Asf Infrastructure Private Limited vs Jyoti Rath Associates Private Limited

,,

1.The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the „the Act‟) impugning the",,

arbitral award dated 26.08.2016 (hereafter „the impugned award‟) delivered by the Arbitral Tribunal constituted by a Sole Arbitrator, Justice B. A.",,

Khan, former Judge of this Court (hereafter „the Arbitral Tribunal‟). The impugned award was rendered in the context of disputes that had arisen",,

between the parties in respect of the „Service Agreement‟ dated 30.03.2006 (hereafter „the Agreement‟), which was entered into between the",,

parties, whereby the respondent was appointed to render architectural and other alliedservices.",,

2.The petitioner alleged that there was deficiency in the services and the respondent had failed to submit complete drawings and design in respect of,,

various components. The petitioner also alleged that the respondent had abandoned the work and consequently, the petitioner was constrained to avail",,

services of another consultant for execution of the balance work. The petitioner also submitted that the drawings furnished by the respondent were,,

defective and the roof constructed based on the said drawings had sagged. Consequently, the petitioner also claimed damages on that count. The",,

respondent also raised counter claims aggregating `6,36,95,517/-. The said counter claims included a claim of `1 crore for non declaration of the",,

respondent as the official architect of the project in question; `25,49,634/- as the balance contractual fee; and interest of `7,45,536/- thereon.",,

3.The Arbitral Tribunal rejected the claims made by the petitioner and also most of the counter claims made by the respondent. However, the Arbitral",,

Tribunal directed that the respondent be declared as an official architect of the project and further awarded a sum of `7,66,000/- in favour of the",,

respondent as balance fee due under the Agreement. In addition, the Arbitral Tribunal also awarded interests at the rate of 9% on the aforesaid fee",,

from the date of termination of the Agreement (that is, 08.03.2007) till the date of actual payment.",,

4.Although, Mr Sibal, the learned Senior Counsel appearing for the petitioner had initially advanced arguments with respect to the rejection of",,

certain claims made by the petitioner; however, subsequently, he restricted the challenge to the impugned award only in respect of two aspects,",,

namely: (i) the Arbitral Tribunal‟s direction to declare the respondent as an official architect of the project; and (ii) the award of `7,66,000/- in favour",,

of the respondent along with interest thereon.,,

5.Briefly stated, the relevant facts necessary to address the aforesaid controversy are as under:-",,

5.1The petitioner (then known as Canton Marketing Private Limited) in terms of the Lease Agreement dated 14.04.2006 took on lease two bare shell,,

buildings (Block A & B) comprising of a basement and ground to 6th floor on a piece of land measuring 2.5 acres from Haryana Industrial,,

Development Corporation (HIDC). The object was to develop a Software Development Centre (SDC), which was to be leased to Tata Consultancy",,

Services Limited (TCSL).,,

5.2.The petitioner, thereafter, appointed the respondent for rendering services relating to the internal fitment, designing and supervision of the project.",,

A Letter of Intent (LOI) dated 04.01.2016 was issued by the petitioner to the respondent. Thereafter, on 30.03.2006, the parties entered into the",,

Agreement (Service Agreement).,,

5.3It was agreed between the parties that the petitioner will be paid professional fee of `69,50,000/-, in stages, for rendering the services as agreed",,

under the Agreement.,,

5.4.The scope of the work was enhanced and the petitioner agreed to pay a further fee of `9 lakhs in respect of such enhanced work. Although, there",,

is no dispute that the petitioner had agreed to pay the said enhanced fee, there is some controversy as to the manner in which the same was to be",,

paid.,,

5.5.The petitioner terminated the Agreement on 08.03.2007 alleging failure on the part of the respondent to comply with its obligations under the,,

Agreement.,,

5.6.Thereafter, the petitioner sent a notice dated 16.04.2007 claiming a sum of `9,01,27,000/- on account of breach of the Agreement alleged to have",,

been committed by the respondent. The petitioner also proposed the name of the Sole Arbitrator to be appointed to resolve the disputes.,,

5.7.The respondent responded by a letter dated 28.04.2007 disputing the allegations made by the petitioner and further raised the counter claims,,

aggregating `6,36,95,517.72/-. The breakup of the counter claims is set out below:-",,

“(a)₹2 crores for the loss due termination of the Contract,",,

(b)₹1 crore for non declaration as the official Architect of the Project,",,

(c)₹2.35 Crores for loss of business opportunity,",,

(d)₹42 lacs for loss caused due to delays of Claimant,Â",,

(e)₹25,49,634/- and for balance contractual fee and 7,45,536/- as interest.â€​",,

5.8.Since the parties would not agree on appointment of a Sole Arbitrator, this Court by an order dated 18.09.2007 appointed the sole arbitrator to",,

adjudicate the disputes between the parties.,,

5.9.The Arbitral Tribunal framed the following issues for consideration:-,,

“i)Was Respondent wholly and solely responsible for the overall supervision and completion of the project and had he failed in this?,,

ii)Had Respondent committed breach of any terms of the service agreement dated 30.03.2006 by delaying the submissions of designs/drawings or by,,

their non-submission?,,

iii)Was Respondent‟s contract validly terminated and was appointment of new Architect justified?,,

iv)Had Respondent supplied any deficient and wrong drawings/designs resulting in the sagging of the 7th Floor or Tower B, which had to be rectified",,

at the cost of Rs.45 lacs?,,

v)Had Claimant suffered any loss/damages of Rs. 9,01,27,000/- due to Respondent‟s non-performance of the contract?",,

vi)In Respondent entitled to Counter Claim of Rs.6,36,95,517.72?â€​",,

6.The Arbitral Tribunal held that it was difficult to hold that the respondent had delayed the delivery of drawings or had committed any breach of,,

the terms of the Agreement resulting in any loss or damage to the petitioner. The Arbitral Tribunal also held that the respondent was not solely,,

responsible for the completion of the project and rejected the plea that the respondent had failed to exercise due control or supervision to coordinate,,

the work with other agencies. Accordingly, the first three issues framed by the Arbitral Tribunal were decided against the petitioner. The Arbitral",,

Tribunal also found that the termination of the Agreement by the petitioner was wrongful and illegal and in contravention of the Agreement.,,

7.The Arbitral Tribunal also rejected the petitioner‟s claim that there was any deficiency or defect in the drawings and accordingly, rejected the",,

,"of

Contract

Price",Architect

1.,5%,On signing of the Letter of Intent

2.,5%,On signing of the Agreement

3.,10%,"On approval and upon compliance

of obligations upto the said stage of

schematic drawings by Owner

4.,10%,"On approval of designs, material,

specifications, finishes, estimate

and issue of tenders and upon

compliance of obligations upto the

said stage.

5.,10%,"On issue of working drawings at

work commencement stage and

upon compliance of obligations

upto the said stage.

6.,40%,"To be paid in installments

consistent with the value of works

implemented at site, payable pro-

rata upon certification of bills for

such works.

7.,10%,"On virtual completion of the

relevantProject works and

handover by respective contractors

and upon compliance of obligations

upto the said stage.

8.,7.50%,"On Project Closure and upon

compliance of obligations upto the

said stage.

9.,2.50%,"On expiry of the Defect Liability

Period