“Cherished Goal” of Arbitration is Finality of Arbitration Awards which Needs to be Fulfilled: High Court of New Delhi.
The equality in rate of interest, would be in consonance with one of the objectives of the Arbitration and Conciliation Act, 1996, namely, finality of arbitration awards. This honorable judgement was passed by High Court of New Delhi in the case of Guru Gobind Singh Indraprastha University v. Engineering India Ltd [FAO(OS) (COMM) 46/2021 &amp; CM APPLs.10323-10325/2021 AND 10760/2021] by The Hon’ble justice Asha Menon and Hon’ble Justice Man Mohan. The appeal had been filed challenging the order that instead of granting a similar rate of interest @ 12% per FAO(OS) (COMM) 46/2021 Page 2 of 6 annum, had asked it to re-agitate the matter as per law despite appreciating that both the parties were to be treated on the same footing and pointed out that Section 34 of the Arbitration and Conciliation Act, 1996 allowed this Court to correct the Award at least to the extent of directing that same rate of interest shall be granted to both the parties and the amount of interest of Rs. 74.12 lakhs had been disallowed, and both the parties should have been permitted to re-agitate the matter before a freshly appointed arbitral tribunal. there is a calculation error in computing the external development charges by the Arbitrator inasmuch as the factum of the claimant completing only 41.9% work was not taken into account. The learned council referred the case of State of Goa vs. Praveen Enterprises, AIR 2011 SC 3814 and the case of M/s. L.G. Electronics India (P) Ltd v. Dinesh Kalra. The Court opinioned that, “in the present appeal, cannot examine the contention of the appellant qua any calculation error in computing the external development charges on the basis that the factum of the claimant completing only 41.9% work was not taken into account by the Arbitrator. if the matter is remanded to an arbitrator for fresh adjudication with regard to rate of interest, it would promote and not curtail litigation—an „end‟ which the Arbitration and Conciliation Act, 1996 seeks to discourage. In fact, this Court is of the opinion that if the argument of learned senior counsel for the appellant with regard to rate of interest is accepted, it would be in consonance with one of the objectives of the Arbitration and Conciliation Act, 1996, namely, finality of arbitration awards.”
IN THE HIGH COURT OF DELHI AT NEW DELHI FAO(OS)46 2021 & CM APPLs.10323 10325 2021 AND 10760 2021 GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY Appellant Through: Mr. Mukul Talwar Senior Advocate with Ms. Anita Sahani Advocate. ENGINEERING INDIA LTD Through: Mr. Uday Gupta Advocate. ..... Respondent Date of Decision: 26th March 2021 HON BLE MR. JUSTICE MANMOHAN HON BLE MS. JUSTICE ASHA MENON JUDGMENT MANMOHAN J(COMM) 46 2021 annum to the Appellant has asked it to re agitate the matter as per law despite appreciating that both the Appellant and the Respondent were to be treated on the same footing. He points out that Section 34 of the Arbitration and Conciliation Act 1996 allows this Court to correct the Award atleast to the extent of directing that same rate of interest shall be granted to both the Respondent and the Appellant. 3. He submits that in the alternate even if the learned Single Judge felt compelled to direct the Appellant Counter Claimant to re agitate its claim for interest then in that case the same direction ought to have been issued to the Respondent as well and the amount of interest of Rs. 74.12 lakhs ought to have been disallowed and both the parties should have been permitted to re agitate the matter before a freshly appointed arbitral 4. Learned senior counsel for the appellant also contends that there is a calculation error in computing the external development charges by the Arbitrator inasmuch as the factum of the claimant completing only 41.9% work was not taken into account. Issue notice. Mr. Uday Gutpa Advocate accepts notice on behalf of the Respondent. He submits that as far as interference with an order made under Section 34 as per Section 37 of Arbitration and Conciliation Act is concerned it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words the Court cannot undertake an independent assessment of the merits of the award and must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision. FAO(OS)46 2021 6. He further submits that as the counter claim is in the nature of damages the appellant is not entitled to any interest on the same. In the alternative without prejudice to his rights and contentions he would submit that if at all the appellant is held entitled to any interest then the same ought to be calculated from 26th October 2015 when the original counter claim was replaced with the amended counter claim and not from 19th May 2011. In support of his submission he relies upon a judgment of the Supreme Court in State of Goa vs. Praveen Enterprises AIR 2011 SC 3814 wherein it has been held as under: “17. As far as counter claims are concerned there is no room for ambiguity in regard to the relevant date for determining the limitation. Section 3(2)(b) of the Limitation Act 1963 provides that in regard to a counterclaim in suits the date on which the counterclaim is made in court shall be deemed to be the date of institution of the counterclaim. As the Limitation Act 1963 is made applicable to arbitrations in the case of a counter claim by a respondent in an arbitral proceeding the date on which the counter claim is made before the arbitrator will be the date of “institution” insofar as counterclaim is concerned. There is therefore no need to provide a date of “commencement” as in the case of claims of a claimant. Section 21 of the Act is therefore not relevant for counter claims. There is however one exception. Where the respondent against whom a claim is made had also made a claim against the claimant and sought arbitration by serving a notice to the claimant but subsequently raises that claim as a counter claim in the arbitration proceedings initiated by the claimant instead of filing a separate application under Section 11 of the Act the limitation for such counter claim should be computed as on the date of service of notice of such claim on the claimant and not on the date of filing of the counter claim.” 7. Having heard learned counsel for the parties this Court is of the view that findings of fact as well as of law of the arbitrator Arbitral Tribunal are FAO(OS)46 2021 ordinarily not amenable to interference either under Section 34 or Section 37 of the Act. The scope of interference is only where the finding of the tribunal is either contrary to the terms of the contract between the parties or ex facie perverse. 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. It has also been repeatedly held that while entertaining appeals under Section 37 of the Act the Court is not actually sitting as a Court of Appeal over the award of the Arbitral Tribunal and therefore the Court would not re appreciate or re assess the evidence Ltd v. Dinesh Kalra’]. 8. Keeping in view the aforesaid mandate of law and concurrent findings of the fact this Court is in agreement with the submission of the learned counsel for the respondent that this Court in the present appeal cannot examine the contention of the appellant qua any calculation error in computing the external development charges on the basis that the factum of the claimant completing only 41.9% work was not taken into account by the Arbitrator. 9. However this Court is of the view that as the learned Single Judge in the impugned order has held that the appellant is entitled to interest on the counter claim which is in the nature of damages it ought to have applied the same yardstick with regard to the rate of interest to both the parties. This Court is further of the view that the appellant is entitled to interest from the date it filed its counter claim namely 19th May 2011. On 26th October 2015 the appellant had only amended its counter claim and that too by reducing the amount claimed from Rs.6.93 crores to Rs. 6.46 crores. FAO(OS)46 2021 It is pertinent to mention that the Arbitrator had only awarded Rs.45 50 046 against the aforesaid counter claim. 10. The judgment of the Apex Court in State of Goa is inapplicable to the facts of the present case as the said judgment deals with the issue of limitation of a counter claim and not with regard to rate of interest that has to be paid on the counter claim. 11. Further this Court is of the view that if the matter is remanded to an arbitrator for fresh adjudication with regard to rate of interest it would promote and not curtail litigation—an „end‟ which the Arbitration and Conciliation Act 1996 seeks to discourage. In fact this Court is of the opinion that if the argument of learned senior counsel for the appellant with regard to rate of interest is accepted it would be in consonance with one of the objectives of the Arbitration and Conciliation Act 1996 namely finality of arbitration awards. 12. This Court is of the view that if the argument of learned senior counsel for the appellant with regard to rate of interest is accepted it would promote one of the „cherished goals‟ of arbitration namely finality of arbitration awards. 13. Accordingly the impugned order of the learned Single Judge is modified to the extent that the appellant shall also be entitled to the same rate of interest as awarded by the Arbitrator to the respondent on the counter claim namely simple interest @ 12% per annum from 19th May 2011 till the date of award and @ 16% from the date of the award to the date of payment. FAO(OS)46 2021 14. With the aforesaid modification the award and impugned order of the learned Single Judge are upheld and the present appeal and pending applications stand disposed of. MANMOHAN J MARCH 26 2021 ASHA MENON J FAO(OS)46 2021 