Meiden T And D INDIA Limited. vs. Pci Limited

Facts

The Petitioner, MEIDEN T&D INDIA LIMITED, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated 11.07.2022 and an additional award dated 31.08.2022. The award directed the Petitioner to pay Rs.1,95,48,107/- to the Respondent, PCI LIMITED, along with pendente lite interest. The dispute arose from a Service Facility Agreement (SFA) executed on 01.06.2016, wherein the Petitioner was licensed premises and agreed to pay service charges and utility charges. The Petitioner defaulted in paying enhanced service charges from October 2018 and utility charges from February 2020. The Petitioner also raised a claim of set-off related to bank guarantees invoked in two public utility projects (UHBVN and DHBVN). The Arbitrator awarded costs of Rs.25 lacs to the Respondent.

Held

The Court held that the Arbitral Tribunal was justified in holding the Petitioner entitled to the suspension of rent for the period from 18.05.2020 till 31.03.2021, as the Respondent had denied access to the licensed premises. The Court noted that the Respondent had not challenged this specific finding. Regarding the costs, the Court held that the Arbitral Tribunal had the discretion to award costs under Section 31A of the Act, which has an overriding effect. The Arbitrator considered the detailed calculation of costs claimed by the Respondent and counterbalanced the award by noting the Petitioner's default in service and utility charges and the Respondent's denial of access for a specific period. The Court found no reason to interfere with the Arbitrator's discretion in awarding Rs.25 lacs as costs, relying on precedents that affirm the Tribunal's wide discretion in awarding costs. No arguments were addressed on any other issues.

Key Issues

1. Whether the Arbitral Tribunal erred in holding the Petitioner entitled to suspension of rent for the period from 18.05.2020 till 31.03.2021, despite the Petitioner's default in payment of service and utility charges under the Service Facility Agreement (SFA)? The Petitioner argued that the Respondent denied access to the licensed premises under the pretext of HVAC work upgradation and maintenance, justifying the suspension of rent. The Respondent did not challenge this part of the award. 2. Whether the Arbitral Tribunal erred in awarding costs of Rs.25 lacs in favour of the Respondent, considering Section 31A of the Arbitration and Conciliation Act, 1996? The Petitioner contended that the Arbitrator's discretion in awarding costs was improperly exercised. The Respondent argued that the Arbitrator correctly exercised discretion under Section 31A, considering the conduct of both parties and the Petitioner's default in payments, while also acknowledging the Respondent's denial of access for a period.