High Court of H.P.IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

Arbitration Case No. 71 of 2017

Reserved on:16.08.2019

Decided on: 23.08.2019.

__________________________________________________________

Tarun Mahindroo ….Petitioner

Versus

H.P. Power Corporation Limited …Respondent

______________

Coram:

The Hon’ble Ms. Justice Jyotsna Rewal Dua, Judge.

Whether approved for reporting?

1

Yes.

__________________________________________________________

For the petitioner : Mr. Suneet Goel, Advocate.

For the respondent : Mr. Sunil Mohan Goel, Advocate.

__________________________________________________________

Jyotsna Rewal Dua, J.

Feeling aggrieved against the award passed by the learned

Arbitrator, instant petition under Section 34 of the Arbitration &

Conciliation, Act 1996, has been preferred by the petitioner/claimant.

The main point to be adjudicated in this case is:- whether

loss of profits and over heads on account of prolongation of the contract,

can be awarded merely on the basis of Hudson formula without the

claimant leading any evidence, be it oral or documentary in respect of

loss, damages suffered by him.

1

Whether reports of Local Papers may be allowed to see the judgment?2

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2. The factual position of this case, can be summarized as

under:-

2(i) The respondent awarded construction work of ‘Bachelor

Accommodation at Sunder Nagar, District Mandi (Civil Work, Internal

WS, SI and Electrical Installation)’ to the petitioner/claimant vide letter

of award dated 25.07.2011 (Annexure C-1). The contracted value of

the work was Rs.1,96, 03,299/-. The work was to be completed within

18 months from 21

st

day after issuance of letter of award dated

25.07.2011. Annexure C-2, contained the terms and conditions

governing the contract duly executed by the parties.

2(ii) Various representations of claimant, addressed to the

respondent, in respect of the contract work have been enclosed at

Annexure C-3 (colly). The details of the same can be summed up

hereunder:-

i)Letter dated 31.08.2011 to the effect that work at

site has been stopped by BBMB, on the ground that

land belongs to BBMB. Request was made for

revised handing over of the site to the

claimant/contractor.

ii)Letter dated 07.11.2011 is a reminder of previous

letter dated 31.08.2011, with respect to handing

over the possession of the site to the claimant.

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iii)Letter dated 09.2.2012, written in continuation to

the previous letters that site had still not been

handed over to the contractor, resultantly, huge loss

on account of setting of cement, payments of

chowkidars for watch and ward of material stacked

at site stores and indirect losses

due to prolongation is being caused to the

claimant/contractor. Request was made for handing

over the possession of the site for starting and

completing the work in time.

iv)Letter dated 09.04.2012, to the effect that the

possession of the site had still not been handed over

to the contractor. Therefore, extension in time by

nine months was requested by the claimant. This

was followed by representation dated 07.01.2013

on the same lines.

v)Letter Dated 15.09.2014, intimating that the

extension of time for completion of the project

granted by the respondent up to 15.08.2014, had

lapsed, however, the site had still not been handed

over to the claimant. Therefore, the second

extension to time from 15.08.2014 to 14.02.2016,

i.e. for a period of 18 months, was sought for.

vi)Letter dated 04.10.2014, to the effect that despite

repeated requests, second time extension had not

been granted and accordingly, prayer was made for

extending the time period for completing the work.

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vii)Letter dated 23.06.2016, requesting the respondent

either to appoint the Arbitrator under Clause-33 of

the Contract or to provide the site for construction

of the building.

2(iii) On 16.12.2016, notice (Annexure C-4), under Clause 36 of

the agreement, was issued by the respondent to the claimant, intimating

that despite best efforts of the respondent, the land ownership issues for

undertaking the construction of the project work, could not be resolved,

therefore, it was decided by the respondent to abandon the work.

2(iv) The Arbitrator was appointed by the order of this Court on

08.03.2017. Claimant preferred his claim before learned Arbitrator

under following heads:-

Sr. No. Heads Amount claimed

1. Loss of profit and over Rs. 29,40,495/-

heads on account of

prolongation of contract.

2. Refund of security. Rs. 10,000/-

3. Refund of earnest money.Rs. 3,43000/-

4. Cost of Arbitration Rs. 1,00,000/-

Proceedings.

5. Interest. 18% per annum.

2(v) The respondent contested the claim and denied that

contractor was put to any loss or harassment and that he had been

intimated and was aware regarding non-availability of land for

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construction from the very beginning. It was denied that claimant

continued to deploy its labour and machinery at site.

2(vi) On consideration of the pleadings and the material

available on the record, learned Arbitrator passed impugned award on

29.07.2017. The award in tabulated form is :-

Sr. No.Heads Amount

claimed

Amount

awarded

1. Loss of profit and

over heads on account

of prolongation of

contract.

Rs.29,40,495/

-

-nil-

2. Refund of security.Rs.10,000/-Rs.10,000/-

3. Refund of earned

money.

Rs.3,43,000/-Rs.3,43,000/

-

4. Cost of Arbitration

Proceedings.

Rs.1,00,000/-Rs.1,11,565/

-

5. Interest 18% P.A. 9%

Thus, learned Arbitrator passed an award of Rs. 5,54,565/-

@ 9% interest payable within one month from the date of the award,

failing which, the respondent had to pay enhance rate of interest @ 12%

till the actual payment.

3. Learned Arbitrator having not find favour with the claim

of Rs. 29,40,495/- regarding alleged loss of profit and over heads on

account of prolongation of the contract, the claimant has preferred

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instant objections under Section 34 of the Arbitration & Conciliation

Act.

4. Contentions:-

4(i) The main plank of the contentions of Mr. Suneet Goel,

learned counsel for the petitioner/claimant is that the claim under this

head was based purely on Hudson formula, where-under, claimant was

not required to prove any actual damage having been caused to him; he

was only required to show that the contract was prolonged, but not

because of any fault on part of the claimant; he is only required to prove

that the contract was extended and could not be completed because of

lapses, actions, inactions on part of the respondent or reasons, which

were attributable and could be sorted out only by the respondent.

His further contentions is that the learned Arbitrator, while

deciding proposition No.1, in the impugned award, had already held

that the prolongation of the contract period was due to the fact that

though the land on which the site was located, was owned and possessed

by the respondent, but the adjoining land required as a passage to reach

the site, was not owned by the respondent. The adjoining land was

owned and possessed by the BBMB and it is on account of this fact that

the construction work at site remained blocked and could not be carried

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out. Accordingly, the contention of learned counsel for the

petitioner/claimant is that after having come to the conclusion that

project work was prolonged on the site because of non-availability of

the adjoining site, which was required as a passage by the claimant for

starting the construction work at site, it was not open for the learned

Arbitrator to have rejected his claim of loss of profit and over heads on

account of prolongation of the contract.

Learned counsel for the petitioner/claimant, in this regard

has relied upon (2006) 11 SCC 181, titled as Mcdermott International

Inc. v. Burn Standard Co. Ltd. and others and (2015) 3 SCC 49, titled

as Associate Builders v. Delhi Development Authority to contend that

Hudson formula is an accepted formula by the Hon’ble Apex Court, for

awarding loss of profit and over heads on account of prolongation of the

contract.

4(ii). Per contra, Mr. Sunil Mohan Goel, learned counsel for the

respondent, has argued that the claimant had executed certain site

development works, for which due and admissible amount of Rs.

1,02,654/- stands released to him.

He further submitted that the land where the building was

to be constructed by the claimant under the awarded work, belonged to

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the State Government and was in possession of the respondent, however,

the approached road to the site was from the land owned and possessed

by BBMB, which objected to carrying out of the construction work vide

their (BBMB) letter dated 24.08.2011 (Annexure-III). Copy of this

objection of BBMB, had been supplied to the contractor and he was

made aware about the site problems; and it is on account of this

objection of BBMB that the work had to be stopped at the site at very

initial stage. The work could have been undertaken only after resolving

the land dispute. It was denied that contractor deployed any labour or

machinery at the site after August, 2011; the land disputes could not be

resolved, therefore, the work was foreclosed vide letter dated

16.12.2016 (Annexure C-4), as per Clause 36 of contract agreement.

Learned counsel further contended that no loss was suffered by the

contractor on account of prolongation of contract due to any reason

whatsoever. Hudson formula, without proof of any actual damage

suffered by the claimant, cannot advance the case of the petitioner for

his claim of profit and over heads on account of prolongation of

contract.

Learned counsel for the respondent relied upon (2010) 13

SCC 377, titled as Oil and Natural gas Corporation Vs. Wig Brothers

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Builders and Engineers Private Limited, (2007) 4 SCC 697, titled as

Food Corporation of India vs. Chandu Constructions, (1999) 9 SCC

283, titled as Rajasthan Mines & Minerals Ltd. v. Eastern Engineering

Enterprises, in support of his contentions.

5. Observations:-

5(i) Stopping of Work:- It is seen from the record that vide

Annexure-III dated 24.08.2011, BBMB, had asked the respondent to

stop the ongoing construction work. It is not in dispute that this letter

was forwarded by the respondent to the petitioner/claimant. This is also

apparent from the fact that petitioner/claimant had himself written a

letter to the respondent as early as on 31.08.2011, regarding stopping of

work by BBMB Authorities on account of the fact that the adjoining

land required as passage by the contractor for carrying out awarded

construction work at site, belonged to BBMB, where-under, the

petitioner/claimant had also requested the respondent for revised

handing over of the site to him. The dispute, thus, had arisen in just

over a period of one month from the date of execution of the contract

agreement. The work had come to stand still in a period little over one

month from the date of execution of the contract agreement and

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contractor was very well aware about the stopping of the work, reasons

for stopping of the work.

5(ii) Hudson Formula:-

5(ii)(a)No proof of actual damage suffered by the

petitioner/claimant has been placed on record. The claimant on

29.06.2017, stated before the learned Arbitrator that but for the

documents appended along with his claim petition, he did not want to

lead any oral or documentary evidence in support of his statement of

claim. There is no proof available on record that claimant deployed men

and machinery etc. at the site. No proof whatsoever has been furnished

by the claimant of having suffered any actual loss due to prolongation of

contract.

5(ii)(b)In my considered view, learned Arbitrator was justified in

turning down the claim of Rs. 29,40,495/- for alleged loss of profits and

over heads on account of prolongation of contract for want of proof of

any actual damage having been suffered by the claimant/contractor.

Hon’ble Apex Court in (2006) 11 SCC 181 titled as

Mcdermott International Inc. v. Burn Standard Co. Ltd. and others,

relied upon by learned counsel for the claimant, has not held that in a

case of instant nature, without there being any proof of any actual

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damage having been caused to the claimant/contractor, in absence of any

oral or documentary evidence in this regard, he has to be held entitled to

15% of the contracted amount on the basis of Hudson formula. The

present is the case wherein just over a period of one month from the date

of execution of the contract agreement, the work had admittedly come to

stand still. Whatever work was done by the claimant, during this period

of little over one month, has been duly paid for by the respondent.

There is no proof of any deployment of any men or machinery or

material to suggest that claimant suffered any loss of profit and over

heads. Formula has to be applied to facts of a case; on the basis of the

evidence led by the claimant. Merely on the basis of an abstract

formula, without furnishing any evidence, any proof whatsoever of any

loss or damage having been suffered by the claimant, claim for loss of

profits and overheads cannot be allowed to him on the ground that

contract period was prolonged.

5(ii)(c)In (2015) 3 SCC 49 titled as Associate Builders v. Delhi

Development Authority, after adverting to an earlier judgment in

Mcdermott International Inc. v. Burn Standard Co. Ltd. and others,

(2006) 11 SCC 181, Hon’ble Apex Court reiterated that decision of

Arbitrator in applying Hudson formula in construction contracts for

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awarding claim for loss of profit and over heads, cannot be interfered

with, in exercise of jurisdiction under Section 34 of Arbitration &

Conciliation Act. However, present is the case where neither there is

any oral nor documentary evidence to show any loss, or any damage

having been caused to the petitioner by prolongation of contract on part

of the respondent. Hudson formula cannot be applied in vacuum. No

details of any men, any machinery deployed on site after August, 2011,

is available. No details of any material loss has been provided. No

books of accounts are there. No details of any watch and ward staff,

supervisors etc. has been given. No material was produced with respect

to nature of practice in the trade. Claim for loss of profits has been

based on abstract Hudson formula and 15% value of contracted work

has been claimed as loss of profits and over heads on account of

prolongation of contract. Learned Arbitrator was justified in not

applying Hudson formula for awarding alleged loss of profits and over

heads in absence of any evidence. In Kalash Nath Associates vs. Delhi

Development Authority & Anr., (2015) 4 SCC 136, it has been held by

Hon’ble Apex Court that while considering the claim under Sections 73

& 74 of Contract Act, where it is possible to prove actual damage or

loss, such proof cannot be dispensed with. Monetary compensation in

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lieu of loss prayed for by claimant cannot be awarded in negation of

Section 73 of Contract Act by penalizing the respondent even though

claimant had not proved any loss suffered by him. Reference can also

be made in this regard to a judgment passed by Bombay High Court in

Case No. 470 of 2012, tilted as Essar Procurement Services Ltd. vs.

Paramount Constructions:-

“101.The question that arises for consideration of this

court is whether the respondent who had made claim for

overhead on the basis that the respondent had

considered 10% towards overhead for the work in

question at the time of finalization of the contract and

had incurred such amount during the contractual period

ought to have proved the said claim by leading evidence

including oral evidence or could have simplicitor rely

upon the Hudson formula and whether in absence of any

evidence of the actual expenditure incurred by the

respondent, the arbitral tribunal could have allowed the

claim for overhead by considering the claim on rough

and ready basis by applying Hudson formula by

dispensing with the proof of the overhead expenditure or

not.

103. It is held that the different formula can be applied

in different circumstances and the question as to

whether damages should be computed by taking

recourse to one or the other formula, having regard to

the facts and circumstances of a particular case, would

eminently fall within the domain of the arbitrator.

Supreme Court noticed that the witness examined by the

contractor had applied the Emden Formula while

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calculating the amount of damages having regard to the

books of account and other documents maintained by

the contractor. The learned arbitrator did not insist that

sufferance of actual damages must be proved by

bringing on record books of account and other relevant

documents. In these circumstances, Supreme Court held

that if the learned arbitrator applied the Emden

Formula in assessing the amount of damages, he could

not be said to have committed an error warranting

interference by this Court. The learned arbitrator had

also referred to other formulae but opined that the

Emden Formula was widely accepted one.

105. Division Bench of this court in case of Edifice

Developers and Project Engineers Ltd. (supra) after

adverting to the judgment of Supreme Court in case of

McDermott International INC. (supra) and in case of

M/s.A.T.Brij Paul Singh and Bros. vs. State of Gujarat,

AIR 1984 SC 1703 which judgments were relied upon by

the arbitral tribunal has held that the appellant in that

case had produced no evidence in support of the claim

for loss of overhead and profit and award of claim was

on the misconceived basis that Hudson Formula must be

applied despite there being no evidence. The Division

Bench also held that no material was produced before

the arbitral tribunal on the nature of the practice in the

trade and claim for loss of profits was based on pure

conjecture and in the absence of any evidence and was

thus rightly set ppn 49 arbp-470.12(j).doc aside by the

learned Single Judge. The Division Bench upheld the

conclusion drawn by the learned Single Judge that the

award of arbitrator proceeded on the manifestly

misconceived notion that a contractor is entitled to

claim overhead losses even in the absence of evidence

on the basis of Hudson's Formula.

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106. In my view the impugned award rendered by the

arbitral tribunal allowing the claim for overhead merely

on the basis of the Hudson Formula and not based on

any evidence is contrary to the principles of law laid

down by this court in case of Edifice Developers and

Project Engineers Ltd. (supra) and shows patent

illegality and is in conflict with public policy.”

No fault can thus be found in the award passed by the

learned Arbitrator in rejecting the claim of the petitioner for loss of

profits and over heads on account of prolongation of contract. The point

is answered accordingly.

6. Rejection of Claim viz-a-viz Terms of Contract:-

6(i) There is yet another reason for rejecting the claim of loss

of profits and over heads on account of prolongation of contract. The

terms of the contract are significant in the instant case. The contract

which has been executed by both the parties and in terms of Clause-33

of which, learned Arbitrator was appointed, also contains Clause-36.

This being relevant for purpose of adjudication of the present petition, is

being reproduced hereinafter:-

“36.1If at any time after acceptance of the tender the

Employer decides to abandon or reduce the scope of the

works for reason whatsoever and hence does not

require the whole or any part of the works to be carried

out, the Engineer-in-Charge shall give notice in writing

to that effect to the contractor, and the Contractor shall

have no claim to any payment of compensation or

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otherwise whatsoever, on account of any profit or

advantage which he might have derived from th

execution of the works in full but which he could not

derive in consequence of the fore-closure of the whole

or part of the works.

The Contractor shall be paid at contract rates for

full amount of the works executed at site and, in

addition,a reasonable amount as certified by the

Engineer-in-Charge for the items hereunder mentioned

which could not be utilized on the works t the full extent

because of the foreclosure:

(a) Any expenditure incurred on preliminary works,

e.g. temporary access roads, temporary labour, huts,

staff quarters and site office; storage accommodation,

workshop, installation and dismantling of Construction

Equipment (batching plant, crushing plant) and water

storage tanks.

(b) i) The Employer shall have the option to take over

Contractor’s materials or any prt thereof, either brought

to site or of which the Contractor is legally bound to

accept delivery from suppliers (for incorporation in or

incidental to the Work), provided, however, the

Employer shall be bound to take over the material or

such portions thereof as the Contractor does not desire

to retain. The cost shall, however, taken into account

purchase price, cost of transportation and deterioration

or damage which may have been caused to materials

whilst in the custody of the Contractor.

ii ) For Contractor’s materials not retained by the

Employer, reasonable cost of transporting such material

from Site to Contractor’s permanent stores or to his

other Works, whichever is less. If materials are not

transported to either of the said places, no cost of

transportation shall be payable.

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(c) If any materials issued by the Employer are

rendered surplus, the same except normal wastage for

the materials used in the works shall be returned by the

Contractor to the Employer.

(d) Reasonable compensation for transfer of T&P from

Site to Contractor’s permanent stores or to his other

works whichever is less. If T&P are not transported to

either of the said places, no cost of outward

transportation shall be payable.

36.2 The Contractor shall, if required by the Engineer-

in-charge, furnish to him books of accounts, wage

books, time sheets and other relevant documents as may

be necessary to enable him to certify the reasonable

amount payable under this condition.”

6(ii) The above Clause empowers the respondent to abandon or

reduce the scope of the work for any reason whatsoever. The contractor

will have no claim, in terms of this Clause, to any compensation on

account of any payment of compensation, on account of any profit or

advantage which he might have derived from the execution of the works

in full, but which he could not derive on account of fore-closure either

of part or whole works.

Clause 36.1, when read in its entirety, though provides that

in case of fore-closure of the contract, the contractor has to be paid at the

contract rates for full amount of the works executed at the site and in

addition, reasonable amount certified by the Engineer-in-Charge for the

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items, which could not be utilized on the works to full extent because of

the fore-closure. The items mentioned in this Clause are in respect of

preliminary works, i.e. temporary access roads, temporary labour huts,

staff quarters, site office, storage accommodation workshop, installation

and dismantling of construction equipment and water storage tanks etc.

Clause also provides for materials in similar way.

6(iii) Thus, in terms of Clause 36.1 of the agreement duly

executed by the parties, claimant cannot have any claim for payment of

compensation for any profit which he couldn’t derive because of

foreclosure of the work. Claimant is though entitled to amount for

works actually carried out at contract rates and for items mentioned

therein lying unused and expenditure incurred over them as provided in

contract. However, in the instant case, there is no evidence whatsoever

available on record that the above said works were actually carried out,

which are yet to be paid for. Therefore, claim for loss of profit and over

heads on account of prolongation of contract could not be allowed, in

view of specific provision of contract agreement.

6(iv) Reference in this regard can also be made to (2010) 13

SCC 377, titled as Oil and Natural Gas Corporation v. Wig Brothers

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Builders and Engineers Private Ltd., in which, Hon’ble Apex Court has

held as under:-

“4. It is now well settled that a court, while

considering a challenge to an award under sections 30

and 33 of Arbitration Act, 1940, does not examine the

award, as an appellate court. It will not reappreciate

the material on record. An award is not open to

challenge on the ground that the arbitrator had reached

a wrong conclusion or had failed to appreciate some facts.

But if there is an error apparent on the face of the award or

if there is misconduct on the part of the arbitrator or legal

misconduct in conducting the proceedings or in making the

award, the court will interfere with the award. Keeping the

said principles in view, we will consider the challenge.

6.The arbitrator has observed that there is no provision

in the contract by which the contractor can be estopped from

raising a dispute in regard to the said claim. But clause 5A

of the contract pertains to extension of time for completion

of work and specifically bars any claim for damages. The

said clause is extracted below :

"In the event of delay by the Engineer-in-Charge

to hand over to the contractor possession of

land/lands necessary for the execution of the

work or to give the necessary notice to the

contractor to commence work or to provide the

necessary drawing or instructions or to do any

act or thing which has the effect of delaying the

execution of the work, then notwithstanding

anything contained in the contract or alter the

character thereof or entitle the contractor to any

damages or compensation thereof but in all such

cases the Engineer-in-Charge may grant such

extension or extensions of the completion date as

may be deemed fair and reasonable by the

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Engineer-in Charge and such decision shall be

final and binding."

7. In view of the above, in the event of the work being

delayed for whatsoever reason, that is even delay which is

attributable to ONGC, the contractor will only be entitled to

extension of time for completion of work but will not be

entitled to any compensation or damages. The arbitrator

exceeded his jurisdiction in ignoring the said express bar

contained in the contract and in awarding the compensation

of Rs.9.5 lakhs. This aspect is covered by several decisions

of this Court. We may refer to some of them.

8.In Associated Engineering Co. v. Government of A.P. -

1991 (4) SCC 93, this Court observed :

"24. The arbitrator cannot act arbitrarily,

irrationally, capriciously or independently of the

contract. His sole function is to arbitrate in terms

of the contract. He has no power apart from what

the parties have given him under the contract. If

he has travelled outside the bounds of the

contract, he has acted without jurisdiction. ..."

9.In Rajasthan State Mines & Minerals Ltd. v. Eastern

Engineering Enterprises – this Court held: (SCC pp. 300 &

310, paras 22-23 & 44)

"22…..The rates agreed were firm, fixed and

binding irrespective of any fall or rise in the cost

of the work covered by the contract or for any

other reason or any ground whatsoever. It is

specifically agreed that the contractor will not be

entitled or justified in raising any claim or dispute

because of increase in cost of expenses on any

ground whatsoever. By ignoring the said terms,

the arbitrator has travelled beyond his

jurisdiction as his existence depends upon the

agreement and his function is to act within the

limits of the said agreement. This deliberate

departure from the contract amounts not only to

manifest disregard of the authority or misconduct

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on his part but it may be tantamount to mala fide

action.

23.It is settled law that the arbitrator is the

creature of the contract between the parties and

hence if he ignores the specific terms of the

contract, it would be a question of jurisdictional

error which could be corrected by the court and

for that limited purpose, agreement is required to

be considered. ....

44.. (h)……..he cannot award an amount which is

ruled out or prohibited by the terms of the

agreement."

10.In Ramnath International Construction (P) ltd. v.

Union of India, a similar issue was considered. This Court

held that clause 11(C) of the General Conditions of

Contract (similar to clause 5A under consideration in this

case) was a clear bar to any claim for compensation for

delays, in respect of which extensions had been sought and

obtained. This Court further held that such a clause

amounts to a specific consent by the contractor to accept

extension of time alone in satisfaction of claims for delay

and not to claim any compensation; and that in view of such

a bar contained in the contract in regard to award of

damages on account of delay, if an arbitrator awards

compensation, he would be exceeding his jurisdiction.

11. In view of the above, the award of the arbitrator in

violation of the bar contained in the contract has to be held

as one beyond his jurisdiction requiring interference.

Consequently, this appeal is allowed in part, as follows :

(a) The judgment of the High Court and that of the civil

court making the award the rule of the court is partly

set aside in so far as it relates to the award of Rs.9.5

lakhs under claim No.(1) and the award of interest

thereon.

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(b) The judgment of the civil court as affirmed by the

High Court in regard to other items of the award is not

disturbed.”

In (2007) 4 SCC 697, titled as Food Corporation of India

v. Chandu Construction and Another, the Hon’ble Apex Court, held

that the arbitrator being a creature of the agreement between the parties,

has to operate within the four corners of the agreement and if he ignores

the specific terms of the contract, it would be a question of jurisdictional

error on the face of the award, falling within the ambit of legal

misconduct which could be corrected by the Court. Arbitrator derives

his authority from the contract and if he acts in disregard of the contract,

he acts without jurisdiction. A deliberate departure from contract

amounts to not only manifest disregard of his authority or a misconduct

on his part, but it may tantamount to a mala fide action.

It is apt to refer to (2015) 3 SCC 49, titled as Associate

Builders v. Delhi Development Authority:-

“31.The third juristic principle is that a decision which is

perverse or so irrational that no reasonable person would

have arrived at the same is important and requires some

degree of explanation. It is settled law that where:-

(i)a finding is based on no evidence, or

(ii) an Arbitral tribunal takes into account

something irrelevant to the decision which it arrives

at; or

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(iii) ignores vital evidence in arriving at its

decision, such decision would necessarily be

perverse.”

In the instant case, learned Arbitrator justly turned down

the claim in view of clear stipulation contained in Clause 36 of the

contract agreement.

7. In view of the above discussion, looking from any angle,

this Court does not find any infirmity in the impugned award passed by

the learned Arbitrator. Hence, the present petition being devoid of any

merit, is dismissed. Pending application(s), if any, also stand disposed

of.

(Jyotsna Rewal Dua)

Judge

23

rd

August, 2019

(reena)

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