Airports Authority Of India vs M/S Sikka Associates

G.S.Sistani, J

This is an appeal under section 37 of the Arbitration and Conciliation Act, 1996 read with section 13 of the Commercial Courts Act, 2015 against

the judgment dated 21.12.2017 passed by a learned Single Judge of this Court by which the award dated 23.03.2015 passed by the sole arbitrator has

been upheld and the objections to the award stand dismissed.

The necessary facts to be noticed for disposal of this appeal are that the Board of the appellant in its 96th Board Meeting held on 16.03.2006

granted approval for inviting Expression of Interest for the New Domestic Passenger Terminal at NSCBI Airport, Kolkata for short listing and then

holding Global Design Competition as per the Guidelines of the Council of Architecture and Engineering Services for the New Domestic Passenger

Terminal at NSCBI Airport, Kolkata.

The appellant had organized a Global Design Competition for execution of comprehensive architecture and engineering services for the proposed

New Domestic Passenger Terminal Building at NSCBI Airport at Kolkata (West Bengal). The competitive design submitted by the respondent (SA)

was approved by the Assessment Committee of the appellant and the respondent was appointed as a consultant on 01.06.2007 for air side of the

project. Owing to the nature and based on the blue prints of the building, which was to cater the footfall of 20 millions annually, the appellant also

appointed M/s Virender Khanna & Associates (M/s VKA), another Architectural Consultant for city side work of the Airport.

The parties entered into an agreement dated 21.08.2007 for execution of „Architectural/ Engineering Consultancy Services‟. The agreement laid

down the terms and conditions pertaining to the services to be rendered, the stipulated time period, professional fee to be paid, stages & schedule of

payments etc. The relevant terms of the agreement are reproduced below:-

2.0 PROFESSIONAL FEE

2.1 Professional fee shall be paid only for the items of works for which professional services have been rendered by the Consultant.

2.2 In consideration of the professional services rendered by the Consultant, he shall be paid a professional fee of 5% of the actual cost of

the work or the awarded cost whichever is lower of the subhead of the works for which consultant has rendered Professional services. In

addition to the professional fee, service tax will be paid as per the Act in vogue at the time of the payment of the bill. The initial payment

shall be made on approval preliminary estimated cost. The cost of the work shall not include costs of aerobridges, in-line Baggage handling

Conveyor system, Baggage claim Belts, telephone exchange equipment, Specialized hand/ Baggage security scanning items, DG Sets, FIDs,

CCTV, Surveillance CCTV, check-in counters, custom and immigration counters and dust bins. For effecting stage wise payments the cost of

works shall be as specified in clause 4.1. Nothing extra shall be paid to the Consultant on account of Soil investigation site survey, vetting

from IIT, presentations, model, computer simulation, presentation, drawing etc.

Items like travellators, escalators, elevators, counters, concourse and security hold chairs and furniture would be included towards payment

till stage 4.

The payment to State Electricity Board for dedicated power supply may be included in the cost estimate of the project but not to be included

for payment to Consultant.

3.0 SCHEDULE OF PAYMENT

3.1 Details of services to be rendered at various stages shall be as mentioned in Annexure 'A'.

3.2 The Consultant shall be paid professional fee in the following· stages consistent with the work done plus other charges and

reimbursable expenses as agreed upon. On submitting the bill the consultant shall certify completion of stage work.

4.0 EFFECTING PAYMENT TO THE CONSULTANT

4.1 The fee payable to the Consultant shall be computed on the actual cost of works or the awarded cost whichever is lower. The payment

due to the Consultant at different stages shall be computed on the following basis:

(i) At Stage 1 : On rough estimate of cost

(ii) At Stage 2,3 &4 : On preliminary estimate of cost

(iii) At Stage 5 : On preliminary estimate of cost. excluding the estimated cost of works/ items specified in clause 4.4

(iv) At Stage 6& 7 : On Awarded cost or actual cost whichever is lower of the Packages specified in para 2.20 of Annexure A

 (Emphasis Added)

The cost estimated for the entire project was Rs 1123.418 crores, which included all the civil and E& M works. The ratio of proportionality among

the two consultants i.e. M/s VKA and the respondent was 27.02% :72.98%

After nearly four years from the date of commencement of the project, the Appellant by a communication dated 24.01.2011, brought to the notice

of the respondent that in its 110th Board resolution passed on 17.05.2007, the appellant had approved the professional services rendered by the

consultant being paid a professional fee @ 5% of the estimated cost of work or the awarded cost whichever is lower. The respondent was informed

about this omission and owing to inadvertence, clause 2.2 of the agreement had wrongly recorded that the consultant shall be paid a professional fee

@ 5% of the actual cost of the work or the awarded cost whichever is lower. The respondent was called upon to submit its acceptance to the change

in the agreement and post the change, the agreement would read as the consultancy services shall be paid @ 5% of the estimated cost of the work or

the awarded cost whichever is lower. By a communication dated 14.03.2011, the respondent refused to give its consent for the modification of the

terms of the agreement. The respondent contented that it has already completed majority of the work for which, 70% of the fee had already been

paid. It was further submitted that as the respondent was performing the work in joint collaboration with an international firm of architects namely

RMJM-Hong Kong, and there were other financial commitments, which were directly based on the fee receivable by the respondent under the

agreement so executed. Hence, the change suggested by the appellant was unworkable and no such unilateral change in the terms was acceptable to

the respondent.

Post the communication dated 24.01.2011 and its reply dated 14.03.2011, the respondent continued to provide the necessary services as per the

agreement till the completion of the building in March 2013, pursuant to which, a final bill was raised. Since the appellant had suddenly stopped making

payment on the running Account Bills, a sole Arbitrator, Shri. H.S. Dogra, was appointed by an order dated 08.10.2012 in Arbitration Petition no.363

of 2012 to adjudicate the claims/ counter- claims of the parties pursuant to agreement dated 07.04.2006.

The Sole Arbitrator vide its impugned award dated 23.03.2015, awarded the total sum of Rs. 19,02,47,938/- in favour of the respondent under Claim

no.1 along with the service tax at the rate of 12.36% and 10% of simple interest towards the Claim No.2 and 3 of the respondent.

Mr. Rai, learned senior counsel for the appellant submits that in the meeting held in the Planning office of the appellant on 13.07.2007 in the

presence of the respondent and M/s VKA, where both the parties (SA and VKA) agreed to follow the Madurai Agreement with modifications as

mentioned in the minutes of the meetings. However the written note of the appellant wrongly recorded the consultancy fee to be paid to the

consultants. Learned senior counsel further submits that the Single Judge and the Arbitrator have failed to consider that vide 96th Board meeting held

on 16.03.2006 and 110th Board Meeting held on 17.05.2007, the Board of the appellant had approved consultancy fee of 5% of the estimated cost or

the awarded cost whichever is lower. The same was incorrectly reflected in the agreement as 5% of the „actual‟ cost instead of the „estimate‟,

which was in the knowledge of the respondent. Therefore, the appellant in view of the said letter re-worked the fee payable to the respondent based

on the decision of the Board of the Airports Authority of India and stopped further release of payments.

It is further submitted that the learned Arbitrator has erred in observing that the complete Board Resolution of the 110th Board Meeting was not

placed on record and only an extract of the meeting was placed. However, the Arbitrator failed to appreciate that various agendas are put before the

Board and only the relevant extract concerning the issue was filed before the Arbitrator. Therefore, the abovementioned reasoning of the Arbitrator

further upheld by the learned Single Judge is erroneous and perverse. Moreover, the resolution itself has not been disputed by the Respondent.

It is further contended that the learned Single Judge has erred in holding that instead of taking any further action on its letter dated 24.01.2011,

further work was awarded to the respondent on the same terms and conditions which is against the pleadings and evidence on record. It is submitted

that for such a large and strategic project, the consultancy agreement could not have been terminated at the 6th stage when 70% work was complete.

It is strongly denied that any further work was awarded to the respondent by the appellant on the same terms and conditions.

It is also contended by counsel for the appellant that the learned Single Judge has failed to appreciate that till stage 5, consultancy charges were to

be paid to the respondent on rough estimate of cost and on preliminary estimate of cost. It was only at the 6th and 7th stage when the consultant was

to be paid on awarded cost or actual cost, whichever is lower, as per the contract and it is during this period the appellant came to know of the

anomaly which had crept in the agreement and prior to the said stages, there was no occasion to detect such an anomaly/mistake.

Counsel for the appellant has also submitted that the learned Single Judge has erroneously held that there was no mistake of fact in the award

whereas, the documents on record clearly show that there was a mistake of fact, which is evident from the fact that what was agreed to between the

parties was not put into writing. Counsel submits that the learned Single Judge has failed to appreciate that the entire agreement was vitiated by fraud

inasmuch as it was signed in violation of the Madurai Agreement as well as the 110th Board meeting. Moreover, the person i.e. Shri Sarwan Singh

was not authorized to make any changes in the approval accorded by the Board of the AAI in its 110th Board meeting.

Mr. Sharma, counsel for the respondent submits that the agreement is clear and unambiguous in nature and therefore, should be read in its

entirety. He contended that the plea of the appellant that there was a genuine mistake in the agreement does not hold any ground, as the same term

has been repeatedly used in the agreement. He further submits that the appellant raised such a grievance only after four years, when admittedly most

of the work was complete. Moreover, even upon realizing the purported „inadvertent mistake‟ in the agreement, the appellant never rescinded the

contract, but, infact gave additional work to the respondent.

The Counsel for the respondent further submitted that the Board Resolutions are not binding on the respondent as they were not brought to the

notice of the respondent and therefore, cannot bind the respondent.

Counsel for the respondent also submits that the appellant has now, at this stage, sought to improve its case by relying upon the noting dated

13.07.2007. Mr. Sharma contends that the purported minutes and the file notings pre-date the agreement between the parties, and inspite of which no

amendment was made to the agreement ; secondly, these purported minutes and notings were never communicated to the respondent, nor the

respondent were privy to them; thirdly, the purported file notings were never placed or even pleaded before the Ld. Arbitral Tribunal; and lastly, these

purported file notings are a matter of indoor management and cannot possibly bind the respondent.

Mr. Sharma lastly submitted that the learned Arbitrator had considered the evidence and passed a speaking and reasoned award. He further

submitted that appellant cannot unilaterally novate/ modify an agreement and it is not for the courts to rewrite the agreement between the parties.

We have heard the learned Counsel for the parties and given our thoughtful consideration to the matter.

Mr. Rai, learned Senior Counsel appearing for the appellant has submitted that clause 2.2 of the agreement had wrongly recorded that the

consultant shall be paid a professional fee at the rate of 5% of the actual cost of the work or the awarded cost whichever is lower. Mr.Rai has

highlighted the fact that in fact the Board of Airport Authority of India had approved the professional services rendered by the consultant on being

paid a professional fee at the rate of 5% of the estimated cost of the work or the awarded cost whichever is lower. It is also the case of the appellant

that although the agreement was entered into between the parties on 21.08.2008, the error was detected in the year 2011 and the same was brought to

the notice of the respondent vide letter dated 24.01.2011. Counsel has also submitted that the minutes of the 96th Board Meeting of the appellant held

on 16.03.2006 and 110th Board Meeting held on 17.05.2007 had recorded the terms whereas the learned Arbitrator and the learned Single Judge have

ignored the same. He has also submitted that as the Board had accorded its approval only on the fee being 5% of the estimated cost or the awarded

cost whichever is lower, the agreement by mistake records that such fee would be paid at 5% of actual cost or the awarded cost whichever is lower,

and the appellant could not have been held liable under the same. He further submitted that this mistake in the agreement was known to the

respondent as in a meeting held between the respondent and the Member(Planning) of the appellant on 13th July, 2007, the respondent had been

informed that the latest agreement signed between the appellant and the consultant for the Integrated Passenger Terminal Building at Madurai Airport

in Tamil Nadu would be followed and in the said agreement, there was a term correctly recording the fact that the consultant was to be paid 5% of

the estimated cost or the awarded work whichever is lower. He, however, concedes that this agreement was not placed before the Arbitrator.

The sum and substance of arguments of Mr.Rai is that since the agreement executed between the parties was not in terms of the Board

Resolution, the same would not be binding upon the parties. Per contra, Mr.Sharma, learned counsel for the respondent has submitted that the terms of

the agreement were clear and explicit. The terms regarding the fee not only find mentioned in clause 2.2 but also in clause 4.1 of the agreement. It is

contended that the appellant cannot be allowed to raise the plea of inadvertence after a gap of 3½ years of execution of the agreement. Mr.Sharma

has also highlighted the fact that even post the communication dated 24.01.2011 the appellant took no steps to terminate the agreement but allowed the

respondent to continue with the work and in fact awarded further work as per the terms of the agreement which is apparent from the fact that the

agreement was not terminated. It has also been submitted by Mr.Sharma that reliance of Board Resolutions by the appellant are misplaced as the

same are not binding on the respondent and is an internal document of the appellant.

The learned arbitrator has considered this aspect in the following paragraph of the award which we deem appropriate to reproduce:

“(vi) After carefully going through all the documents and records produced by the parties and hearing at length both the parties, I have come to the

following conclusion. It is undisputed that clause 2.2 of the agreement between the parties clearly stipulates that “In consideration of the

professional services rendered by the consultant, he shall be paid a professional fee of 5% of the actual cost of the work or the awarded cost

whichever is lower of the sub head of the works for which consultant has rendered professional services.†This contract was entered into on 21st

August, 2007 whereas the board meeting of AAI is stated to have been held on 17th May, 2007 i.e. nearly three months prior to the signing of the

agreement. Since the decision of the board was well known to the respondents as on the date of signing of this agreement, the respondents could not

explain or place before me any documents or circumstances explaining as to how this clause got written differently in the contract document in the

first place.

Further, a careful study of the contract document reveals that similar provisions (as at clause 2.2) are repeated at least at two more places in the

contract. At clause 4.1, the contract states that “the fee payable to the consultant shall be computed on the actual cost of the works or the

awarded cost whichever is lowerâ€. Again at sub clause 4.1 (vi) relating to the payment at stage 6 and 7 it states “on awarded cost or actual cost

whichever is lower of the packages specified in para 2.20 of Annexure Aâ€. It therefore appears that the contract document was framed with the

clear intent and understanding that the fee is to be paid on the basis of lower of the awarded cost or the actual cost since this aspect is reflected at

least at three different clauses in the contract document. This therefore cannot be accepted as an inadvertent error or a typing mistake as argued by

the Respondents.

The argument of the respondents that upto stage 5 payment was to be made on rough cost estimate and therefore this omission escaped their attention

also does not appear to be plausible. Clause 4.1 of the agreement clearly states that payment at stage 1 only shall be made on rough estimated cost.

Payment at stage 2,3 and 4 is to be made on preliminary estimate of cost. Similarly, payment at stage 5 is to be made on the preliminary estimate of

the cost excluding the items specified in clause 4.4. Payment at stage 6 and 7 is to be made on awarded cost or the actual cost whichever is lower. It

is undisputed that when the matter was raised by the respondent in January 2011, the consultancy works had reached stage 6b(ii) which means 70%

of the total fees was payable at that stage and some payments had already been made on the awarded costs (which is now proposed to be replaced

by estimated cost by the Respondent). One cannot fault the field units of AAI on this, as the payments released were as per the contract.

In the face of large number of judgments of the apex court and High Courts cited above, and the fact that for nearly four years parties continued to

act as per the provisions of the clause 2.2 of the agreement, the principle of estopple also comes into play. Considering all the factors mentioned

above, I hold that the modifications proposed to be carried out in clause 2.2 of the agreement cannot be sustained in view of the objections raised by

the Claimant and a large number of citations of the Apex court barring such unilateral actions. Therefore, the letter of the respondents dated 24th

January, 2011 proposing changes in clause 2.2 of the contract is struck down. The respondent has to finalize the final bill based on the terms and

conditions of clause 2.2 as it existed in the original agreement entered into between the two parties.â€​

The learned arbitrator has carefully analysed the terms of the contract entered into between the parties and observed that clause 2.2 of the

agreement clearly stipulates the terms regarding the professional services to be rendered by the consultant. The arbitrator has further taken note of

the fact that similar clause has been repeated at two more places in the contract and thus, it cannot be said that the same was an inadvertent error or

a typing mistake. We also find that the arbitrator has also taken note of the fact that payments were made to the respondent not on the basis of a

rough cost estimated as was urged before the arbitrator and urged before us as well. Taking note of clause 4.1 of the agreement, the arbitrator has

held that payment at stage 1 only was to be made on rough estimated cost and while payments at stages 2 to 4 were required to be made on the

preliminary estimated cost. We may also note that the consultancy work had reached stage 6b(ii) which means that 70% of the total fees was payable

at that stage and payments had already been made on the awarded costs and not on estimated cost as is sought to be urged by the appellant. We are

unable to find any fault in the reasoning of the learned arbitrator. We do not find the award to be either perverse, unreasonable, not violative of public

policy of India.

It is not in dispute that the respondent had refused to give its consent to the modification of the terms of the contract vide its letter dated

14.03.2011 and in the absence thereof the appellant could not have unilaterally modified the terms of the contract entered into between the parties on

21.08.2008. In Bharat Sanchar Nigam Limited And Another Vs. BPL Mobile Cellular Limited And Others reported in (2008) 13 SCC 597, the

Supreme Court held that:-

“44. If the parties were ad idem as regards terms of the contract, any change in the tariff could not have been made unilaterally. Any novation in

the contract was required to be done on the same terms as are required for entering into a valid and concluded contract. Such an exercise having not

been resorted to, we are of the opinion that no interference with the impugned judgment is called forâ€​.

Similarly, in Delhi Development Authority And Another Vs. Joint Action Committee, Allottee Of SFS Flats And Others reported in (2008) 2 SCC

672, the Supreme Court reiterated the above position of law as under :-

“62. It is well-known principle of law that a person would be bound by the terms of the contract subject of course to its validity A contract in

certain situations may also be avoided. With a view to make novation of a contract binding and in particular some of the terms and conditions thereof,

the offeree must be made known thereabout. A party to the contract cannot at a later stage, while the contract was being performed, impose terms

and conditions which were not part of the offer and which were based upon unilateral issuance of office orders, but not communicated to the other

party to the contract and which were not even the subject- matter of a public notice. Apart from the fact that the parties rightly or wrongly proceeded

on the basis that the demand by way of fifth installment was a part of the original Scheme, DDA in its counteraffidavit either before the High Court or

before us did not raise any contra plea. Submissions of Mr. Jaitely in this behalf could have been taken into consideration only if they were pleaded in

the counter- affidavit filed by DDA before the High Court.

Xxxxxx xxxxxx

The stand taken by DDA itself is that the relationship between the parties arises out of the contract. The terms and conditions therefor were,

therefore, required to be complied with by both the parties. Terms and conditions of the contract can indisputably be altered or modified. They cannot,

however, be done unilaterlally unless there exists any provision either in contract itself or in law. Novation of contract in terms of Section 60 of the

Contract Act must precede the contract-making process. The parties thereto must be ad idem so far as the terms and conditions are concerned. If

DDA, a contracting party, intended to alter or modify the terms of contract, it was obligatory on its part to bring the same to the notice of the allottee.

Having not done so, it, relying on or on the basis of the purported office orders which are not backed by any statute, new terms of contract could (sic

not be) thrust upon the other party to the contract. The said purported policy is, therefore, not beyond the pale of judicial review. In fact, in the realm

of contract, it cannot be stated to be a policy decision as such.

Xxxxxx xxxxxx

A definite price is an essential element of binding agreement. A definite price although need not be stated in the contract but it must be worked out

on some premise as was laid down in the contract. A contract cannot be uncertain. It must not be vague. Section 29 of the Contract Act reads as

under:

“29. Agreements void for uncertainty- Agreements, the meaning of which is not certain, or capable of being made certain, are void.â€​

A contract, therefore, must be construed so as to lead to a conclusion that the parties understood the meaning thereof. The terms of agreement cannot

be vague or indefinite. No mechanism has been provided for interpretation of the terms of the contract. When a contract has been worked out, a fresh

liability cannot be thrust upon a contracting party.

 81. It is well settled that a definite price is an essential element of a binding agreement. Although a definite price need not be stated in the contract,

but assertion thereof either expressly or impliedly is imperativeâ€​.

The Learned Single Judge rightly upheld that an alteration in the contract can be made only where the parties are ad idem to the same. In the case

of National Highways Authority of India vs. BSCPL, (2015) 217 DLT 321, this court held as under:-

“A party cannot unilaterally act on a different interpretation to is advantage. In this regard the Claimant has referred to the decision of Hon'ble

Supreme Court of India in Delhi Development Authority vs. Joint Action Committee Allottee of SFS Flats MANU/SC/0202/2008 : (2008) 2 SCC 672

where the Hon'ble Supreme Court has laid down in paragraph 61 as under:-

........Terms and conditions of the contract can indisputably be altered or modified. They cannot, however, be done unilaterally unless there

exists any provision either in contract itself or in law. Novation of contract in terms of Section 60 of the Contract Act must precede the

contract making process. The parties thereto must be ad idem so far as the terms and conditions are concerned. If DDA, a contracting

party, intended to alter or modify the terms of contract, it was obligatory on its part to bring the same to the notice of the allottee. Having

not done so, it, relying on or on the basis of the purported office orders which is not backed by any statute, new terms of contract could (sic

not be) thrust upon the other party to the contract.

It was further held by the Hon'ble Supreme Court in paragraph 80 of the said case as under:-

A contract, therefore, must be construed so as to lead to a conclusion that the parties understood the meaning thereof. The terms of agreement

cannot be vague or indefinite. No mechanism has been provided for interpretation of the terms of the contract. When a contract has been worked out,

a fresh liability cannot thrust upon a contracting party.

The Supreme Court in Bharat Sanchar Nigam Limited Vs. BPL Mobile Cellular MANU/SC/7717/2008: 2008(8) SCALE 106.

The Supreme Court in the said case has held as under:

If the parties were ad idem as regards terms of the contract, any change in the tariff could not have been made unilaterally. Any novation in the

contract was required to be done on the same terms as are required for entering into a valid and concluded contract. Such an exercise having not been

resorted to, we are of the opinion that no interference with the impugned judgment is called for.

Indisputably, mistakes can be rectified. Mistake may occur in entering into a contract. In the latter case, the mistake must be made known. If by

reason of a rectification of mistake, except in some exceptional cases, as for example, where it is apparent on the face of the record, mistake cannot

be rectified unilaterally. The parties who that would suffer civil consequences by reason of such act of rectification of mistake must be given due

notice. Principles of natural justice are required to be complied with. The fact that there was no mistake apparent on the face of the records is borne

out by the fact that even the officers wanted clarification from higher officers. The mistake, if any, was sought to be rectified after a long period; at

least after a period of three years. When a mistake is not rectified for a long period, the same, in law, may not be treated to be one.

The findings of Lord Denning in Amalgamated Investment & Property Co. Ltd. vs. Texas Commerce International Bank Ltd. cited as (1981) 3 ALL

ER 557 (Volume C-3 Page 175-183). The relevant paragraph is reproduced in Award:-

If the parties to a contract, by their course of dealing, put a particular interpretation of the terms of it, on the faith of which each of them to the

knowledge of the other acts and conducts their mutual affairs, they are bound by that interpretation just as if they had written it down as being a

variation of the contract. There is no need to inquire whether their particular interpretation is correct or not or whether they were mistaken or not, or

whether they had in mind the original terms or not. Suffice it, that they have, by the course of dealing, put their own interpretation on their contract,

and cannot be allowed to go back on it.""â€​

The Hon‟ble Supreme Court in Essar Steel Ltd. Vs. Union of India (UOI) and Ors., (2016)11 SCC, the court held as under:-

“23.The learned Senior Counsel further contends that the power to unilaterally alter the terms and conditions of an agreement is not available even

to a party to a contract and such a unilateral exercise affects the integrity of the contract and therefore it is illegal.â€​

The law is well settled that the scope of interference by courts under Section 34, and Section 37 of the Arbitration Act, 1996 is limited. The court

cannot sit in appeal and reassess the evidence. The Arbitrator/ Tribunal is the final arbiter on facts as well as in law, and even errors, factual or legal,

which stop short of perversity, do not merit interference under Sections 34 or 37 of the Act.

The scope of judicial scrutiny and interference by an appellate court under Section 37 of the Act is even more restricted, while deciding a petition

under Section 34 of the Act. The Hon‟ble Supreme Court in the case of McDermott International Inc. v. Burn Standard Co. Ltd. and Ors, (2006) 11

SCC 181 held as under:

The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness.

Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice,

etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it

is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties

to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and

finality offered by it.

In the case of MP Housing Board vs. Progressive Writers and Publishers, (2009) 5 SCC 678, the Supreme Court was of the view that unless

there is a gross error apparent on the face of the award, or that the award is perverse, the courts should refrain from interfering with the award.

The mere adoption of one view by the Arbitral Tribunal where there are two plausible views is not a ground that merits judicial interference. The

Apex Court in G. Ramachandra Reddy and Co. Vs. Union Of India (UOI) and Anr., (2009) 6 SCC 414 held as under:-

“Error apparent on the face of the record does not mean that on closer scrutiny of the import of documents and materials on record, the finding

made by the arbitrator may be held to be erroneous. Judicial decisions over the decades have indicated that an error of law or fact committed by an

arbitrator by itself does not constitute misconduct warranting interference with the award.â€​

In Associate Builders vs. Delhi Development Authority, reported at (2015) 3 SCC 49, the Supreme Court while further explaining the scope of

judicial intervention under the appeal in the Act held as under:-

“It must clearly be understood that when a court is applying the ""public policy"" test to an arbitration award, it does not act as a court of appeal and

consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the

ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or

on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score1 . Once it is found that the

arbitrators approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah, Shares and Stock Brokers (P) Ltd. v. B.H.H.

Securities (P) Ltd. MANU/SC/1248/2011 : (2012) 1 SCC 594, this Court held:

A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or re-appreciating the evidence. An award can be challenged

only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second Respondent

and the Appellant are liable. The case as put forward by the first Respondent has been accepted. Even the minority view was that the second

Respondent was liable as claimed by the first Respondent, but the Appellant was not liable only on the ground that the arbitrators appointed by the

Stock Exchange under Bye-law 248, in a claim against a non-member, had no jurisdiction to decide a claim against another member. The finding of the

majority is that the Appellant did the transaction in the name of the second Respondent and is therefore, liable along with the second Respondent.

Therefore, in the absence of any ground Under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different

decision can be arrived at.â€​

This Court, time and again has emphasized on the narrow scope of section 37. In the case of MTNL Vs. Fujitshu India Private Limited, reported

at 2015 (2) ARB LR 332 (Delhi), in paragraph 17 and 19 , the division bench held as under:

“17.The law is settled that where the Arbitrator has assessed the material and evidence placed before him in detail, the court while

considering the objections under Section 34 of the said Act does not sit as a court of appeal and is not expected to re- appreciate the entire

evidence and reassess the case of the parties. The jurisdiction under section 34 is not appellate in nature and an award passed by an

Arbitrator cannot be set aside on the ground that it was erroneous. It is not open to the court to interfere with the award merely because in

the opinion of the court, another view is possible. The duty of the court in these circumstances is to see whether the view taken by the

Arbitrator is a plausible view on the facts, pleadings and evidence before the Arbitrator. Even if on the assessment of material, the court

while considering the objections under section 34 is of the view that there are two views possible and the Arbitral Tribunal has taken one of

the possible views which could have been taken on the material before it, the court would be reluctant to interfere. The court is not to

substitute its view with the view of the Arbitrator if the view taken by the Arbitrator is reasonable and plausible Jhang Cooperative Group

Housing Society v. P.T Munshi Ram & Associates Private limited: MANU/DE/1282/2013 : 202(2013) DLT 218.

The extent of judicial scrutiny under section 34 of the Act is limited and scope of interference is narrow. Under section 37, the extent of

judicial scrutiny and scope of interference is further narrower. An appeal under section 37 is like a second appeal, the first appeal being to

the court by way of objections under section 34. Where there are concurrent findings of facts and law, first by the Arbitral Tribunal which

are then confirmed by the court while dealing with objections under section 34, in an appeal under section 37, the Appellate Court would

be very cautious and reluctant to interfere in the findings returned in the award by the Arbitral Tribunal and confirmed by the court under

section 34.â€​

A careful reading of the award would show that the same is neither patently illegal nor violative of the public policy of India nor it shocks the

conscience of the Court. The appellant has failed to point out any error apparent on the face of the record, which would justify our interference.

We do not find any merit in the appeal. Hence, no grounds are made out to interfere in the impugned order passed by learned Single Judge under

Section 34 of the Arbitration and Conciliation Act, 1996. Resultantly, the appeal is dismissed.

C.M.Nos.4730/2018 & 4731/2018

Both the applications stands disposed of, in view of the order passed in the appeal.