Allied-Dynamic Joint Venture v. Ircon International Ltd, Delhi

Delhi High Court | OMP (COMM) 451/2016

Background facts

  • A contract was awarded by Ircon International Ltd, Delhi (Respondent) to Allied-Dynamic Joint Venture (Petitioner) on October 25, 2010, for various work (Project).
  • The Petitioner and the Respondent entered into an Agreement dated December 1, 2010 (Agreement) in respect of the contract awarded by the Respondent.
  • The total value of the Project was INR 21,97,61,199 and the term for completion was determined as 11 months ending on September 24, 2011.
  • Various issues arose which lead to delay in completion of the Project. However, both the Petitioner and Respondent mutually agreed to extend the completion period to March 31, 2014.
  • The Project was finally completed in March 2014 and an amount of INR 23,09,58,770 was released for the same.
  • After completion, the Petitioner had various claims against the Respondent with respect to incorrect deductions and compensation for the delay.
  • All the claims raised by the Petitioner were referred to a Sole Arbitrator, who rejected all the claims of the Petitioner.
  • Being aggrieved by the said Award, the Petitioner has filed the present Petition.

Issues at hand?

  • Whether the Arbitrator who was an employee of the Respondent rendered the Award in a biased manner?
  • Whether compensation in respect of the delay in handing over of the project site should be awarded since the same is admitted by the Respondent?
  • Whether claims of the Petitioner with respect to illegal deduction and compensation should have been allowed?

Decision of the Court

  • At the outset, the Court held that the Agreement itself provides that an employee can be appointed as a Sole Arbitrator provided such an employee is not connected with the work in question.
  • Further, it was held that the Sole Arbitrator was appointed as far back as October 21, 2014, however the Petitioner at no point sought for a formal adjudication for change of arbitrator on the grounds of biasness nor availed any remedy on this ground. Hence, the Court held that the Petitioner cannot wait for the final Award and then approach the Court with the allegation of biasness of the Sole Arbitrator.
  • The Court also held that the decision of the Supreme Court in the case of Shree Vishnu Constructions v. The Engineer in Chief Military Engineering Service1 is not applicable to the present case. The Court further held that Petitioner participated in the proceedings fully and hence after an Award is passed the Petitioner cannot challenge the said order on the basis of biasness of the Sole Arbitrator as the same would constitute as waiver of right of the Petitioner under Section 4 of the Arbitration and Conciliation Act, 1996 (Act).
  • The Court held that delay in completion of the Project occurred due to the conduct of both the Petitioner as well as the Respondent and they had mutually agreed to extend the date of completion of the Project. The Court observed that the Petitioner was also paid an amount of INR 1,08,32013 as per the Price Variation Clause (PVC) in the Agreement. The Court also held that the claims of the Petitioner were based on hypothetical calculations and were not based on evidence at all. Hence in view of the above the Court held that there are no grounds for interference with the decision of the Sole Arbitrator in rejecting the claim of the Petitioner.
  • Finally, the Court relied on the judgement in the case of Haryana Urban Development Authority, Karnal v. Mehta Construction Company2 and held that a Court cannot enter into fact finding in a Petition filed under Section 34 of the Act and cannot set aside an Award on the ground of misappreciation of evidence.
  • Hence, in view of the above the Court dismissed the Petition.

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1. 2023 LiveLaw (SC) 417

2. 2022 LiveLaw(SC) 348

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