropriated the same.
The Respondent relied on Clause 12 of Chapter I of the Tender Documents. As per the Clause, the Claimant was expected to work for 4 years. And thereafter, the Claimant was obliged to wor k for an aditional period of 4 months if so, required by the Respondent. Since the Claimant has exited prematurely, the termination of the Contract by the Claimant amounted to breach of the Contract.
I have already held above that the Claimant exited the Contract with due notice along with the Respondent's consent, despit e breach by the Respondent and that the exit clause was also one - sided. Therefore, Respondent's reliance on Clause 12 of Chapter I of the Tender Documents in the circumstances is misplace d.
Thus, as stated above the invocation and apropriation of the Bank Guarante was wrongful, arbitrary, and ilegal. The point is answered accordingly.“ Page of 47
The Respondent herein was also held entitled to the cost of arbitration and pendente lite interest @ 9% per anum , along with future interest @ 9% on the sum awarded , inclusive of pendente lite
interest.
Agrieved by the said Award, the Apelant filed a petition under Section 34 of the A&C Act before the learned Single Judge of this Court .
The learned Single Judge, after hearing the parties, rendered the Impugned Judgment, which is now the subject mater of chalenge in the present Apeal. The relevant portion of the Impugned Judgement dated 17.01.202 is produced herein below: - —Reasons and Conclusions
CONCOR has chalenged the impugned award, primarily, on two grounds. First, that CONCOR had not breached the Agrement in question and therefore, WTC's claim for damages was required to be rejected. Second, that even if it was acepted that CONCOR was in breach of the Agrement and WTC was entitled to a claim for damages, it was, nonetheles, esential for WTC to establish los sufered by it. CONCOR claims that there was no material on record to substantiate the aleged los sufered by WTC. Therefore, th e impugned award is vitiated by patent ilegality.
Mr Jain, learned counsel apearing for CONCOR, contended that the impugned award is contrary to the expres terms of the Agrement betwen the parties. He pointed out that Clause 3 of the General Condition s of Contract (GC), expresly stipulate that, WTC would not be entitled for any compensation from CONCOR, in the event of any change in the busines patern, drop in the volumes or insuficient work. He contended that WTC's entire claim is founded on the basis that there has ben a drop in the busines and therefore, its bilings were reduced. Thus, the impugned award is contrary to the terms of the Agrement.
CONCOR had isued the NIT for Mechanized Cargo Handling and Inventory Management Services at ICD in two bid mode (Financial and Technical). The bids would be considered on a reverse auction basis and the technicaly qualified bider quoting the lowest bid price (L - 1) would be considered sucesful. The biders were required to quote the schedule of r ates as per Anexure - I to the Tender Documents. The biders were required to Page of 47
quote separate rates for separate items of works such as ICD stufing, direct stufing, direct transhipment of cargo, loading and unloading of cargo, examination of cargo/contain er. It is clear that the financial bids submited by the biders were required to be evaluated on the said basis. The Tender Document also indicated the estimate value of business at ০3 - per anum. Anexure - I to the biding document also indica ted the estimated volume of work for each item of work. The biders were required to deploy the specified resources in terms of manpower and machinery at the ICD and maintain themselves in a state of readines to cary on the work of cargo handling.
The ra tes submited by WTC were found to be the lowest. Acordingly, CONCOR had isued the LoI dated 1.09.2017, in favour of WTC, acepting its tender. Anexure - I to the LoI sets out the rates for certain activities as acepted. Anexure - I to the LoI is relevan t and is reproduced below:
—Anexure - 1 ACTIVITY
SIZE
Rate per container
(in ০)
7: Export Cargo Handling
1: ICD Stufing
20‘
50
40‘
50
2: Direct Stufing
20‘
50
40‘
50
3.1:Factory Stufing (Seal Cuting)
20‘
0
40‘
50
3.2: Factory Stufing (Seal Cuting and Cargo Handling)
20‘
50
40‘
50
8: Import Cargo Handling
1: ICD De - Stufing
20‘
0
40‘
0
2: Direct De - Stufing
20‘
0
40‘
310/0
3.1:Factory De - Stufing (Seal Cuting)
20‘
0
40‘
50
3.2: Factory De - Stufing (Seal Cuting and Cargo Handling)
20‘
0
40‘
50
9: OUT OF CYCLE
1: De - Stufing of containers
20‘
0
40‘
0
2: Stufing of containers
20‘
0
40‘
0
3: Direct Transhipment of Cargo
20‘
0
40‘
0 Page of 47
There is no dispute that WTC was paid for each activity conducted by it, at the rates as agred.
As noted above, WTC's grievance is that the volume of revenue generated was les than the value of busines as projected in the Tender Documents. WTC claimed that it had submited its tender based on the estimated volume projected by CONCOR. The oficials of CONCOR had asured WTC that the volume of busines at the ICD, Tughlakabad, was increasing and the actual volume of busines would be more than the estimated value as set out in the Tender Documents. WTC claimed that it had quoted aproximately 2.4% les s than the estimated value. WTC believed that it would be paid on the basis of the number of containers and other data as captured under the CLS data as this was the procedure being folowed by CONCOR prior to the Agrement in question. WTC claimed that i t had incured costs of more than 2.5 crores in material handling equipment to perform the Agrement but had found that the busines was significantly les than as estimated by CONCOR. WTC claimed that the reduction in the volume was on acount of change i n the CLS software made by CONCOR and the same amounted to a change in the Tender Conditions. It also claimed that there was a change in the policy and the biling for cuting seals, which was earlier fixed at 170.90 for a 20 fet container and 192.10 for a 40 fet container, was stoped.
The Statement of Claims does not contain any alegations that CONCOR had breached any term of the provisions of the Agrement. A plain reading of the impugned award indicates that no such finding had ben returned by the Arbitral Tribunal as wel.
However, as stated above, WTC had premised its claim on the alegation that CONCOR had changed the Tender Conditions and the Arbitral Tribunal had also returned a finding to the aforesaid efect.
The alegation that CONCOR had ch anged the Tender Conditions is required to be understod by examining the pleadings. In the Statement of Claims filed by the WTC before the Arbitral Tribunal, it had claimed an amount of 2,08,94,29/ - . Acording to WTC, CONCOR had changed the Tender Condit ions. WTC claimed that it had sufered a los to the extent of 2,09,2,028/ - on acount of change in the Tender Conditions and low volume of busines from the month of April, 2018 to September, 2019. Paragraph 29 of the Statement of Claims reads as under: - "
That due to the change in tender condition and low 2.9.4: Loading/unloading of cargo
Per MT
0
5: Examination of Cargo/Container
20‘
0
40‘
0
10: Work for Inventory Management of Cargo
Rate per Container
0 Page of 47
volume of busines from April 2018 to September 2019, the claimant has sufered a huge los of Rs.2,09,2,028/ - in runing the contract. That as per the busines volume projected by the Respondents on which the Claimant has submited their bid and the contract was awarded to them the Claimant is suposed to get an amount of Rs. 6,97,80,736.7/ - for the work done for a total period of 23 months and 20 days but the Claimant has received an amount of Rs. 4,8,86,437/ - therefore, the Claimant as per the volume of busines has sufered a los of Rs. 2,08,94,29.7/ - is due and payable to the claimant by the Respondents. The details are anexed herewith as ANEXURE P - 18."
The computation of the amount as clai med (Anexure P - 18 to the Statement of Claims) is relevant and set out below : -
"SCHEDULE OF THE MONETARY CLAIM OF THE CLAIMANTS
Projected Busines as per the tender 2017 for one year.
Rs. 3,53,81,782/ - Total projected busines as per the tender documen t for 23 months and 20 days
Rs. 6,97,80,737/ - Total amount received under invoices
Rs. 4,8,86,437/ - Total amount received under invoices
Rs. 4,8,86,437/ - Actual los as per tender
Rs. 2,08,94,29/ - Bank Guarante Encashed
Rs. 25,0,0/ -
Damages on acount of los of reputation And mental agony
Rs. 5,0,0/ - Total
Rs. 2,38,94,29/ -
(Rupes Two Crores Thirty Eight Lakhs Ninety four thousand and two hundred and ninety nine only)
Ad interest at the rate of 18% on the sum of Rs.2,38,94,29/ - from the date of filing of the statement of claim til the pasing of the award and thereafter from the date of the award til the ful and final payment of the entire amount as per the award."
A plain reading of the impugned award indicates that the Arbi tral Tribunal acepted WTC's contention that dehors the guidelines isued by the Custom Department for cuting seals of only specific containers, CONCOR was paying for al the containers which were pasing through the Gren Chanel irespective of seal cut ting since the month of April, 2013. This continued til the month of April, 2018. However, in the month of April, 2018, CONCOR changed the CLS software and started paying only for those containers of which the seals were opened.
Page of 47
However, it continued to charge its customers for al the containers. The fact that CONCOR was charging its customers for al the containers pasing through the Gren Chanel was admited by CONCOR's witnes. The Arbitral Tribunal acepted that the change in the biling made a hug e diference in the volume of the busines. The Arbitral Tribunal also found that the cost of the tender was finalized based on the estimated value of work. Although, the volume of busines indicated in the Tender Document was only an estimate, however, th e same was based on the minimum volume of work. The Arbitral Tribunal found that there was material change in the biling patern due to changes in the CLS software. The said findings are based on apreciation of evidence produced before the learned Arbit rator. The said
conclusion canot be held to be patently eroneous or one that vitiates the impugned award. It is, therefore, not amenable to review these procedings.
The Arbitral Tribunal also found that the estimated volume of import containers as proj ected by CONCOR in the tender floated leading to the award of the contract to the new contractor in the month of September, 2019, was 39% lower in volume than as projected by CONCOR in the Tender Documents. The Arbitral Tribunal infered that at the time o f inviting bids, CONCOR was not aware that it would change its biling patern by makin g changes in the CLS software.
A reading of the impugned award indicates that the Arbitral Tribunal had acepted that the drop in the volume of busines was on acount of change in the biling patern introduced in the CLS software. In other words, the estimated busines as projected in the Tender Documents was based on a biling system that provided for payments for al containers. If the volume of busines was estimat ed solely on the basis of the payments to be made on activity to be performed by the contractor, the volumes as projected would be much lower.
It is clear that the award entered by the Arbitral Tribunal is not for failure on the part of CONCOR to perform i ts payment obligations under the Agrement as WTC was paid for the activities performed by it at the agred rates. The Arbitral Tribunal had entered an award on the ground that CONCOR had changed the Tender Conditions. A plain reading of the impugned award
clearly indicates that the expresion "change in the tender conditions" is used to mean that the projections of estimated volume of busines as made by CONCOR in the Tender Conditions would be corect if it folowed the biling patern as was being folow ed earlier. But that was subsequently changed. The change in the biling patern rendered the said estimate untrue.
The Arbitral Tribunal has entered an award on the basis that CONCOR had procured the Agrement by making a wrong representation as to the vo lume of busines and therefore, WTC is Page of 47
liable to be compensated on the basis that the representation was incorect. The Arbitral Tribunal did not articulate its reasons in the aforesaid maner. However, a meaningful reading of the impugned award clearly in dicates so.
In Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.: (2019) 20 SC 1 , the Supreme Court has observed as under:
There is no dispute that Section 34 of the Arbitration Act limits a chalenge to an award only on the grounds provided therein or as interpreted by various courts. We ned to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier maner, unles the court comes to a conclusion that the perversity of the award goes to the rot of the ma ter without there being a posibility of alternative interpretation which may sustain the arbitral award. Section 34 is diferent in its aproach and canot be equated with a normal apelate juri iction. The mandate under Section 34 is to respect the fi nality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the comercial wi om behind opting for alternate dispute resolution would stand frustrated.
Moreover, umpten number of judgments of this Court have categoricaly held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts ned to be cautious and should defe r to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied
unles such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
*
*
*
When we consider the requirement of a reasoned order, thre characteristics of a reasoned order can be fathomed. They are: proper, inteligible and adequate. If the reasonings in the order are improper, they reveal a flaw in the decision - making proces. If the chalenge to an award is based on impropriety or perversity in the reasoning, then it can be chalenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the chalenge to an award is based on the ground that the same is unin teligible, the same would be equivalent of providing no reasons at al. Coming to the last aspect concerning the chalenge on adequacy of reasons, the Court while exercising juri iction under Section 34 has to adjudicate the validity of such an award bas ed on the degre of particularity of reasoning required having regard to the nature of isues faling for consideration. The degre Page of 47
of particularity canot be stated in a precise maner as the same would depend on the complexity of the isue. Even if the C ourt comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court neds to have regard to the documents submited by the parties and the contentions raised before the Tribunal so that awards with inadeq uate reasons are not set aside in casual and cavalier maner. On the other hand, ordinarily uninteligible awards are to be set aside, subject to party autonomy to do away with the reasoned award. Therefore, the courts are required to be careful while dist inguishing betwen inadequacy of reasons in an award and uninteligible awards."
The principle that a party, who has entered into a contract by relying on a representation made by the other party, is liable to be compensated, if the representation is found to be untrue is wel setled. The agrieved party is required to be placed in the same position as if the representation was corectly made. It is aparent that the Arbitral Tribunal has awarded damages on the aforesaid principle and the same warants no interference in these procedings.
Mr Jain, had contended that the representation regarding volume of busines as set out in the Tender Documents was merely an estimate and WTC had ben put to notice that the actual volume of busines would vary. He also r efered to Clauses 1.1 and 1.2 of Chapter I of the Agrement and Clause 3 of the GC and contended that WTC could not make any claim on acount of variation in the volume of busines.
Clauses 1.1 and 1.2 of Chapter I of the Agrement, reads as under:
"
SCOPE OF WORK
1 . The scope of work indicated in the paras below is only a guide. The actual requirements are subject to variations/adjustments depending on the patern and volume of trafic.
The scope of work described in this chapter shal not be a basis for any dispute with regard to rates or for alteration of terms and conditions including General Conditions. Doubt, if any, about the interpretation of any of the clauses in this chapter shal be refered to the Tender Acepting Authority of Co ntainer Corporation of India Ltd. whose decision in the mater shal be final and aceptable to the tenderer/contractor."
Clause 3 of the GC is set out below:
—3. CHANGE IN BUSINESS PATTERN: In ca volumes or insuficient work contractor wil not be entitled for any compensation from CONCOR on this acount."
The Arbitral Tribunal had rejected the contention that the aforesaid clauses proscribed the award of damages. A plain Page of 47
reading of Clause 3 of the GC indicates that it proscribes of raising any claim based on variation of volume of busines. There is no dispute that WTC was required to bear the risk of change in the volume of busines. The volume of busines as mentioned in the Tender Documents was merely an estimate and CONCOR had not held o ut any asurance that that volume of busines would be generated. However, the principal isue in this case is not any variation in the volume of trafic. Clearly, WTC is required to bear the risks in variation in the volume of trafic. However, the Arbitr al Tribunal found that a drop in WTC's biling was not atributable to a drop in trafic of containers. The same was as a result of a change in the biling patern. CONCOR had projected the volume of busines on a biling patern that was subsequently chan ged thereby, rendering its representation to be incorect. The variation in the volume of busines resulting from change in trafic of containers, is materialy diferent from a variation in the value of biling because the estimated cost was based on a bi ling patern diferent from the one folowed for making payments.
The estimated volume of busines was based on the volumes in the period prior to isuing the NIT. The biders were required to take that into acount, while submiting their bids. CONCOR co uld not be held liable for any variation in the volume of busines. However, in this case, the impugned award is based on the finding that although there was no material change in the volume of work, the bilings droped below the estimate as represented b y CONCOR. There was no material reason not to hold CONCOR liable for the acuracy of its estimate as the biders had submited their bid on the aforesaid basis. It is not seriously contended that WTC had any means to check the acuracy of the estimated vol ume of busines.
In view of the above, the decision of the Arbitral Tribunal to hold that Clauses 1.1. and 1.2 of Chapter I of the Agrement and Clause 3 of the GC do not aply, canot be held to be perverse or patently eroneous. The impugned award is based on the finding that CONCOR had made an incorect representation for procuring the bids.
Mr Jain contended that WTC had led no evidence with regard to the quantum of los and the award was based on no evidence at al. The said contention is unmerited as the Arbitral Tribunal has entered an award based on the volume of biling projected by CONCOR. The Arbitral Tribunal has awarded the amount being the diference betwen the amount paid and the projected volume of busines. As stated above, this is to pl ace WTC in the same position as it would have ben if the representation made by CONCOR regarding the volume of busines,
The Arbitral Tribunal also awarded a sum of 25 lakhs in favour of WTC being the amount recovered by CONCOR by encashing the BG furnish ed by WTC. The Arbitral Tribunal found Page of 47
that CONCOR had not presented any evidence, which would reflect the los sufered by it. It, acordingly, directed refund of the said amount. This Court finds no infirmity with the said decision. Mr Jain had fairly no t advanced any contention to chalenge the impugned award on this ground.
In view of the above, the petition is dismised. The pending aplications are also disposed of. “
CONTENTIONS OF THE APELANT :
Learned Senior Counsel for the Apelant would comence his submisions by emphasizing that the Contract clearly stipulates that payment would be made strictly on the basis of work actualy
executed by the Respondent, and since the Respondent has already ben paid for the work performed, the claims now advanced are unfounded and appear to rest upon — pre - contractual asumptions “.
Learned Senior Counsel for the Apelant would further argue that both the Award and the Impugned Judgment sufer from patent erors, for the sum granted in favour of the Respon dent is in the nature of damages which canot be awarded in the absence of breach, and since the learned Single Judge has categoricaly held that no breach ocured, there remains no legal basis for granting damages.
To fortify his argument, the learned Se nior Counsel for the Apelant would draw atention to specific contractual provisions, namely , Clauses 1.1 and 1.2 of Chapter I of the Contract and Clause 3 of the General Conditions of Contract 8 , which colectively provide that the scope of work is mer ely indicative and subject to variations, that such scope canot form the basis for disputes or alteration of terms, and that in case of a drop in volumes, the contractor would not be entitled to compensation. The said clauses are set out as folows: -
8 GC Page of 47
—The scope of work indicated in the paras below is only a guide. The actual requirements are subject to variations/adjustments depending on the patern and volume of trafic.
The scope of work described in this chapter shal not be a basis for any dispute with regard to rates or for alteration of terms and conditions including General Conditions, Doubts, if any, about the interpretation of any of the clauses in this chapter shal be refered, to the Tender Acepting Authority of Container Corporation of India L td. whose decision in the mater shal be final and aceptable to the tenderer/contractor.
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CHANGE IN BUSINES PATERN: In case of drop in volumes or insuficient work contractor wil not be entitled for any compensation from CONCOR on this account.“
Learned Senior Counsel for the Apelant would also rely upon Clause 13.4 of the Contract, which stipulates that monthly bils must be submited strictly on the basis of work handled and would be paid after necesary checks and deductions, and while such payments would ordinarily be made within ten days, ocasional delay would neither entitle the contractor to claim interest nor alow termination of the Contract. Clause 13.4 of the Contract reads as folows: -
—13.4 The contractor shall prep are and submit monthly bils in prescribed forms based on the quantum of work handled during the previous month to the Terminal In - charge of ICD/TKD. (The format in which the bils should be prepared by the contractor shal be in time with the format in wh ich CONCOR's reports are prepared. This wil help to check the bils faster. Payment of the amount claimed wil he aranged after necesary checks of the corectnes of the claim, deducting al charges/damages/fines/recoveries due, including TDS and/or any other levies at the prescribed rates. The aforesaid payment of the bil wil ordinarily be made within (10) ten days of submision. An ocasional or inadvertent delay, however, shal neither entitle the contractor to claim interest nor provide a basis for termination of contract. The work shal in no case be hampered on acount of non - payment of bills.“
The gist of the arguments advanced by the learned Senior Counsel for the Apelant would be that, first, since payment was to Page of 47
be made solely on the basis of the actual work performed by the Respondent and such payments have already ben made, the scope of work canot form the basis for any dispute regarding rates or alteration of the terms and conditions, including those in the GC; and second, a reading of Clause 1.2 of Chapter I, when read with Clause 3 of the GC, makes it clear that no dispute can be raised on acount of a drop in volumes.
Learned Senior Counsel for the Apelant would further argue that there was, in fact, no change in the Contract bu t only in the busines model, and that the Award wrongly proceded on the asumption that the tender conditions had ben altered, for while the learned Arbitrator in paragraph 6 of the Award observed that the terms stood ”impliedly changed‘, th ge was in the biling patern due to the introduction of the CLS software, and none of the contractual conditions had actualy ben modified.
It would also be contended by the learned Senior Counsel for the Apelant that by awarding claims to the Respond ent, the learned Arbitrator efectively altered the contractual framework, which is impermisible in law .
Learned Counsel for the Apelant would submit that it apears that the impugned Judgment and Award apears to be based on the principles of fairnes and reasonablenes coupled with what acording to him is efectively an alteration of the contractual terms, and to suport this submision , reliance would be placed on Para 26 of the judgment in Asistant Excise Comisioner v. Isac Peter 9 , where the Hon ‘ble Supreme Court held that in contracts voluntarily entered
9 194 (4) SC 104 Page of 47
into with the State through tender or negotiation, the doctrine of fairnes and reasonablenes canot be invoked to rewrite or suplement the terms merely because one party is the State. Para 26 of the said judgement reads as under: - —26.స సLearned counsel for respondents of fairnes and reasonablenes must be read into contracts to which State is a party. It is submited that the State canot act unreasonably or unfairly even while acting under a contract involving State power. Now, let us se, what is the purpose for which this argument is adresed and what is the implication? The purpose, as we can se, is that though the contract says that suply of aditional quota is discretionary, it must be read as obligatory – at least to the extent of previous year's suplies – by aplying the said doctrine. It is submited that if this is not done, the licenses would sufer monetarily. The other purpose is to say that if the State is not able to so suply, it wou ld be unreasonable on its part to demand the ful amount due to it under the contract. In short, the duty to act fairly is sought to be imported into the contract to modify and alter its terms and to create an obligation upon the State which is not there i n the contract. We must confes, we are not aware of any such doctrine of fairnes or reasonablenes. Nor could the learned counsel bring to our notice any decision laying down such a proposition. Doctrine of fairnes or the duty to act fairly and reasonab ly is a doctrine developed in the administrative law field to ensure the rule of law and to prevent failure of justice where the action is administrative in nature. Just as principles of natural justice ensure fair decision where the function is quasi - judi cial, the doctrine of fairnes is evolved to ensure fair action where the function is administrative. But it can certainly not be invoked to amend, alter or vary the expres terms of the contract betwen the parties. This is so, even if the contract is gov erned by statutory provisions, i.e., where it is a statutory contract – or rather more so. It is one thing to say that a contract – every contract – must be construed reasonably having regard to its language. But this is not what the licenses say. They se ek to create an obligation on the other party to the contract, just because it hapens to be the State. They are not prepared to aply the very same rule in converse case, i.e., where the State has abundant suplies and wants the licenses to lift al the stocks. The licenses wil undertake no obligation to lift al those stocks even if the State sufers los. This one - sided obligation, in modification of expres terms of the contract, in the name of duty to act fairly, is what we are unable to apreciate. The decisions cited by the learned counsel for the licenses do not suport their proposition. In Dwarkadas Marfatia v. Board of Trustes of the Port of Bombay Page of 47
[(1989) 3 SC 293] it was held that where a public authority is exempted from the operation of a statute like Rent Control Act, it must be presumed that such exemption from the statute is coupled with the duty to act fairly and reasonably. The decision does not say that the terms and conditions of contract can be varied, aded or altered by importin g the said doctrine. It may be noted that though the said principle was afirmed, no relief was given to the apelant in that case. Shrilekha Vidyarthi v. State of U.P. [(191) 1 SC 212 : 191 SC (L&S) 742] was a case of mas termination of District Gov ernment Counsel in the State of U.P. It was a case of termination from a post involving public element. It was a case of non - government servant holding a public ofice, on acount of which it was held to be a mater within the public law field. This decisi on to does not afirm the principle now canvased by the learned counsel. We are, therefore, of the opinion that in case of contracts frely entered into with the State, like the present ones, there is no rom for invoking the doctrine of fairnes and rea sonablenes against one party to the contract (State), for the purpose of altering or ading to the terms and conditions of the contract, merely because it hapens to be the State. In such cases, the mutual rights and liabilities of the parties are governe d by the terms of the contracts (which may be statutory in some cases) and the laws relating to contracts. It must be remembered that these contracts are entered into pursuant to public auction, floating of tenders or by negotiation. There is no compulsion on anyone to enter into these contracts. It is voluntary on both sides. There can be no question of the State power being involved in such contracts. It bears repetition to say that the State does not guarante profit to the licenses in such contracts. T here is no waranty against incuring loses. It is a busines for the licenses. Whether they make profit or incur los is no concern of the State. In law, it is entitled to its money under the contract. It is not as if the licenses are going to pay more to the State in case they make substantial profits. We reiterate that what we have said hereinabove is in the context of contracts entered into betwen the State and its citizens pursuant to public auction, floating of tenders or by negotiation. It is not necesary to say more than this for the purpose of these cases. What would be the position in the case of contracts entered into otherwise than by public auction, floating of tenders or negotiation, we need not express any op
It would there after be aserted by the learned Senior Counsel for the Apelant that Clause 1.2 of Chapter I read with Clause 3 of the GC expresly prohibits raising disputes on acount of reduction in volumes, and hence both the Award and the Impugned Judgment Page of 47
are u nsustainable in law. To reinforce this contention, he would submit that the Contract must be read as a whole, and since the specific clauses cited above expresly preclude claims arising from a drop in volumes, the claims are bared, and in suport of this argument reliance would be placed on Para 10 of Continental Construction Co. Ltd. v. State of M.P. 10 , which reads as under: - —10.స సThe question about specific ref was examined by this Court recently in the case of Tarapore and Company v. Cochin Shipyard Ltd., Cochin [(1984) 2 SC 680]. There it was observed that if the agred fact situation, on the basis of which agrement was entered into, ceases to exist, the agrement to that extent would become otiose. If rate initialy quot ed by the contractor became irelevant due to subsequent price escalation, it was held in that case that contractor's claim for compensation for the exces expenditure incured due to the price rise could not be turned down on ground of absence of price es calation clause in that regard in the contract. Agrement as a whole has to be read. Reliance was placed very heavily on this decision on behalf of the apelant before us. It has to be borne in mind that in the instant case there are specific clauses refe red to hereinbefore which bared consideration of extra claims in the event of price escalation. That was not so in Tarapore and Company case [(1984) 2 SC 680]. That made al the diference. The basis of bargain betwen the parties in both these two case s were entirely different.“
Similarly , reliance would be placed by the learned Senior Counsel on SAIL v. J.C. Budharaja, Govt. and Mining Contractor 1 , where the Hon‘ble Supreme Court held that arbitrator canot ignore contractual provisions that expresly bar claims, and if they do so, they act beyond juri iction and in manifest disregard of the contract, which makes such an award arbitrary and unsustainable. Para 15 of the said judgement states as under: - —15.స సClause 32 of the agreement spe ipulates that no claim whatsoever for not giving the entire site on award of work
10 (198) 3 SC 82
1 19 (8) SC 12 Page of 47
and for giving the site gradualy wil be tenable and the Contractor is required to arange his working programe acordingly. Clause 39 further stipulates that no failure or omision to cary out the provisions of the contract shal give rise to any claim by the Corporation and the Contractor, one against the other, if such failure or omision arises from compliance with any statute or regulation of the Government or other re asons beyond the control of either the Corporation or the Contractor. Obtaining permision from the Forest Department to cary out the work in the wildlife sanctuary depends on statutory regulations. Clause (vi) of the general conditions of the contract al so provides that failure or delay by the Corporation to hand over to the Contractor posesion of the lands necesary for the execution of the work or any other delay by the Corporation due to any other cause whatsoever would not entitle the Contractor to damage or compensation thereof; in such cases, the only duty of the Corporation was to extend the time for completion of the work by such period as it may think necesary and proper. These conditions specificaly prohibit granting claim for damages for the breaches mentioned therein. It was not open to the arbitrator to ignore the said conditions which are binding on the contracting parties. By ignoring the same, he has acted beyond the juri iction confered upon him. It is setled law that the arbitrator derives the authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one. This deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduc t on his part, but it may tantamount to mala fide action. In the present case, it is aparent that awarding of damages of Rs 1 lakhs and more for the aleged lapses or delay in handing over the work site is, on the face of it, against the terms of the con tract.“
Learned Senior Counsel for the Apelant would thereafter refer to the judgment of the Hon‘ble Supr Joshi Technology International Inc. v. Union of India & Ors. 12 , to contend that since no writen amendment was made, the Contract could not be demed to have been altered, and therefore th the Contract was —changed or implie and unsustainable.
12 2015 (7) SC 728 Page of 47
CONTENTIONS OF THE RESPONDENT :
Per contra , learned Senior Counsel for the Respondent would start by drawing this Court‘s attent learned Arbitrator
and the learned Single Judge of this Court have concurently ruled in his favor.
It would be the learned Senior C te nder itself was altered during the performance of the Contract, which had ben entered into on the premise of certain specified volumes based on the conditions prevailing at the time the tender was floated.
Learned Senior Counsel for the Respondent would r ely upon the tender document, which projected an estimated cost of Rs.3,61,59,917/ - , against which the Respondent had tendered at a discounted value of Rs.3,53,83,628/ - , and he would further contend that the Appellant‘s assertion tha o be modified at the instance of the Customs Department, was incorect, since the proposal for segregating containers into the Gren Chanel or the Red Chanel under the CLS system had ben moted as early as 2013 but had not ben implemented at the time of tendering.
Learned Senior Counsel for the Respondent would contend that the belated introduction of the CLS software in its present form was a departure from the tender as originaly floated, and that its imposition during the tenure of the Contract am ounted to a substantive change in the operational conditions, since the tender document, by virtue of Clause 16 of Chapter I, formed an integral part of the Contract and thereby rendered the change a modification in the operation of the Contract itself.
Page of 47
Le arned Senior Counsel for the Respondent would also point out that as early as April 2013 the Customs Department had isued guidelines requiring inspection of containers before sale, yet up until April 2018 the Apelant continued to make payments for al c ontainers pasing through the Gren Chanel regardles of whether the seal was severed, and with the introduction of the CLS software in its present form , the volume of bilable trafic available to the Respondent was reduced by nearly 40%, thereby causin g significant financial loses.
Learned Senior Counsel for the Respondent would further emphasize that when the Apelant re - tendered the same work in 2019 , the estimated volume was consciously reduced by almost 40%, which, acording to him, clearly demons trated that the Res grievances, now conclusively upheld by both the Arbitral Award and the Impugned Judgment, were genuine; and therefore, there was no infirmity in either the Award or the Impugned Judgment.
Although both learned Senior Counsel fo r the Apelant and the Respondent refered to various portions of the Award and the Judgment to suport their arguments, we do not consider it necesary to reproduce them, since the relevant extracts have already ben set out earlier.
ANALYSIS :
This Court has carefuly heard the detailed submisions advanced on behalf of both parties, examined the pleadings along with documents, and scrutinized the Impugned Judgment as wel as the Arbitral Award in their entirety.
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At the outset, it must be reite rated that the scope of judicial interference with arbitral awards under Section 37 of the A&C Act is extremely limited. The legislative intent, reinforced by the authoritative pronouncements of the preserve the sanctity of arb itral procedings and to prevent courts from reapreciating evidence or substituting their own views for that of the arbitral tribunal. In Punjab State Civil Suplies Corpn. Ltd. v. Sanman Rice Mils 13 , the Hon‘ble Supreme Co underscored that interference is permisible only when the award sufers from patent ilegality, perversity, or contravention of fundamental policy of Indian law, and that even under Section 37, a court canot act as a court of apeal over the arbitral award. The relevant paragraphs of Punjab State Civil Suplies Corpn. Ltd. (supra)
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.