Delhi High Court
Gillanders Arbuthnot And Co Limited vs Steel Authority Of India Limited & Ors. on 20 November, 2024
Author: Vibhu Bakhru
Bench: Vibhu Bakhru, Sachin Datta
IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 20.11.2024 + FAO (OS) (COMM) 13/2024 GILLANDERS ARBUTHNOT AND CO. LIMITED ..... Appellant versus STEEL AUTHORITY OF INDIA LIMITED & ORS. ..... Respondents Advocates who appeared in this case: For the Appellant : Mr Raj Shekhar Rao, Senior Advocate with Mr Gaurav Juneja, Mr Arjit Oswal, Mr Soorya B. and Mr Rajarshi Roy, Advocates. For the Respondents : Mr Shaiwal Srivastava, Advocate. CORAM HON'BLE MR JUSTICE VIBHU BAKHRU HON'BLE MR JUSTICE SACHIN DATTA JUDGMENT
VIBHU BAKHRU, J.
1. M/s Gillanders Arbuthnot and Co. Limited (hereafter GACL), a
company incorporated under the Company Act, 1956 has filed the
present appeal under Section 37(1)(c) of the Arbitration and
Conciliation Act, 1996 (hereafter the A&C Act) impugning a judgment
dated 06.12.2023 (hereafter the impugned judgment) delivered by the
learned Single Judge in O.M.P.(COMM) 269/2023 captioned Steel
Authority of India Limited v. Beijing Sino Steel Industry and Trade
Group Corporation, China and Ors., Respondent no.1 (hereafter SAIL)
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had preferred the said application [O.M.P.(COMM) 269/2023] under
Section 34 of the A&C Act for setting aside an arbitral award dated
11.04.2023 (hereafter the impugned award) rendered by an Arbitral
Tribunal (hereafter the Arbitral Tribunal) comprising of three members.
The learned Single Judge allowed the said petition and has set aside the
impugned award. Aggrieved by the same, GACL has filed the present
appeal.
2. The arbitral proceedings were conducted under the Rules of
Arbitration of the International Chamber of Commerce (hereafter the
ICC Rules). The parties had agreed to the place of arbitration as New
Delhi. There is no dispute that the A&C Act is applicable in this case
and the challenge to the impugned award was maintainable under
Section 34 of the A&C Act.
3. The disputes between the parties arise out of an agreement dated
13.10.2007 entered into between SAIL and a consortium of contractors
comprising of M/s Beijing Sino Steel Industry and Trade Group
Corporation (hereafter respondent no.2 – SSIT in short), M/s Tangshan
Iron and Steel Design & Research Institute Company Limited, China
(respondent no.3 – TISD in short) and GACL. The said consortium of
contractors is collectively referred to as the Consortium. The agreement
in question was for executing the work of installation of a Top Pressure
Recovery Turbine (TRT) (PKG-18) under 2.5 MT New Stream
Expansion at SAIL’s IISCO Steel Plant, Burnpur, India. The said
agreement is hereafter referred to as the Contract.
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4. Whilst, SSIT and TISD are companies existing and organized
under the laws of China, GACL is an Indian company incorporated
under the Companies Act, 1956. SAIL is a Government company
incorporated under Section 617A of the Companies Act, 1956.
5. The Contract was for execution of work on a divisible turnkey
basis for an aggregate consideration (Contract Price) of USD
6,051,350.00 and ₹14,92,69,000/-.
6. The works under the Contract were to be completed within a
period of twenty-four months from the effective date of the Contract,
that is, within two years from 13.10.2007. Thus, the Contract was
required to be completed on or before 12.10.2009. However, the term
of the Contract was extended to 30.11.2012. Undisputedly, the
execution of the works under the Contract was delayed. According to
SAIL, the Contract was delayed on account of reasons attributable to
the Consortium. SAIL claimed that the drawings were finalized as late
as 25.08.2008 and there were unilateral changes in the design by SSIT
and TISD.
7. SAIL terminated the Contract by a letter dated 29.11.2012,
alleging breach of the Contract on the part of the Consortium. SAIL
further informed the consortium members (SSIT, TISD and GACL) that
the balance works would be completed at their risk and cost by engaging
another contractor. Thereafter, on 07.10.2011, SAIL invited tenders for
completion of the balance work (referred to as the Risk Purchase
Contract).
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8. SAIL raised a claim for damages. Additionally, it also claimed
interest and costs. The parties were unable to resolve their disputes
amicably. SAIL made a request for arbitration to the Secretariat of the
International Chambers of Commerce (ICC) on 03.12.2018 but the
same was abandoned as SAIL did not deposit the necessary costs. On
07.01.2020, SAIL initiated the arbitration proceedings by sending a
fresh request to the ICC Secretariat. Thereafter, the Arbitral Tribunal
was constituted in accordance with the ICC Rules.
9. SAIL had initially made a claim of ₹17.29 crores in its notice for
arbitration and a statement of claim. However, SAIL amended the same
to ₹17.02 crores and filed an amended Statement of Claim. In addition,
SAIL also claimed interest at the rate of 12% per annum from
29.03.2018 till the date of payment as well as costs for arbitration.
10. GACL and SSIT contested the arbitral proceedings, inter alia, on
the ground that the same was barred by limitation. SSIT and GACL also
raised counter claims. SSIT raised a counter claim of USD 504,600.53
alleging wrongful termination and encashment of the bank guarantees.
In addition, SSIT also claimed interest. GACL raised a counter claim
aggregating a sum of ₹39,645,424/- on account of wrongful termination
of the Contract and wrongful encashment of the bank guarantees
amongst others, along with interest and costs.
11. The arbitral proceedings culminated in the impugned award,
whereby the Arbitral Tribunal rejected SAIL’s claim as being time
barred under Section 3 of the Limitation Act, 1963 (hereafter the
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Limitation Act). The Arbitral Tribunal also awarded costs quantified at
₹1,16,92,032/- in favour of GACL with the direction that the same be
paid within a period of fourteen days from the date of the impugned
award.
12. SAIL challenged the impugned award under Section 34 of the
A&C Act, which was allowed by the impugned order. The learned
Single Judge held that the Arbitral Tribunal had committed an error by
not recognizing SAIL’s right under Clause 44.2.6 of the General
Conditions of the Contract (GCC) and also faulted the Arbitral Tribunal
for deciding the issue of limitation without conducting a trial. The
learned Single Judge held that this was not a case where this issue could
have been decided without trial.
13. In the aforesaid facts, the only question to be decided is whether
the Arbitral Tribunal’s decision that SAIL’s claims are barred by
limitation, is liable to be interfered with under Section 34 of the A&C
Act.
THE IMPUGNED AWARD
14. The Arbitral Tribunal had on the basis of the defence and the
counter claims struck several issues. In the first instance, the Arbitral
Tribunal considered the question whether SAIL’s claims are barred by
limitation under the Limitation Act. The said issue was addressed in the
affirmative and therefore, the Arbitral Tribunal did not proceed to
render its decision on the other issues.
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15. Before the Arbitral Tribunal, SAIL accepted that the Limitation
Act was applicable. It also, inter alia, accepted that Article 55 of the
Limitation Act would determine the period of limitation in respect of its
claims. There was also no cavil that 07.01.2020 being the date of the
notice issued by SAIL, was required to be considered as the date of
commencement of the arbitral proceedings for the purposes of the
Limitation Act.
16. Before the Arbitral Tribunal, it was contended by SAIL that
although the breach of the Contract occurred on the date when the
Contract was terminated on 29.11.2012; however, the same could not
be considered as the date from which the period of limitation was
required to be reckoned. SAIL relied on Clause 44.2.6 of the GCC and
contended that the breach was a continuing one and therefore, the
limitation would begin to run from the date on which the breach ceases.
SAIL claimed that the amount due to it could only be determined after
the completion of facilities, that is, after the Risk Purchase Contract was
completed. In the alternative, SAIL claimed that limitation would begin
to run from ‘the breaking point’ of negotiations between the parties and
thus its claims were within the period of limitation.
17. The Arbitral Tribunal held that SAIL’s cause of action accrued
on 29.12.2012, when it terminated the Contract. The arbitral
proceedings were commenced on 07.01.2020, which was beyond the
period of three years from the date of cause of action and therefore,
SAIL’s claims were barred under Section 3 of the Limitation Act. The
relevant extract from the said impugned award is set out below:
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“146. It is common ground between SAIL and GAC that
Article 55 to the Schedule of the Limitation Act,
1963 determines the limitation period for SAIL’s
claims. Article 55 provides a 3-year limitation
period from:
a. When the contract is broken.
b. Where there are successive breaches – when the
breach in respect of which the claim is brought
occurs.
c. Where the breach is continuing – when it ceases.
147. It is also common ground between SAIL and GAC
the date of the notice of arbitration (7 January 2020)
is the date SAIL commenced action for the purposes
of the Limitation Act, 1963.”
18. Insofar as SAIL’s reliance on Clause 44.2.6 of the GCC is
concerned, the Arbitral Tribunal held that the same did not extend the
period of limitation. The Arbitral Tribunal rejected SAIL’s contention
that there was a continuing breach of the Contract. The Arbitral
Tribunal held that once the Contract had been terminated, there could
be no further breaches of the Contract. The relevant extract of the said
decision is set out below:
“152. GCC 44.2.6 does not extend the period of
limitation:
a. Once the contract is terminated there can be no
further breaches of the contract and the
question of successive or continuing breach
cannot arise.
b. In Ancient InfraTech the Delhi High Court held
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by completion of works by an alternate
contractor. Retendering of the work at risk and
costs does not extend the period of limitation.
The period of limitation does not continue
while the risk and cost works continues.
c. Likewise, in KLA Construction the Delhi High
Court held:
i. Retendering the contract and engagement
of alternate contractors does not extend the
limitation period. Amounts that alternate
contractors may charge affect, at best, the
quantum of damages or compensation. This
does not change the date when the cause of
action arose.
ii. If the wrongful act causes an injury which
is complete, there is no continuing wrong
even though the damage from the act may
continue (approving Bal Krishna Savalram
Pujari v Sh. Dayaneshwar Maharaj
Sansthan, AIR 1959 SC 798).
d. And in Delta Foundation the Division Bench
of the Kerala High Court held retendering of
the work does not extend the period of
limitation – this goes against the law on
limitation.
e. Further, GC 44.2.6 of the Contract only
provides a mechanism for determining the
value of the works under the risk purchase
contract. It does not specify the date or time
when the difference in value of work is to be
paid, or any consequence for non-payment. GC
44.2.6 does not give rise to a cause of action
independent from SAIL’s right to terminate the
Contract under CG 44.2.2. The presence or
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Ancient InfraTech, KLA Construction or Delta
Foundation from this case.
153. For the reasons given above, the limitation period
did not start to run from the dates below as SAIL
submits:
a. The date the alternate contractor completed the
risk purchase contract (29 March 2018).
b. A date between 9 November 2017 to 5 January
2018.
c. 5 May 2018 when SAIL provided the
documents on risk purchase to SSIT and
GAC.”
SUBMISSIONS
19. Mr. Srivastava, the learned counsel appearing on behalf of SAIL
contended that the impugned award was in conflict with public policy
of India and therefore, it was rightly set aside by the learned Single
Judge.
20. He referred to the decision of the Supreme Court in Renusagar
Power Co. Ltd. v. General Electric Co.,1 and on the strength of the said
decision contended that the arbitral award, which is contrary to the
fundamental policy of Indian law; the interest of India; or justice and
morality would be in conflict of public policy of India and therefore,
would be liable to be set aside under Section 34(2)(b)(ii) of the A&C
Act. He also referred to the decision in the case of Associate Builders
v. Delhi Development Authority2, in support of his contention that the
1 AIR 1994 SC 860
2
(2015) 3 SCC 49
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expression ‘fundamental policy of India’ has to be construed as
explained in the decision in Renusagar Power Co. Ltd. v. General
Electric Co.1
21. He relied on the decision of the Supreme Court in Pundlik Jalam
Patil (dead) by LRs v. Executive Engineer, Jalgaon Medium Project
and Anr.3 and drew the attention of this Court to the observations made
by the Supreme Court to the effect that the object of fixing time limit
for litigation is based on public policy. He also referred to the
observations to the effect that a court would bear in mind the public
interest parameters while exercising its discretion in dealing with
obligations filed under the Limitation Act.
22. Lastly, he contended that the impugned award was contrary to
the decision of the Supreme Court in Indian Oil Corporation Limited
v. SPS Engineering Limited4. He submitted that in the said case, the
Supreme Court had explained that the cause of action would arise once
the risk and cost tender is issued and the amount is crystalized.
However, the Court has also clarified that in case where there is a
specific clause, which requires the contractor to pay the difference
between the amounts, which would have been payable and those that
are paid to the alternate contractor, the period of limitation would begin
later.
3 (2008) 17 SCC 448
4
(2011) 3 SCC 507
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23. He submitted that in the present case, the Arbitral Tribunal had
erred in not following the ruling of the Supreme Court in Indian Oil
Corporation Limited v. SPS Engineering Limited4 and therefore, the
impugned award was rightly set aside.
24. The learned counsel also referred to various dates to establish that
the parties were attempting to resolve the disputes amicably and
therefore, SAIL had invoked the arbitration within the period of three
years of what could be considered as ‘breaking point’ of negotiations
between the parties. He also referred to the decision of the Supreme
Court in Geo Miller & Co. Pvt. Ltd. v. Chairman, Rajasthan Vidyut
Utpadan Nigam Ltd.5; Hari Shankar Singhania & Ors. v. Gaur Hari
Singhania & Ors.6; Shri Ram Mills Ltd. v. Utility Premises (P) Ltd.7
in support of his contention. He submitted that the Arbitral Tribunal had
not undertaken any exercise to determine the said breaking point. In
view of the above, the learned Single Judge has rightly found that the
Arbitral Tribunal was required to undertake a trial and had erred in not
doing so.
REASONS & CONCLUSIONS
Non-maintainability of Patent illegality exception
25. At the outset it is relevant to note that the impugned award was
rendered in an international commercial arbitration. Concededly, the
ground of patent illegality under Section 34 (2A) of the A&C Act is not
5
(2020) 14 SCC 643
6
(2006) 4 SCC 658
7
(2007) 4 SCC 599
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available to set aside an arbitral award in an international commercial
arbitration. Thus, SAIL’s challenge to the impugned award on the
ground that it is vitiated by patent illegality, was not maintainable.
26. A bare perusal of the grounds as set out in SAIL’s application
under Section 34 of the A&C Act clearly indicate that SAIL’s challenge
was founded on the basis that the Arbitral Tribunal had erred in not
appreciating the import of Clause 44.2.6 of the GCC. SAIL contends
that any disagreement in regard to the compensation as payable would
also give rise to a cause of action to invoke the arbitration. According
to SAIL, since the Contract specifically provided for computing the
quantum of compensation after the amount expended to complete the
balance work at the risk and costs of GACL, was determined. And,
SAIL had commenced arbitral proceedings within a period of three
years of completion of facilities. Therefore, its claim was not barred by
Section 3 of the Limitation Act. SAIL also claims that its cause of action
was continuing one. Thus, its claims were not barred by limitation. It
is contended on behalf of SAIL that the Arbitral Tribunal had erred in
relying on the decision of KLA Construction Technologies Pvt Limited
v. Chadha Sugar and Industries Pvt Limited & Anr.8 and the same was
inapplicable in the facts of the present case.
SAIL’s grounds of challenge
8 2018 SSC OnLine Del 10226
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27. It is relevant to refer to the grounds of challenge as set out by
SAIL in its application under Section 34 of the A&C Act to set aside
the impugned judgment. The same are reproduced below:
“A. Because the Ld. Arbitral Tribunal failed to appreciate
that the General Conditions of Contract clause 44.2.6
specifically provided for risk purchase action that may have
been undertaken by the petitioner and thereafter, claiming
the damage/loss suffered by it to be claimed from the
respondents.
B. Because the Ld. Arbitral Tribunal failed to appreciate
that Clause 44.2.6 of the General Conditions of Contract was
in the nature of a “survival” clause which continued to
operate even after termination of the contract and parties
agreed to be bound by the same.
C. Because the Ld. Arbitral Tribunal failed to recognize
the nature of Clause 44.2.6 of the General Conditions of
Contract which obligated the parties to perform further
obligations agreed under the contract. Clause 44.2.6 of the
general Conditions of Contract read “The Employer and
Contractor shall agree in writing on the compensation
described above and the manner in which any sums shall be
paid.”
D. Because the Ld. Arbitral Tribunal failed to appreciate
that in case there was a dispute amongst the parties as regards
the compensation payable after termination of the Contract,
the dispute would still have been referred to the arbitral
tribunal constituted under the Contract. Thus, any
disagreement upon the compensation would also have been
a cause of action for any of the parties to invoke arbitration.
E. Because the Ld. Arbitral Tribunal wrongly held that
the cause of action accrued upon termination of contract on
29.12.2012. The Contract specifically provided further
obligation of the parties even after termination of the
Contract and therefore, the cause of action to invoke
arbitration was continuing one.
F. Because the Ld. Arbitral Tribunal wrongly relied
upon the matter of Ancient Infratech (Pvt.) Ltd. vs. National
Buildings Construction Corporation Ltd. & Ors. (2019 ) 175
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DRJ 380 as the facts were clearly distinguishable from the
facts of the present matter .
• the above judgment dealt with the Contractor’s
claims of unpaid invoices wherein, it was held that cause of
action for the Contractor to claim for unpaid invoices
commenced upon termination of the contract \. The present
case is where the Employer’s claim of damages
/compensation arising out of risk purchase action under
Clause 44.2.6 is in question.
• The above judgment did not deal with a case was
being adjudicated on the basis of a clause similar to clause
44.2.6 existing in the subject Contract It was in absence of a
similar clause as that of Clause 44.2.6 the Hon’ble Court in
the above matter held that “Retendering of the work at risk
and cost does not extend the period of limitation. The period
of limitation does not continue while the risk and cost works
continues.”
G. Because the Ld. Arbitral tribunal wrongly relied
upon the matter of KLA Construction Technologies Pvt. Ltd.
vs. Chadha Sugar and Industries Pvt. Ltd. 2018 SCC Online
Del 10266 for that the facts of the said case nowhere dealt
with the issue of limitations where a clause similar to clause
44.2.6 of the subject Contract, existed in the contract.
H. Because the Ld. Arbitral Tribunal wrongly held that
“Once the contract is terminated there can no longer be any
completion of work by the contractor as envisaged under the
contract”. For that the Ld. Arbitral Tribunal clearly failed
to recognize Clause 44.2.6 of the General Conditions of
Contract which was also an agreed obligation under the
contract between the parties and a breach of which would
have given a cause of action to either of the parties to invoke
arbitration.
I. Because the Ld. Arbitral Tribunal wrongly held that
Clause 44.2.6 does not give rise to a cause of action
independent from SAIL’s right to terminate the Contract
under Clause 44.2.2. For that in case Ld. Tribunal’s finding
is to be accepted, there would be multiplicity of arbitral
proceedings i.e. upon termination; and thereafter, in case,
losses cannot be ascertained within three years of
termination- upon crystallization of claims once facilities are
completed by alternate Contractor.
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J. Because the Ld. Arbitral Tribunal wrongly held that
“the presence or absence of GCC 44.2.6 does not distinguish
Ancient Infratech, KLA Construction or Delta Foundation
from this case”. For that the matter of Delta Foundation &
Constructions Kochi vs. Kerala State Construction
Corporation Ltd. AIR 2003 Ker 201 clearly referred to the
decision of Bell Alloy Steels (P) Ltd. vs. National Small
Industries Corporation Limited 1980 ( 1 ) Legal Serv (Mad)
85 in which the agreement provided a specific clause similar
to Clause 44.2.6 and therefore, it was held that “right to
recover loss arises out of the contract and the said right can
accrue only on re- sale and not before under such
circumstances it was held that the suit was not hit by the law
of limitation.”
K. Because the Ld. Arbitral Tribunal wrongly
considered that “Bell Alloy Steels was a case involving a hire
-purchase agreement, which is different in nature from a
construction contract”. For that the hire purchase agreement
is also a contract between the parties and cannot be
differentiated from construction contract for limitation
purposes.
L. Because the Ld. Arbitral Tribunal wrongly held that
“Delta Foundations did not distinguish Bell Alloy Steels on
the basis that the case contained an express clause
governing contractual relations post termination, and Delta
Foundations did not”. For that the sole reason for referring
Bell Alloy Steels case was to show a different fact situation
where there existed a specific clause pursuant to which right
to sue for loss under the contract accrued.
M. Because the Ld. Arbitral tribunal misconstrued the
reference “we are of the view the decision in the above case
is in a different fact situation” appearing in the case of Delta
Foundations and applied to distinguish between a hire-
purchase agreement and a construction contract . For that the
reference was made not to distinguish between a hire-
purchase agreement and construction contract but existence
and non -existence of a clause similar to that of Clause 44.2.6
of the subject Contract.
N. For that the Ld. Arbitral Tribunal failed to take
cognizance of the fact that Final Acceptance Certificate was
issued by the petitioner to the alternate contractor only on
29.03.2018 and therefore, the cause of action to recover the
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damages under the Contract commenced from 29.03.2018.
The Request for Arbitration having been filed on
07.01.2020, the claims were within the limitation period of
three years.
O. Because the Ld. Arbitral Tribunal failed to take into
account the respondent’s own conduct in seeking risk
purchase documents from the petitioner so as to give effect
to Clause 44.2.6 of the Contract. The Respondents clearly
understood that the petitioner had a right to invoke
arbitration under Clause 44.2.6 of the Contract.
P. Because the Ld. Arbitral Tribunal also failed to
appreciate that upon furnishing all the risk purchase
documents to the respondents, the parties were giving effect
to Clause 44.2.6 of the Contract and therefore, the petitioner
had the right to invoke arbitration.”
28. It is apparent from the above that SAIL had not challenged the
impugned award on the ground that it is in conflict with public policy
of India. SAIL’s challenge to the impugned award rests mainly on its
assertion that the Arbitral Tribunal had erred in accepting that its claims
were barred by Section 3 of the Limitation Act.
29. The learned Single Judge had proceeded to discuss SAIL’s
challenge on merits without considering whether such a challenge falls
within the scope of Section 34(2)(b)(ii) of the A&C Act. In our view,
the impugned judgment is liable to be set aside for this reason alone.
SAIL’s Contentions
30. Having stated above, we consider it apposite to consider the
contentions advanced on behalf of SAIL, to examine whether the
impugned award falls foul of the public policy of India. It is contended
on behalf of SAIL that limitation is a matter of public policy and public
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interest and therefore, a decision erroneously rejecting claims as barred
by limitation, would fall foul of the public policy of India.
31. Mr Srivastava, learned counsel appearing for SAIL stoutly relied
upon the decision of the Supreme Court in Pundlik Jalam Patil (dead)
by LRs v. Executive Engineer, Jalgaon Medium Project & Another3
in support of the aforesaid contention.
32. He contended that the question as to when the period of limitation
would commence in the context of a case where the contract contains a
specific provision such as Clause 44.2.6 of the GCC, was explained by
the Supreme Court in the case of Indian Oil Corporation Limited v.
SPS Engineering Limited4. However, the Arbitral Tribunal had erred
in not following the said binding judicial precedent.
33. Since, the controversy centres around the question whether
SAIL’s claim was barred by limitation, it would be necessary to refer to
certain relevant dates and events to briefly examine the same.
Material Dates and Events
34. SAIL terminated the Contract by a letter dated on 29.11.2012.
The said letter expressly provided as under: –
“iv) Further please be informed that we shall enter
upon the site on or after 01.12.12 for causing
alternative execution of balance job as per our
procedure, rule, practice.
v) After assessment of loss, we shall be entitled to
recover cost and damages due to your negligence
and failure in due performance of the contract and
first by adjusting the amount available, if any, toSignature Not Verified
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your credit and thereafter recovery through due
process of law without further reference to you.”
[emphasis added]
35. Thereafter on 13.02.2013, SAIL entered into a ‘Contract
Agreement’ with the consortium comprising of M/s. Nicco Corporation
Limited (hereafter NICCO) and M/s Mitsui Engineering and
Shipbuilding Co. Limited with NICCO as the lead member (hereafter
the alternate contractor). The consideration for completing the works
was agreed at 497,000,000 Yen (Four Ninety Seven Million Yen) and
₹27,06,67,000/- (Rupees Twenty Seven Crore Six Lakhs and Sixty
Seven Thousand). The subject work was to be completed within the
period of eleven months from the effective date, which was fixed as
30.12.2012.
36. Although SAIL had fixed the value to be paid for the balance
work, it did not take any immediate steps for making a claim against the
Consortium and its members for the differential amount as agreed with
the alternate contractor and what would be payable to the Consortium
for the balance work, in terms of the Contract.
37. On 26.09.2015, SAIL issued a letter alleging that it had
terminated the Contract due to negligence and failure on the part of the
Consortium members to perform the Contract. SAIL also informed the
Consortium that it had placed a separate order for completing the
balance work on the alternate contractor (consortium comprising of
NICCO and M/s Mitsui Engineering and Shipbuilding Co. Limited) for
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a sum of 497,000,000 Yen and ₹27,06,67,000/-. It also set out the
computation of damages / losses incurred for execution of the balance
work through the alternate contractor and called upon the Consortium
members to pay the differential amount of ₹17.29 Crores.
38. It is apparent from the above that as on 26.09.2015 if not earlier,
SAIL had crystalized its demand of losses and had claimed the same. It
had also referred to Clause 44.2.6 of the GCC for making the said claim.
39. On receipt of the aforesaid letter dated 26.09.2015, GACL sent a
letter dated 29.09.2015 acknowledging the receipt of the said letter. It
stated that it would revert back in due course of time and further stated
that the claim was not admitted by it. Thereafter, GACL sent a letter
dated 15.10.2015, inter alia, stating in unambiguous terms that SAIL’s
claim for ₹17.29 Crores on account of ‘risk purchase’ is untenable, and
is rejected.
40. On 25.07.2016, SAIL sent a letter referring to Article 10 of the
Contract, which was set out in the said letter. The same is reproduced
as under:-
“Any disputes, differences, whatsoever, arising between the
parties out of or relating to the construction, meaning, scope,
operation or effect of this Contract shall be settled between the
Employer and the Contractor amicably. If however, the
Employer and the Contractor are not able to resolve their disputes
/ differences amicably as aforesaid the said disputes / differences
shall be settled by Conciliation, failing which, through
Arbitration.”
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41. Article 10 of the Contract required the parties to attempt to settle
the disputes amicably and if unsuccessful to refer the disputes, to be
settled by Conciliation, failing which through arbitration.
42. GACL accepted SAIL’s invitation for an amicable resolution of
the disputes and sent an email dated 29.07.2016 proposing to conduct
the meeting for an amicable settlement at SAIL’s office at Burnpur on
03.08.2016. In response to the said communication, SAIL sent an email
dated 02.08.2016 asking GACL to come to Burnpur on 03.08.2016
along with the Consortium leader (SSIT) or with its authorisation.
GACL responded to the same by stating that it was neither in a position
to come along with Consortium leader nor able to secure an
authorisation to attend the meeting.
43. Thereafter, on 03.12.2016, SAIL informed GACL about failure
of the process of amicable settlement and invoked the Conciliation. It
proposed Conciliation proceedings under the rules of the SCOPE
Forum of Conciliation and Arbitration and called upon GACL to inform
SAIL about its consent for conciliation proceedings latest by
19.12.2016. The penultimate paragraph of the said letter reads as under:
–
“Therefore as per the terms and condition of the contract, we
hereby invoke the conciliation proceedings under the rules of the
SCOPE Forum of Conciliation and Arbitration. You are
requested to intimate us your consent to the conciliation
proceedings latest by 19.12.2016 positively, failing which it will
be treated that the conciliation proceedings has failed and further
steps will be taken as per the terms and conditions of the contract
for settlement of disputes.
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This is without prejudice to the rights and contentions arising out
of the subject contract matter.”
44. SSIT responded to the invitation for Conciliation and by a
communication dated 14.12.2016 conveyed its consent to attend the
conciliation proceedings, but also requested that proceedings for
amicable settlement be conducted simultaneously. GACL responded on
16.12.2016 and stated that it was ready to attend the conciliation
proceedings with the Consortium leader (SSIT) and called upon the
SAIL to decide the time of the meeting. In response to the aforesaid
letter, SAIL sent a letter dated 16.02.2017 and called upon the
Consortium members to propose a suitable date in the month of March,
2017 for attending the meeting for an amicable settlement. It also stated
that if the parties failed to arrive at an amicable settlement, conciliation
proceedings would be initiated.
45. Thereafter, on 02.03.2017, SSIT confirmed that it would send its
delegation to attend the meeting in the last week of March 2017. SSIT
also then sent an email dated 08.03.2017 once again intimating SAIL of
its consent to attend the “conciliation proceedings and requested to
make the amicable settlement and conciliation simultaneously”.
Thereafter, a meeting was held between SAIL, SSIT and GACL on 28th
to 29th March, 2017. The minutes of the said meeting indicate that the
parties could not arrive at any consensus.
46. On 21.07.2017, SAIL sought to initiate the conciliation
proceedings and called upon the Consortium member to consent for the
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same within thirty days, failing which it would be considered that they
had rejected the invitation to Conciliation.
47. GACL sent the communication letter dated 16.08.2017 stating
that it was ready and willing for conciliation under the SCOPE Forum
of Conciliation and Arbitration. However, SAIL did not take necessary
steps to initiate the conciliation proceedings. However, it sent a
communication dated 09.11.2017 stating that it had not received the
assent from the Consortium members for initiation of the conciliation
proceedings and if it did not receive the same, it would be presumed
that the conciliation has failed. GACL sent a letter dated 27.11.2017
reiterating that it was ready and willing for conciliation and SSIT may
also participate in the proceedings. However, the conciliation
proceedings were not commenced.
48. On 03.12.2018, SAIL issued its request for arbitration to the
ICC. A copy of such request letter is not filed along with the appeal and
it does not appear to have been placed on record. However, it is
admitted that SAIL did not pursue the said request.
49. Thereafter, SAIL issued a notice requesting for arbitration on
07.01.2020.
50. It is also relevant to mention that on 18.01.2016, SAIL issued a
preliminary acceptance certificate to the consortium led by NICCO (the
alternate contractor) and it is not disputed that the plant in question was
commissioned on 12.02.2016. SAIL issued the final acceptance
certificate to the said alternate contractor on 29.03.2018.
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ANALYSIS
51. It is material to note that SAIL does not dispute that the arbitral
proceedings commenced on 07.01.2020. This was also conceded by
SAIL before the Arbitral Tribunal. It is not disputed that the first
request for arbitration was abandoned. Paragraph no.106 of the
statement of claim is set out below:-
“106. On 07.01.2020, SAIL filed a Request for
Arbitration and the arbitral proceedings
commenced on such date.”
52. It is also not in dispute that SAIL’s principal claim was based on
breach of the Contract. SAIL had claimed that in view of the breach on
the part of the Consortium members and various defaults, it terminated
the contract on 29.11.2012. The Arbitral Tribunal noted that SAIL had
relied upon Article 55 of the Schedule to the Limitation Act and had
agreed that the same would determine the limitation period for its claim.
It also agreed that the request for arbitration was lodged with the ICC
secretariat on 07.01.2020, and that date should be construed as date on
which SAIL commenced its action for the purpose of the limitation.
53. SAIL’s contention that the impugned award is liable to be set
aside as the parties were in negotiations and therefore, it was essential
for the Arbitral Tribunal to determine the ‘breaking point’, is also
unpersuasive. Section 9 of the Limitation Act clearly provides that
“once a time is begun to run, no subsequent disability or inability to
institute a suit or make an application stops it.” In B&T AG v. Ministry
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of Defence9, the Supreme Court had referred to the earlier decision in
the case of Inder Singh Rekhi v. DDA10 and noted that a dispute would
arise when there is a claim on one side and its denial / repudiation by
the other and “bilateral discussions for an indefinite period of time
would not save the situation so far as accrual of cause of action and the
right to apply for appointment of an arbitrator is concerned”.
54. In the present case, SAIL terminated the Contract on account of
alleged breach on the part of Consortium. The cause for recovering any
damages on account of that breach has thus arisen. As noted above,
SAIL thereafter engaged the alternate contractor on 13.02.2013 for
completing the balance work at a fixed price. Clearly, the cause for
claiming differential amount between the amount that would have been
payable to the Consortium for completing the balance work and the
amount agreed with the alternate contractor was crystallized. However,
SAIL did not make any immediate claim for the differential amount but
waited for more than two and a half years to raise the claim in terms of
a letter dated 26.09.2015. As noticed above, GACL disputed the said
claim by its letter dated 15.10.2015. Even at that stage, SAIL did not
take any immediate steps for seeking an amicable resolution of the
disputes. Its letter inviting the Consortium for an amicable settlement
was issued nine months later, on 25.07.2016. At that stage, SAIL
insisted that SSIT should also participate in the meeting or GACL does
it with its authorization. The said condition was not satisfied and
9
(2024) 5 SCC 358
10
(1988) 2 SCC 338
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therefore, the amicable meeting which is scheduled on 03.08.2016 did
not take place. However, four months later SAIL sent a letter informing
the Consortium of the failure of the process for an amicable settlement
and sought to invoke Conciliation. The communications thereafter
indicate that although SSIT and GACL were agreeable to conciliation
before the SCOPE Forum of Conciliation and Arbitration; SSIT had
also made a request to the effect that talks for an amicable settlement
may also be held simultaneously. However, SAIL took a stand that the
conciliation proceedings and talks for amicable settlement could not
take place simultaneously. Clearly, the said stand on the part of SAIL
was ex facie untenable as commencement of conciliation proceedings
does not preclude the parties from resolving the disputes amicably. On
the contrary, conciliation is to facilitate an amicable settlement. The
officials of the parties met on 28th and 29th March, 2017 but could not
arrive at a settlement. Yet it took SAIL more than four months to inform
as to the failure of negotiations for an amicable settlement. SAIL once
again sought to invoke Conciliation by its letter dated 21.07.2017.
GACL once again accepted to proceed with the conciliation
proceedings under SCOPE Forum of Conciliation and Arbitration and,
communicated the same by its letter dated 16.08.2017. However, SAIL
took no steps to proceed with the Conciliation. Plainly, the few
intermittent communications spread over a protracted length of time
cannot extend the period of limitation. It is relevant to refer to the
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following passages from the decision of the Supreme Court in BSNL v.
Nortel Networks (India) (P.) Ltd.:11
“15. It is now fairly well-settled that the limitation for filing
an application under Section 11 would arise upon the
failure to make the appointment of the arbitrator within a
period of 30 days from issuance of the notice invoking
arbitration. In other words, an application under Section 11
can be filed only after a notice of arbitration in respect of
the particular claim(s)/dispute(s) to be referred to
arbitration [as contemplated by Section 21 of the Act] is
made, and there is failure to make the appointment.
16. The period of limitation for filing a petition seeking
appointment of an arbitrator(s) cannot be confused or
conflated with the period of limitation applicable to the
substantive claims made in the underlying commercial
contract. The period of limitation for such claims is
prescribed under various Articles of the Limitation Act,
1963. The limitation for deciding the underlying
substantive disputes is necessarily distinct from that of
filing an application for appointment of an arbitrator. This
position was recognised even under Section 20 of the
Arbitration Act, 1940. Reference may be made to the
judgment of this Court in J.C. Budhraja v. Orissa Mining
Corpn. Ltd. [J.C. Budhraja v. Orissa Mining Corpn. Ltd.,
(2008) 2 SCC 444: (2008) 1 SCC (Civ) 582] wherein it was
held that Section 37(3) of the 1940 Act provides that for the
purpose of the Limitation Act, an arbitration is deemed to
have commenced when one party to the arbitration
agreement serves on the other party, a notice requiring the
appointment of an arbitrator. Para 26 of this judgment reads
as follows: (SCC p. 460)
11
(2021) 5 SCC 738
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“26. Section 37(3) of the Act provides that for the purpose
of the Limitation Act, an arbitration is deemed to have been
commenced when one party to the arbitration agreement
serves on the other party thereto, a notice requiring the
appointment of an arbitrator. Such a notice having been
served on 4-6-1980, it has to be seen whether the claims
were in time as on that date. If the claims were barred on 4-
6-1980, it follows that the claims had to be rejected by the
arbitrator on the ground that the claims were barred by
limitation. The said period has nothing to do with the period
of limitation for filing a petition under Section 8(2) of the
Act. Insofar as a petition under Section 8(2) is concerned,
the cause of action would arise when the other party fails to
comply with the notice invoking arbitration. Therefore, the
period of limitation for filing a petition under Section 8(2)
seeking appointment of an arbitrator cannot be confused
with the period of limitation for making a claim. The
decisions of this Court in Inder Singh Rekhi v. DDA [Inder
Singh Rekhi v. DDA, (1988) 2 SCC 338] , Panchu Gopal
Bose v. Port of Calcutta [Panchu Gopal Bose v. Port of
Calcutta, (1993) 4 SCC 338] and Utkal Commercial
Corpn. v. Central Coal Fields Ltd. [Utkal Commercial
Corpn. v. Central Coal Fields Ltd., (1999) 2 SCC 571] also
make this position clear.”
*** *** ***
51. The period of limitation for issuing notice of arbitration
would not get extended by mere exchange of letters, [S.S.
Rathore v. State of M.P., (1989) 4 SCC 582 : 1990 SCC
(L&S) 50; Union of India v. Har Dayal, (2010) 1 SCC
394; CLP (India) (P) Ltd. v. Gujarat Urja Vikas Nigam
Ltd., (2020) 5 SCC 185] or mere settlement discussions,
where a final bill is rejected by making deductions or
otherwise. Sections 5 to 20 of the Limitation Act do not
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exclude the time taken on account of settlement
discussions. Section 9 of the Limitation Act makes it clear
that:”where once the time has begun to run, no subsequent
disability or inability to institute a suit or make an
application stops it.” There must be a clear notice invoking
arbitration setting out the “particular dispute” [ Section 21
of the Arbitration and Conciliation Act, 1996.] (including
claims/amounts) which must be received by the other party
within a period of 3 years from the rejection of a final bill,
failing which, the time bar would prevail.”
55. The impugned award cannot be faulted on the ground that the
Arbitral Tribunal has not accepted SAIL’s contention that its right to
apply for arbitration is extended on account of negotiations/efforts for
conciliation.
56. The learned counsel appearing for SAIL does not dispute that the
Arbitral Tribunal had correctly noted the stand of SAIL in the impugned
award. Article 55 of the Schedule to the Limitation Act, which
prescribes the period of limitation for bringing an action for breach of a
contract, is set out below:
Description of suit Period of Time from which
limitation period begins to run
55. For compensation for Three years When the contract
the breach of any is broken or (where
contract, express or there are successive
implied not herein breaches) when the
specifically provided breach in respect of
for. which the suit is
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(where the breach
is continuing) when
it ceases.
57. As noted above, SAIL’s claim was based on the allegations that
the Consortium had broken the Contract and thus, it was required to
institute an action within the period of three years from the date of the
breach.
58. However, it was contended on behalf of SAIL that the breach was
a continuing breach. The said contention is unmerited. Rejection of a
demand of damages does not, by any stretch, constitute a continuing
breach of the Contract on the part of the Consortium after the same was
terminated. Some secondary obligations may survive termination, but
the same are not continuing.
59. It is important to note that before the Arbitral Tribunal, it was
contended on behalf of SAIL that its cause of action was based on the
main Contract on account of the Consortium not completing the
Contract within the time, resulting in SAIL terminating the Contract. It
was also contended that the period of limitation is required to be
computed in terms of Article 55 of the Schedule to the Limitation Act.
However, the said period was not required to be computed under the
first two limbs but on the basis that there was a continuing breach. The
transcript of the proceedings held before the Arbitral Tribunal, which is
placed on record indicates that the learned counsel appearing for SAIL
had relied on the third limb of Article 55 of the Schedule to the
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Limitation Act, which pertains to a continuing breach. The period of
limitation in this case is three years from the date on which the said
breach ceases. According to SAIL, the breach was a continuing breach.
The Arbitral Tribunal has rightly rejected the said contention. This is
not a case of continuing wrong. SAIL had terminated the Contract
alleging failure on the part of the Consortium to perform the Contract
within the stipulated time and in accordance with its terms.
60. In Balkrishna Savalram Pujari Waghmare & Ors. v. Shree
Dhyaneshwar Maharaj Sansthan & Others12, the Supreme Court had
explained that if the “wrongful act causes an injury which is complete,
there is no continuing wrong even though the damage resulting from
the act may continue”
61. In view of the above, we find no infirmity with the decision of
the Arbitral Tribunal rejecting SAIL’s contention that there was a
continuing breach of Contract on the part of the Consortium.
62. We must also note that the learned counsel appearing for SAIL
did not seriously pursue the line of argument that there was continuing
breach of the Contract on the part of the Consortium, before us.
63. The learned counsel rested SAIL’s case mainly on the
interpretation of Clause 44.2.6 of the GCC and the decision of the
Supreme Court in Indian Oil Corporation Limited v. SPS Engineering
Limited4. In this case, the designate of the Chief Justice of this Court
12
1959 SCC OnLine SC 68
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had rejected the petition filed by Indian Oil Corporation Limited
(hereafter IOCL) under Section 11 of the A&C Act praying for the
appointment of an arbitrator, inter alia, on the ground that its claim was
barred by limitation and res judicata. The designate of the Chief Justice
found that “once a risk cost tender is issued at the risk and cost of a
person, then, the amount which is to be claimed from the person who is
guilty of breach becomes crystalized when the risk purchase tender at
an higher cost is awarded.” After reproducing the said finding, the
Supreme Court observed as under: –
“24. …. This may be true a general proposition. But
it may not apply if there is a specific provision in the
contract (like Clause 7.0.9.0) which requires that the
employer should claim as extra cost, only the
difference between the “amounts as would have been
payable to the contractor in respect of the work” and
“the amount actually expended by the owner for
completion of the entire work.”
64. According to SAIL, this observation authoritatively holds that in
view of the contractual clause in that case (clause 7.0.9.0.), the period
of the limitation would run from the date when the actual amount
expended by the owner (IOCL in that case) in completion of the entire
balance work is determined. Undisputedly, the Supreme Court had
doubted the findings of the High Court, given the language of the
contractual clause in that case. However, the issue as to when does a
cause of action arises is fact centric and would necessarily require to be
viewed in the context of the facts of each case.
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65. It is necessary to note that in the case of Indian Oil Corporation
Limited v. SPS Engineering Limited4, IOCL had made a claim for risk
and cost before the Arbitral Tribunal and the same was rejected on the
ground that it was premature. IOCL thus, claimed that it was entitled to
re-agitate the issue of ‘risk and cost’ in the arbitral proceedings after the
amounts have been paid. However, the designate of the Chief Justice
rejected the IOCL’s application under Section 11(6) of the A&C Act.
The designate of the Chief Justice held that the amount, which can be
claimed from a person who is guilty of breach of contract becomes
crystalized when the contract for completion of the balance work at his
risk and costs, is awarded. It is in the aforesaid context that the Supreme
Court had observed that in a case where a contract specifically provides
for adjustment to be made on the basis of amount actually expended,
the amount would be crystallized once the amounts are spent. The
decision in the case of Indian Oil Corporation Limited v. SPS
Engineering Limited4 – which is the main foundation of the arguments
advanced for assailing the impugned award – is not applicable in the
facts of the present case for several reasons.
66. First of all, the clause in question in the present case, Clause
44.2.6 of the GCC, is not similarly worded as the clause which was
referred to by the Supreme Court in Indian Oil Corporation Limited v.
SPS Engineering Limited4. Clause 44.2.6 of the GCC states that “the
cost of completing the Facilities by the Employer shall be determined.”
It does not use the expression “the amount actually expended by the
owner for completion of the entire work”. The expression “actually
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expended” would necessarily require the amount to be expended before
the same can be determined. But “the cost of completing the Facilities”
can be determined when the fixed price contract for the completion of
facilities is awarded. In the former case, unless the amount is actually
expended no demand for the ascertained sum can be made.
67. Secondly, in the present case, SAIL had, in fact, made a claim of
damages under Clause 44.2.6 of the GCC, in terms of the letter dated
26.09.2015 for an amount of ₹17.29 Crores, which it claimed that it had
incurred for execution of the balance job. However, in Indian Oil
Corporation Limited v. SPS Engineering Limited4, the first arbitral
tribunal, had rejected the claim as premature. Thus, IOCL was
constrained to invoke arbitration once again for agitating its claim.
68. We also consider it relevant to refer to the relevant extract of the
said letter dated 26.09.2015 setting out the tabular statement for
computing the said losses incurred and the demand made in this regard.
The same is reproduced below: –
SI. Description Rate of PE Value INR(Cr.) Eqv.
No INR(Cr) 1. Original contract 6051350 14.92 ... value of Pkg-18 USD 2. Amount already paid 601340 10.24 ... to the contractors USD against Pkg-18 3. Balance amount USD 5450010 4.68 38.27 available against @61.64 as USD Pkg-18(1-2) on 06.12.13 4. Encashment of BG USD @ 302568 0.746 2.387 for TRT (18) 54.225 as USD (15.12.12) on Signature Not Verified Digitally Signed FAO (OS) (COMM) 13/2024 Page 33 of 55 By:DUSHYANT RAWAL 15.12.12 5. Total amount from ... ... 40.66 Pkg-18 in lieu of Encashment of BG already done and non-payment of balance contract value (3+4). 6. Order value of YEN @ 497000000 27.067 57.95 balance job for Top 0.6213 as YEN Pressure Recovery on base date Turbine (Package No.18R-01) 7. Extra cost to ISP for ... ... 17.29 completing the project (i,e, Damages/ Losses to be recovered) (6-5)
As per clause 44.2.6 of GCC of the contract, you are
requested to pay ISP, the excess amount of Rs.17.29 Crore
incurred for execution of the balance job for completion of the
project.”
[emphasis added]
69. It is material to note that SAIL had made its claim for an
ascertained sum, specifically referring to Clause 44.2.6 of the GCC.
Since, SAIL had made such claim on 26.09.2015, it is not open for the
SAIL to now contend that it could not have done so and its right to claim
damages would arise only on completion of the project. It is material to
note that the Statement of Claims filed by SAIL was also for a sum of
₹17.29 Crore and on the basis as specified in the aforementioned letter
dated 26.09.2015. Subsequently, during the course of arbitration
proceedings, SAIL amended its claim to ₹17.02 Crores, by filing an
amended Statement of Claims.
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70. It is also necessary to ascertain the date on which the dispute
arises for considering whether an action which is founded on the said
dispute, is barred by limitation. It is thus necessary to note GACL’s
response to SAIL’s notice of demand dated 26.09.2015. Immediately
on receipt of the said demand, GACL issued a letter dated 29.09.2015
stating that it would revert back in due course of time. However, it also
stated that “needless to add that your claim is not being admitted by us”.
71. Thereafter, on 15.10.2015, GACL sent a letter rejecting the
SAIL’s claims in its entirety. It asserted that no claim could be made
on account of risk and costs on GACL as it could not be held responsible
for any default on the part of other members of the Consortium. GACL
also asserted that if SAIL was to take a view that all Consortium
members were jointly and severally liable for completion of the
Contract, the same would not be tenable as GACL could not be entitled
to take advantage of its own wrong / default. GACL claimed that when
SSIT was found to be defaulting, it had on several occasions called upon
SAIL to permit it to take over SSIT’s portion of the Contract for
completing the same, however, SAIL had not responded to its
communications. SAIL had not made any attempt to find a mutually
agreeable solution. Without prejudice to all its contentions, GACL also
claimed that SAIL could not claim any damages as it had not undertaken
reasonable steps for mitigating all such damages or losses. More
importantly, GACL pointed out that Clause 44.2.6 of the GCC required
the parties to agree on the computation of the amount payable/
receivable by the Contractor in case the balance works were completed
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at the risk and cost of the Consortium. However, no such agreement
was arrived at. In that context, GACL also demanded copies of the
contract entered into with the alternate contractor and the copy of the
approved billing schedule. It also sought the confirmation that the
Contract had been performed and the payments had been made.
72. It is not necessary to examine the merits of the contentions and
the grounds on which GACL had rejected the claim made by SAIL. The
important point to note is that GACL had in unambiguous terms
disputed SAIL’s right to claim any damages from GACL. The dispute
between SAIL and GACL had clearly arisen on that date if not earlier.
SAIL’s contention that its cause of action to file a claim had not arisen
till the completion of the facilities is thus unmerited.
73. It is also relevant to note the last sentence of Clause 44.2.6 of the
GCC which reads as “The Employer and Contractor shall agree in
writing, on the computation described above and the manner in which
any sums shall be paid.”
74. The parties had arrived at no such agreement. On the contrary,
GACL outrightly rejected the claim made by SAIL in its letter dated
26.09.2015. GACL had also called upon SAIL to furnish certain
documents in confirmation that the Contract had been completed by the
alternate contractor. However, it is clarified that the said demand was
without prejudice to its assertion that SAIL had no right to claim any
loss on account of risk and costs. Thus, the cause of action premised on
any failure on the part of GACL to perform its obligations in terms of
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Clause 44.2.6 of the GCC had arisen on the date, that is on 26.09.2015,
when GACL had in unambiguous terms rejected SAIL’s demand in this
regard. Thus, breach of this secondary obligation, if any, also occurred
on 29.09.2015
75. It is material to note that SAIL had not premised its request for
arbitration in its initial statement of claim on the basis that it had paid
the consideration.
76. As observed earlier, we find the Arbitral Tribunal’s conclusion
that there was no continuing wrong and therefore third limb of Article
55 of the Limitation Act did not apply cannot be faulted.
77. The Arbitral Tribunal also relied upon the decision of this Court
in the case of Ancient InfraTech (Pvt) Ltd. v. National Buildings
Construction Corporation Ltd & Ors.13; KLA Construction
Technology Pvt Ltd v. Chadha Sugar and Industries Pvt Ltd8; as well
as Kerala High Court in Delta Foundation and Construction, Kochi &
Ors. v. Kerala State Construction, Corporation Ltd, Ernakulum14 and
concluded that SAIL’s claim was barred by limitation as it was beyond
the period of three years from the date when the Contract was broken.
The said date was construed as the date on which SAIL had terminated
the Contract -29.11.2012.
78. The Arbitral Tribunal further reasoned that Clause 44.2.6 of the
GCC concerns the quantification of damages and not the cause of action
for claiming the same. This view clearly finds support from the decision
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14
AIR 2003 Kerala 201
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of the Single Bench of this Court in KLA Construction Technologies
Pvt Limited v. Chadha Sugar and Industries Pvt Limited8. In the said
case, the Court held that engagement of a new contractor for completing
the contract cannot logically extend the limitation period. The Court
had held that the conduct of the parties after the termination of the
contract is purely within their own discretion. As to when the balance
work is to be awarded to the third party contractor or the manner in
which it is to be completed is at the discretion of the concerned party.
Thus, the engagement of a new contractor for completion of the contract
does not extend the limitation period.
79. The said view is clearly a plausible view, if not the correct view.
80. At this stage, it is also relevant to note the alternate interpretation
of Clause 44.2.6 of the GCC as advanced on behalf of GACL. Mr Rao,
the learned counsel appearing on GACL had also contended that Clause
44.2.6 of the GCC was inapplicable and reliance on Clause 44.2.6 of
the GCC was misplaced. According to him, the said clause only
contemplates a case where SAIL (referred as Employer) would
complete the facilities on its own. He also referred to Clause 44.2.4 and
44.2.5 of the GCC and submitted that same were required to be read
conjointly. Clause 44.2.4, 44.2.5 and 44.2.6 of the GCC are set out
below: –
“44.2.4
The Employer may enter upon the Site, expel the
Contractor, and complete the Facilities itself or by
employing any third party at the risk and cost of the
Contractor. The Employer may, to the exclusion of
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and use any Contractor’s Equipment owned by the
Contractor and on the Site in connection with the
Facilities for such reasonable period as the
Employer considers expedient for the supply and
installation of the Facilities.
Upon completion of the Facilities or at such
earlier date as the Employer thinks appropriate, the
Employer shall give notice to the Contractor that
such Contractor’s Equipment will be returned to the
Contractor at or near the Site and shall return such
Contractor’s Equipment to the Contractor in
accordance with such notice. The Contractor shall
thereafter without delay and at its cost remove or
arrange removal of the same from the Site44.2.5
Subject to Sub-Clause 44.2.6 hereto the Contractor
shall be entitled to be paid the Price attributable to
the Part of the Facilities, executed as at the gate of
termination, and the costs, if any, incurred in
protecting the Facilities and in leaving the Site in a
clean and safe condition pursuant to paragraph (a)
of Sub-Clause 44.2.3 hereof and rent of the
Contractor’s equipment, if any, used by the
Employer pursuant to Clause 44.2.5 hereof. Any
sums due to the Employer from the Contractor
accruing prior to the date of termination shall be
deducted from the amount to be paid to the
Contractor under this Contract44.2.6
If the Employer completes the Facilities, the cost of
completing the Facilities by the Employer shall be
determined.
If the sum that the Contractor is entitled to be
paid, pursuant to Sub- Clause 44.2.5 hereof, plus
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completing the Facilities, exceeds the Contract
Price, the Contractor shall be liable for such excess.
If such excess is greater than the sums due to
the Contractor under Sub-Clause 44.2.5 hereof the
Contractor shall pay the balance to the Employer,
and if such excess is less than the sums due the
Contractor under Sub-Clause 44.2.5 hereof, the
Employer shall pay the balance to the Contractor.
The Employer and Contractor shall agree, in
writing, on the computation described above and the
manner in which any sums shall be paid.”
81. Mr Rao, submitted that the opening line of Clause 44.2.4 of the
GCC indicates that in the event of termination of the Contract on
account of the default on the part of the Contractor, the Employer shall
be entitled to enter the site and complete the work itself or by employing
a third party at the risk and cost of the Contractor. He submitted that
where the work is contracted to a third party (an alternate contractor) at
the risk and cost of the Contractor, the Contractor would be liable to
pay the amount on the basis of the agreement of the Employer with the
third party contractor. However, in the event that the Employer
completed the facilities on its own, it would be necessary to undertake
the exercise and determine the cost incurred by the Employer. He
submitted that Clause 44.2.6 of the GCC seeks to address a situation
where the Employer completes the facilities on its own.
82. The aforesaid contention is not insubstantial. In a case where the
contract is awarded to a third party at the risk and cost of the contractor,
it may not be necessary to determine the actual cost incurred. This is
because the contractor would not be liable for a cost overrun or an
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additional expenditure that may result on account of the alternate
contractor in not performing the contract. In the present case, SAIL had
engaged the alternate contractor (consortium led by NICCO) to
complete the balance work in eleven months. However, the plant was
commissioned on 12.02.2016. The final acceptance certificate was
issued subsequently on 29.03.2018. It is perhaps for this reason, that
SAIL had crystalised its claim after entering into the contract with the
consortium led by NICCO, without waiting for the plant to be
commissioned. It is not necessary for this Court to examine the
aforesaid alternate interpretation of Clause 44.2.6 of the GCC in any
further details. This is because the Arbitral Tribunal had not proceeded
on the basis of the aforesaid interpretation. And, it is impermissible for
this Court to re-adjudicate the disputes between the parties and
supplement its opinion in place of the Arbitral Tribunal. The scope of
the examination in the proceedings under Section 34/37 of the A&C Act
are limited to examining whether the arbitral award is required to be set
aside on the grounds as set out under Section 34 of the A&C Act.
83. The Arbitral Tribunal examined the admitted facts and also
construed the contractual clauses relied upon by SAIL. The findings of
the Arbitral Tribunal cannot be assailed on the ground of offending
public policy by reappreciation of the material and re-adjudicating the
disputes merely because the dispute also involves interpretation of a
statutory provision, which find its rationale in matters of public interest.
84. Undeniably, the provisions of the Limitation Act are in
furtherance of public interest. It is in the public interest to put a quietus
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to old disputes, which have not been actioned for a considerable period
of time. The principle to foreclose remedies for stale disputes is a matter
of public policy. Thus, even in cases where the Limitation Act does not
apply, the Courts have held that the steps are to be taken within the
reasonable period15. However, it would be erroneous to proceed on the
basis that the decisions of the Arbitral Tribunal are required to be re-
adjudicated on merits to ascertain whether the view of the Arbitral
Tribunal is incorrect on the assumption that an incorrect view would
fall within the public policy exception.
85. There is no scope for re-adjudicating or undertaking a merits
review of the disputes that are subject matter of arbitration. This is
because the Arbitral Tribunal is the sole adjudicator of the disputes
between the parties, which are covered under an arbitration agreement.
86. The scope of examination under the public policy exception is
very narrow. It is only in cases where the arbitral award shocks the
conscience of the Court or offend the most basic notions of justice and
morality that an arbitral award can be impeached as being in conflict
with the public policy of India. The said exception would also apply in
cases where the arbitral award is obtained by fraud or by means of
corruption. In OPG Power Generation Pvt. Ltd. v. Enexio Power
Cooling Solutions India Pvt. Ltd.16, the Supreme Court had observed
as under: –
15
State of Punjab & Ors. v. Bhatinda District Cooperative Milk Producers Union Ltd.: (2007) 11
SCC 363
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“52. The legal position which emerges from the aforesaid
discussion is that after the ‘2015 amendments’ in Section 34
(2)(b)(ii) and Section 48(2)(b) of the 1996 Act, the phrase “in
conflict with the public policy of India” must be accorded a
restricted meaning in terms of Explanation 1. The expression
“in contravention with the fundamental policy of Indian law”
by use of the word ‘fundamental’ before the phrase ‘policy of
Indian law’ makes the expression narrower in its application
than the phrase “in contravention with the policy of Indian
law”, which means mere contravention of law is not enough to
make an award vulnerable. To bring the contravention within
the fold of fundamental policy of Indian law, the award must
contravene all or any of such fundamental principles that
provide a basis for administration of justice and enforcement
of law in this country. Without intending to exhaustively
enumerate instances of such contravention, by way of
illustration, it could be said that (a) violation of the principles
of natural justice; (b) disregarding orders of superior courts in
India or the binding effect of the judgment of a superior court;
and (c) violating law of India linked to public good or public
interest, are considered contravention of the fundamental
policy of Indian law. However, “while assessing whether there
has been a contravention of the fundamental policy of Indian
law, the extent of judicial scrutiny must not exceed the limit as
set out in Explanation 2 to Section 34(2)(b)(ii).”
[emphasis added]
87. The scope of violation of laws linked to the public interest or
public good has to be construed narrowly. This ground cannot be
conflated with an erroneous interpretation of an enactment. The
threshold for applying this ground is very high. It is only in the cases
where the court concludes that the arbitral award militates against the
public interest or public good that this expression can be invoked. This
is apparent from the scope of the public policy ground as explained by
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the Supreme Court in Vijay Karia & Ors. v. Prysmian Cavi E Sistemi
SRL & Others17.
88. Clearly, a contentious issue as to whether the claim falls within
the limitation period or is stale, is not a matter that would warrant a
merits review of an arbitral award, on the ground of conflict with the
public policy of India. It is impermissible for this Court to undertake a
merit review of arbitral award in proceedings under Sections 34 and 37
of the A&C Act. It is relevant to refer to Explanation 2 to Section
34(2)(b)(ii) of the A&C Act, which reads as under: –
“34. Application for setting aside arbitral award.-
(1) ***
(2) ***
Explanation 2.- For the avoidance of doubt, the test as to whether
there is a contravention with the fundamental policy of Indian
law shall not entail a review on the merits of the dispute.”
89. The aforesaid explanation amply clarifies that a merit review of
the arbitral award to examine a challenge on the ground of public policy
is impermissible and the courts must refrain from doing so. This was
reiterated by the Supreme Court in OPG Power Generation Pvt. Ltd. v.
Enexio Power Cooling Solutions India Pvt. Ltd.16, as noted above.
90. In the present case, SAIL invites this Court to examine the
question whether its claims are barred by limitation on merits to press
home its challenge to the impugned award, which is impermissible. The
aforesaid analysis only highlights that the Arbitral Tribunal had taken a
17
(2020) 11 SCC 1
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view regarding a disputed question on merits. The Arbitral Tribunal had
also construed the contractual clause – Clause 44.2.6 of the GCC – on
which SAIL’s contention that its claims are not barred by limitation is
founded. The Arbitral Tribunal’s interpretation is a plausible one.
However, even if it is accepted – which we do not – that the Arbitral
Tribunal’s view is perverse, the impugned award cannot be set aside.
This is because perversity in a case such as this, is a facet of patent
illegality and an arbitral award in an international arbitration cannot be
set aside on this ground.
91. As noted above, in the present case, we find that the Arbitral
Tribunal’s view that the period of limitation for compensation for
breach of contract would run from the date on which it is broken cannot
be interfered with. In ONGC Ltd. v. Western Geco International Ltd18,
the Supreme Court held that perversity was a ground to set aside an
arbitral award. The Court held that the Wednesbury principle – that no
reasonable person could have possibly arrived at the said conclusion –
as applicable for examining whether an arbitral award could be set aside
on the ground of perversity. The said decision prompted the Chairman
of the Law Commission of India to send a communication to
supplement the 246th Report of the Law Commission, which is the basis
for enabling the Arbitration and Conciliation (Amendment) Act, 2015.
Explanation to Section 34(2)(b) (ii) of the A&C Act was substituted to
expressly provide for the examination whether the award is in conflict
with the fundamental policy of India, would not entail a merits review.
18
(2014) 9 SCC 263
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Thus, the decision of the Supreme Court in ONGC Ltd. v. Western Geco
International Ltd18 was statutorily diluted in this aforesaid regard. This
is also noted by the Supreme Court in the decision of HRD Corporation
(Marcus Oil and Chemical Division) v. GAIL (India) Limited19 and
subsequently in the case of Associate Builders v. Delhi Development
Authority2.
92. Explanation I to Section 34(2) of the A&C Act abundantly clarify
that an award would be in conflict with public policy of India -(i) if the
award is induced or effected by fraud or corruption or is in violation of
the Section 75 or 81 of the A&C Act; (ii) is in contravention with the
fundamental policy of Indian law; and (iii) is in conflict with most basic
notions of morality or justice.
93. In Ssangyong Engineering and Construction Co. Ltd. v.
National Highways Authority of India20, the Supreme Court explained
the scope of the expression “fundamental policy of Indian law”. The
Court held that this would necessarily have to be understood as
explained in Renusagar Power Co. Ltd. v. General Electric Company1
and as explained in paragraphs 18 and 27 of the judgment in the case of
Associate Builders v. Delhi Development Authority2. We also consider
it apposite to refer to the following extracts from the said decision:
“34. What is clear, therefore, is that the expression
“public policy of India”, whether contained in
Section 34 or in Section 48, would now mean the
“fundamental policy of Indian law” as explained in
paras 18 and 27 of Associate Builders [Associate
19
(2018) 12 SCC 471
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Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC
(Civ) 204] i.e. the fundamental policy of Indian law
would be relegated to “Renusagar” understanding of
this expression. This would necessarily mean that
Western Geco [ONGC v. Western Geco
International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC
(Civ) 12] expansion has been done away with. In
short, Western Geco [ONGC v. Western Geco
International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC
(Civ) 12], as explained in paras 28 and 29 of
Associate Builders [Associate Builders v. DDA,
(2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], would
no longer obtain, as under the guise of interfering
with an award on the ground that the arbitrator has
not adopted a judicial approach, the Court’s
intervention would be on the merits of the award,
which cannot be permitted post amendment.
However, insofar as principles of natural justice are
concerned, as contained in Sections 18 and
34(2)(a)(iii) of the 1996 Act, these continue to be
grounds of challenge of an award, as is contained in
para 30 of Associate Builders [Associate Builders v.
DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
**** **** ****
39. To elucidate, para 42.1 of Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC
49:(2015) 2 SCC (Civ) 204] , namely, a mere
contravention of the substantive law of India, by
itself, is no longer a ground available to set aside
an arbitral award. Para 42.2 of Associate Builders
[Associate Builders v. DDA, (2015) 3 SCC 49:
(2015) 2 SCC (Civ) 204] , however, would remain,
for if an arbitrator gives no reasons for an award and
contravenes Section 31(3) of the 1996 Act, that
would certainly amount to a patent illegality on the
face of the award.
**** **** ****
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41. What is important to note is that a decision which
is perverse, as understood in paras 31 and 32 of
Associate Builders, while no longer being a ground
for challenge under “public policy of India”, would
certainly amount to a patent illegality appearing on
the face of the award. Thus, a finding based on no
evidence at all or an award which ignores vital
evidence in arriving at its decision would be
perverse and liable to be set aside on the ground
of patent illegality. Additionally, a finding based on
documents taken behind the back of the parties by
the arbitrator would also qualify as a decision based
on no evidence inasmuch as such decision is not
based on evidence led by the parties, and therefore,
would also have to be characterized as perverse.
**** ***** ****
69. We therefore hold, following the aforesaid
authorities, that in the guise of misinterpretation of
the contract, and consequent “errors of
jurisdiction”, it is not possible to state that the
arbitral award would be beyond the scope of
submission to arbitration if otherwise the aforesaid
misinterpretation (which would include going
beyond the terms of the contract), could be said to
have been fairly comprehended as “disputes”
within the arbitration agreement, or which were
referred to the decision of the arbitrators as
understood by the authorities above. If an
arbitrator is alleged to have wandered outside
the contract and dealt with matters not allotted
to him, this would be a jurisdictional error
which could be corrected on the ground of
“patent illegality”, which, as we have seen
would not apply to international commercial
arbitrations that are decided under Part II of
the 1996 Act. To bring in by the backdoor
grounds relatable to Section 28(3) of the 1996
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Act to be matters beyond the scope of
submission to arbitration under Section
34(2)(a)(iv) would not be permissible as this
ground must be construed narrowly and so
construed, must refer only to matters which are
beyond the arbitration agreement or beyond the
reference to the Arbitral Tribunal”.
**** ***** *****
76. However, when it comes to the public policy
of India argument based upon “most basic
notions of justice”, it is clear that this ground
can be attracted only in very exceptional
circumstances when the conscience of the Court
is shocked by infraction of fundamental notions
or principles of justice. … However, we repeat
that this ground is available only in very
exceptional circumstances, such as the fact
situation in the present case. Under no
circumstance can any court interfere with an
arbitral award on the ground that justice has
not been done in the opinion of the Court. That
would be an entry into the merits of the dispute
which, as we have seen, is contrary to the ethos of
Section 34 of the 1996 Act, as has been noted
earlier in this judgment.”
[emphasis added]
94. The decision in the case of Renusagar Power Co. Ltd. v. General
Electric Company1 was rendered in the context of enforcement of the
foreign award under Section 7(1)(b)(ii) of the Foreign Awards
(Recognition and Enforcement) Act, 1961. In terms of the said
provision a foreign award may not be enforced if it was held that it was
contrary to the public policy. The Supreme Court held that an award
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would be contrary to the public policy, if it is contrary to; (i) the
fundamental policy of Indian law; (ii) the interest of India, and (iii)
justice or morality.
95. The A&C Act was extensively amended by virtue of the
Arbitration & Conciliation (Amendment) Act, 2015, pursuant to the
246th Report of the Law Commission of India. The said amendment
included introduction of Explanation 2 to Section 48 of the A&C Act,
which clarify the question whether there was any contravention of a
fundamental policy of Indian Law would not entail a review on the
merits of the dispute. A similar explanation was also added to Section
34(2)(b) of the A&C Act, which expressly clarifies that the question
‘whether there is a contravention with the fundamental policy of Indian
Law shall not entail a review on the merits of the dispute.
96. More importantly, Sub-Section 2A was introduced in Section 34
of the A&C Act, which would be applicable to the arbitral awards other
than those resulting from international commercial arbitration. All
awards other than those emanating from international commercial
arbitration would be liable to be set aside on the ground of patent
illegality, if the award is vitiated by patent illegality appearing on the
face of the award. However, an award rendered in international
commercial arbitration would not be amenable to challenge on the
ground of patent illegality. With the said assignment, explanation of the
public policy of India as set out in Section 34(2)(b) of the A&C Act
aligned with meaning of the said expression as used under Section 48
of the A&C Act.
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97. We also consider it apposite to refer to the decision of the
Supreme Court in Vijay Karia & Others v. Prysmian Cavi E Sistemi
SRL & Others17 which further clarifies the scope of the public policy
exception. The Supreme Court had referred to the decision of the
Singapore High Court in Sui Southern Gas Co. Ltd. v. Habibullah
Coastal Power Co. (Pte) Ltd., which had construed the public policy
exception, very narrowly. It was relevant to note the following passages
from the said decision: –
“42. At this stage it is important to advert to amendments
that were made by the Arbitration and Conciliation
(Amendment) Act, 2015 (hereinafter referred to as “the
2015 Amendment Act”). Section 48 was amended to delete
the ground of “contrary to the interest of India”. Also, what
was important was to reiterate the Renusagar position,
that the test as to whether there is a contravention with
the fundamental policy of Indian law shall not entail a
review on the merits of the dispute [vide Explanation 2
to Section 48(2)].
43. It will be noticed that in the context of challenge to
domestic awards, Section 34 of the Arbitration Act
differentiates between international commercial
arbitrations held in India and other arbitrations held in
India. So far as “the public policy of India” ground is
concerned, both Sections 34 and 48 are now identical, so
that in an international commercial arbitration conducted in
India, the ground of challenge relating to “public policy of
India” would be the same as the ground of resisting
enforcement of a foreign award in India. Why it is
important to advert to this feature of the 2015 Amendment
Act is that all grounds relating to patent illegality appearing
on the face of the award are outside the scope of
interference with international commercial arbitration
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important to advert to paras 41 and 69 of Ssangyong as
follows:
“41. What is important to note is that a decision
which is perverse, as understood in paras 31
and 32 of Associate Builders, while no longer
being a ground for challenge under “public
policy of India”, would certainly amount to a
patent illegality appearing on the face of the
award. Thus, a finding based on no evidence at
all or an award which ignores vital evidence in
arriving at its decision would be perverse and
liable to be set aside on the ground of patent
illegality. Additionally, a finding based on
documents taken behind the back of the parties
by the arbitrator would also qualify as a
decision based on no evidence inasmuch as
such decision is not based on evidence led by
the parties, and therefore, would also have to
be characterised as perverse.
* * *
69. We therefore hold, following the
aforesaid authorities, that in the guise of
misinterpretation of the contract, and
consequent “errors of jurisdiction”, it is not
possible to state that the arbitral award would
be beyond the scope of submission to
arbitration if otherwise the aforesaid
misinterpretation (which would include going
beyond the terms of the contract), could be said
to have been fairly comprehended as
“disputes” within the arbitration agreement, or
which were referred to the decision of the
arbitrators as understood by the authorities
above. If an arbitrator is alleged to have
wandered outside the contract and dealt with
matters not allotted to him, this would be a
jurisdictional error which could be corrected
on the ground of “patent illegality”, which, asSignature Not Verified
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we have seen, would not apply to international
commercial arbitrations that are decided under
Part II of the 1996 Act. To bring in by the
backdoor grounds relatable to Section 28(3) of
the 1996 Act to be matters beyond the scope of
submission to arbitration under Section 34(2)
(a)(iv) would not be permissible as this ground
must be construed narrowly and so construed,
must refer only to matters which are beyond
the arbitration agreement or beyond the
reference to the Arbitral Tribunal.”
This statement of the law applies equally to
Section 48 of the Arbitration Act.
44. Indeed, this approach has commended itself in other
jurisdictions as well. Thus, in Sui Southern Gas Co.
Ltd. v. Habibullah Coastal Power Co. (Pte) Ltd., the
Singapore High Court, after setting out the legislative
policy of the Model Law that the “public policy”
exception is to be narrowly viewed and that an arbitral
award that shocks the conscience alone would be set
aside, went on to hold:
“48. It is clear, therefore, that in order for
SSGC to have succeeded on the public policy
argument, it had to cross a very high
threshold and demonstrate egregious
circumstances such as corruption, bribery
or fraud, which would violate the most
basic notions of morality and justice.
Nothing of the sort had been pleaded or
proved by SSGC, and its ambiguous
contention that the award was “perverse” or
“irrational” could not, of itself, amount to a
breach of public policy.”
[emphasis added]
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98. In Gemini Bay Transcription (P) Ltd. v. Integrated Sales
Service Ltd.21, the Supreme Court rejected the challenge to the
enforcement of a foreign award, which was premised on the public
policy of India exception under Section 48 of the A&C Act. The Court
held that the public policy exception did not include perversity of an
award for declining the enforcement of a convention award. We
consider it apposite to refer to the following extract from the said
decision:
“60. The judgment in Ssangyong [Ssangyong Engg. &
Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 :
(2020) 2 SCC (Civ) 213] noted in para 29 that Section 48
of the Act has also been amended in the same manner as
Section 34 of the Act. The ground of “patent illegality
appearing on the face of the award” is an independent
ground of challenge which applies only to awards made
under Part I which do not involve international commercial
arbitrations. Thus, the “public policy of India” ground
after the 2015 Amendment does not take within its
scope, “perversity of an award” as a ground to set aside
an award in an international commercial arbitration
under Section 34, and concomitantly as a ground to
refuse enforcement of a foreign award under Section 48,
being a pari materia provision which appears in Part II of
the Act. This argument must therefore stand rejected.”
[emphasis added]
99. The dispute essentially relates to the date as to when the cause of
action had arisen. If we consider this controversy in the perspective of
the law relating to the challenge of the arbitral award on the ground that
it being in conflict with the public policy of India, we find that it does
not fall within the ambit of such a challenge.
21
(2022) 1 SCC 753
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100. As noted above, it is apparent that the learned Single Judge has
not examined the challenge to the impugned award in the aforesaid
perspective. The learned Single Judge erred in not noticing that the
ground of patent illegality was not available in case of an arbitral award
in an international commercial arbitration. The impugned judgment is
erroneous and no interference with the impugned award was warranted
in the proceedings under Section 34 of the A&C Act.
101. In view of the above, the impugned judgement setting aside the
impugned award, is set aside.
102. The appeal is allowed in the aforesaid terms.
103. The parties are left bear their own costs.
VIBHU BAKHRU, J
SACHIN DATTA, J
NOVEMBER 20, 2024
RK
Signature Not Verified
Digitally Signed FAO (OS) (COMM) 13/2024 Page 55 of 55
By:DUSHYANT
RAWAL