w w w . L a w y e r S e r v i c e s . i n

United Conveyor Corporation (India) Private Limited v/s Pravash Kumar Mukherjee

Company & Directors' Information:- UNITED CONVEYOR CORPORATION (INDIA) PRIVATE LIMITED [Active] CIN = U45207PN1998PTC149192

Company & Directors' Information:- P N MUKHERJEE AND COMPANY PVT LTD [Active] CIN = U22219WB1993PTC059560

Company & Directors' Information:- B. MUKHERJEE & COMPANY PVT. LTD. [Strike Off] CIN = U25209WB1992PTC055755

Company & Directors' Information:- A MUKHERJEE & CO PVT LTD [Active] CIN = U22219WB1940PTC013674

Company & Directors' Information:- A K MUKHERJEE & CO PVT LTD [Strike Off] CIN = U51505WB1957PTC023546

Company & Directors' Information:- B K MUKHERJEE CO PVT LTD [Strike Off] CIN = U70109WB1921PTC004278

Company & Directors' Information:- J N MUKHERJEE & CO PVT LTD [Active] CIN = U51909WB1943PTC011346

Company & Directors' Information:- S N MUKHERJEE PVT LTD [Active] CIN = U74940WB1941PTC014185

Company & Directors' Information:- P K MUKHERJEE & CO PVT LTD [Strike Off] CIN = U51420WB1939PTC009657

Company & Directors' Information:- A N MUKHERJEE PVT LTD [Strike Off] CIN = U36992WB1949PTC017824

Company & Directors' Information:- MUKHERJEE & MUKHERJEE PVT LTD [Strike Off] CIN = U70101WB1960PTC024754

Company & Directors' Information:- H D MUKHERJEE & CO PVT LTD [Strike Off] CIN = U51109WB1947PTC015631

Company & Directors' Information:- N R MUKHERJEE PVT LTD [Strike Off] CIN = U27106WB1957PTC023649

Company & Directors' Information:- P MUKHERJEE AND CO PVT LTD [Strike Off] CIN = U99999DL1922PTC000090

    Arbitration Petition No. 858 of 2012

    Decided On, 24 August 2020

    At, High Court of Judicature at Calcutta


    For the Appearing Parties: Sakhya Sen, Malay Kumar Das, D. Raha, Advocates.

Judgment Text

Sabyasachi Bhattacharyya, J.1.Upon completion of oral arguments and filing of written notes of arguments by both sides, the matter is being taken up for passing judgment.2. The present proceeding, under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act") arises at the instance of the respondent in the arbitration proceeding, challenging the partial grant of award by the learned Arbitrator.3. In brief, the present petitioner, namely, United Conveyor Corporation (India) Private Limited, was a contractor under the Damodar Valley Corporation (DVC) and had granted the claimant (present respondent), namely, Pravash Kumar Mukherjee a sub-contract for construction of a dry ash handling system by a Work Order dated May 25, 2007. Subsequently, the claimant, that is the present respondent, referred the matter to arbitration, making a claim under various heads as follows:a) unpaid amount against 5th Running Account Bill (RA Bill) for Rs.28,43,727/-,b) loss of business opportunity and profits at the rate of 15% of the entire contract value pursuant to a so-called arrangement between the claimant, the petitioner and a third party, namely, KEC, amounting to Rs.33,34,226/-,c) refund of Works Contract Tax,d) damages, ande) interest.4. On the other hand, the present petitioner took several defences, thereby contesting the claims, and also made a counter claim for damages.5. Ultimately, the learned Arbitrator, pursuant to the reasoning given in the impugned award, allowed the claim on the 5th RA Bill to the tune of Rs.28,43,727/-. Since the claimant had not claimed entitlement to the amount raised by the 1st to 4th RA Bills, the claimant was not granted any amount on such bills.6. It was further held by the learned Arbitrator that the amount, specified above, was payable by the respondent to the claimant with interest at the rate of 15% per annum for the respective periods calculated in the following manner:(a) On the amount of 5th RA Bill namely Rs.28,43,727/-, being part of the claim made in the statement of claim, for the period from April 1, 2008 to August 7, 2009, that is, for the prereference period,(b) On the sum total of the said amount calculated in terms of clause (a), from August 8, 2009 (the date of entering into the reference) till the delivery of the award, that is July 18, 2012, namely the post-reference/pendente lite period,(c) On the sum total of the amount calculated in terms of clause (b), from July 19, 2012, the date following that of the award, till realization, calculated at the same rate of 15% per annum,(d) In case the payment is not made within three months from the date of award, as calculated in terms of clause (c), then the interest shall be payable on the whole amount of the award at the same rate with quarterly rest calculated from the date following the date of the award till realization.7. Costs were granted to the tune of Rs.10,00,000/- under several heads including the fees of the arbitrator, the costs and expenses for the arbitration sittings, costs for arranging the venue etc. and legal costs.8. It was, however, clarified that no interest would be payable on the costs if the sum was paid within three months from the date of the award. In case of delay in payment beyond the said period, it was held that the claimant would be entitled to interest at the rate of 15% on the amount of costs as well, from the date following the date of award till realization.9. Learned counsel for the present petitioner (respondent in the arbitration proceedings) submits that the award of Rs.28,43,727/- on account of unpaid 5th RA Bill was tainted by lacunae within the ambit of Section 34 of the 1996 Act. It is alleged that the findings of the learned Arbitrator suffers from patent inconsistencies apparent on the face of the award, which are in conflict with the public policy of India and contrary to the basic notions of morality and justice; such findings contain glaring errors that would shock the conscience of the court and suffer from non-consideration of material evidence and thus, vitiates the decision-making process and strike at the root thereof, rendering the resultant award perverse and liable to be set aside.10. It is argued on behalf of the petitioner that the conclusion recorded by the arbitrator in paragraph nos. 8.1.1 and 8.1.2 of the award, that there was no contemporaneous letter regarding defective works, is perverse as several documents in respect of such contention, allegedly disclosed in the arbitration, were overlooked. Exhibit R8 (letter dated October 16, 2007) in particular, and several other letters were referred to in this regard. As such, it is argued that non-consideration of such material evidence strikes at the root of the decision-making process and vitiates the award, being perverse and contrary to public policy.11. Learned counsel for the petitioner submits that such perversity would fall squarely within the scope of judicial review under Section 34 of the 1996 Act, as laid down in Associated Builders vs. Delhi Development Authority, (2015) 3 SCC 49 (paragraph nos. 31 to 33), which was further approved in Ssangyong Engineering and Construction Company Limited vs. National Highways Authority of India (NHAI), (2019) 15 SCC 131 (paragraph 41). It is argued that although Associated Builders (supra) arose from an appeal under Section 37 of the 1996 Act, the principle which emerges from paragraph 31 of the said decision would apply to this case, since it involves complete non-consideration of material evidence.12. It is next argued on behalf of the petitioner that the claimant had failed to discharge his onus to prove the claim on the 5th RA Bill, thereby acting contrary to the principle contained in Section 101 of the Evidence Act. Learned counsel submits that no primary evidence in support of such claim, either in the form of any measurement book or any material to conclusively prove execution of work which had been built, had been disclosed by the claimant in the arbitral proceedings.13. That apart, the petitioner argues that the award suffers from material inconsistencies and inherent contradiction in terms, since the arbitrator equated the issue of abandonment of work with the issue of defects in the work, which have no nexus with each other. In paragraphs 8.1.1 and 8.1.2 of the award, it was effectively held that, since there is no document to establish the allegation of defective work as urged by the petitioner, the allegation of abandonment is baseless. Such finding, it is argued, is perverse inasmuch as abandonment of work alone was sufficient to disentitle the claimant from asserting any claim in respect of the 5th RA Bill. The question of defects was immaterial to such aspect of the matter.14. Abandonment, it is argued, was a non-issue since the claimant had practically admitted such position, which was also recorded by the learned Arbitrator in paragraphs 14.4 and 15.1 of the award, under the headings 'conclusion' and 'order' respectively. On the basis of such findings, the claimant was held not entitled to any sums in respect of the 1st to the 4th RA Bills. On the same logic, the 5th RA Bill amount ought not to have been awarded as well, since the latter is a part of the self-same transaction and reflects a chronological billing system in a continuous and running account. This apparent inconsistency regarding application of different principles to similar facts would, according to the petitioner, shock the conscience of this court.15. Learned counsel for the petitioner further argues that the TDS certificate produced in the arbitral proceedings was accepted erroneously by the Arbitrator as unqualified admission of the claim on the 5th RA Bill, which is contrary to law. Exhibit A20, that is, the TDS certificate, was the basis of eventually allowing the claim, and not the 5th RA Bill itself.16. Since full-fledged evidence was led by both parties, the petitioner placed reliance on the decision reported at [M/s Utility Powertech Limited vs. M/s Amit Traders,2018 SCCOnLineDel 9096], in particular paragraph no. 19 thereof. Counsel further relied on an unreported decision of a coordinate bench of this court dated February 7, 2019 passed in G.A. 2522 of 2016 (C.S. 213 of 2016), in the matter of J.K. Engineering Pvt. Ltd. vs. ANE Industries Pvt. Ltd., placing particular reliance on paragraph no. 7(i) of the said judgment.17. It is further argued on behalf of the petitioner that the learned Arbitrator granted interest upon interest several times over. Further interest was granted not only on the original principal amount but on the capitalized/compounded sum, which was granted for the pre-reference period, already with interest. Such interest was granted for the pendente lite period. The third interest was granted for the post-award (till realization) period, calculated on the amount compounded in terms of the previous compounded amount and not on the principal sum. In fact, a fourth interest was granted on such compounded amount as lastly mentioned above, in the event of non-payment of the awarded amount within three months.18. The final interest was directed to be paid at quarterly rates, even in the absence of any contract to such effect between the parties. As such, the Arbitrator allowed interest thrice over.19. In support of the proposition that an Arbitrator cannot pass an award for interest on interest, learned counsel for the petitioner places reliance on Hyder Consulting (UK) Limited vs. Governor, State of Orissa, (2015) 2 SCC 189 . Such proposition, it is argued, is also evident from Section 31(7) of the 1996 Act.20. Apart from the aforesaid grounds, the petitioner challenges the award on the ground that harsh injustice was meted out to the petitioner by directing full costs of the arbitration to be borne by it, despite the fact that only one out of the four principal claims were allowed. The quantum of cost, it is submitted, is extremely disproportionate to the claim awarded and is therefore unreasonable.21. As such, learned counsel submits that the arbitral award is patently unconscionable, contrary to public policy and to the basic notions of morality and justice as well as suffers from irrationality, inconsistency and is in conflict with well-settled principles of law. Such award, according to learned counsel for the petitioner, thus, ought to be set aside.22. The respondent (claimant in the arbitral proceeding) controverted such arguments of the petitioner and submits that none of the ingredients contained in Section 34(2) of the 1996 Act are satisfied, which renders the present challenge misconceived and liable to be dismissed in limine.23. Apart from the other aspects, it is submitted, non-payment of the 5th RA Bill was the principal dispute before the learned Arbitrator and the evidence set up by the present petitioner was on the claimant's abandonment of the work on or about January 8, 2008, allegedly after receiving complaints from the petitioner company that the work performed during the period covered under the said RA Bill were defective and not in conformity with the specifications.24. Learned counsel for the respondent argues that it would be evident from clause 14.00.00 of the contract, as quoted in paragraph 8.2.11 of the award and also reflected in the subsequent findings in paragraphs 8.2.13 and 8.2.14, was that the 5th RA Bill, submitted by the claimant on January 8, 2008, was to be verified by the Resident Engineer (RE) of the petitioner company at site within next ten days and payment therefor was to be realised within thirty days from the date of submission of the bill. Such clause of the contract had never been modified or agreed to be departed from. The learned Arbitrator further found that there was no evidence to the effect that the 5th RA Bill was not verified by the RE stationed at site, nor was there any evidence of any adverse report of the petitioner's RE regarding shortcomings in the 5th RA Bill or defect in the work executed.25. The TDS certificate (exhibit A20) was considered by the learned Arbitrator. The petitioner company had deducted tax at source under Section 194C(2) of the Income Tax Act, 1961 in respect of the 5th RA Bill (for the period ended March 31, 2008) and only after depositing the said tax in the bank on May 30, 2008, the petitioner issued the said TDS certificate to the claimant, which is evident from the exhibit itself. Such deduction necessarily implies that the entire amount of the RA Bill had been credited to the account of the claimant, even if not actually paid till date. In view of such circumstances, the petitioner company is now estopped from raising any dispute as regards any defect or deviation from the specification in respect of the work done under the 5th RA Bill.26. The arbitrator recorded in paragraph 8.2.14 of the award that there was no evidence of any defect or departure from specification in respect of the 5th RA Bill reported by the RE of the petitioner company while verifying the 5th RA Bill. The allegation of the petitioner company, about the abandonment of work after receiving complaints that the work performed during November, 2007 to January, 2008 were defective, as reflected from the evidence adduced by RW1 in the arbitral proceedings, were disbelieved by the learned Arbitrator in the absence of any material evidence, as was recorded in paragraph no. 8.1.3 of the award.27. All evidences adduced by the petitioner company pertained to periods prior to submission of the 5th RA Bill on January 8, 2008. On the other hand, no evidence was adduced to show that the 5th RA Bill was ever disputed after its submission and verification by the RE.28. The arbitrator undertook a threadbare discussion about the rival contentions of the parties as regards Exhibit A20 (the TDS certificate) and the factum of crediting the amount of the said bill to the claimant and only then held that the petitioner company was liable to make payment on the 5th RA Bill.29. The award, insofar as the adjudication of the quantity and quality of evidence before the arbitrator is concerned, cannot be questioned under Section 34 of the 1996 Act. Learned counsel for the respondent relies on paragraphs 51 and 52 of Associated Builders (supra), wherein it was held that the Division Bench of the High Court had obviously exceeded its jurisdiction in interfering with the pure findings of fact, forgetting that the arbitrator is the sole Judge of the quantity and quality of evidence before him.30. There is nothing on record, it is argued, to show that the contract was ever terminated by the petitioner or that the petitioner company had suffered any loss or damage due to the alleged abandonment of work by the claimant, as recorded in paragraph 8.1.2 of the award. The counter claim of the petitioner was refused on such premise, after recording the arbitrator's findings in that regard in paragraph no. 12 of the award.31. Regarding entitlement of the claimant to interest on the awarded amount, as discussed under issue no. 7 in paragraph no. 9 of the award, learned counsel for the respondent submits that 15% interest on the awarded amount on 5th RA Bill was awarded for the pre-reference period and also on the total sum for the pendente lite period. On the entire sum calculated above, interest at the same rate of 15% was awarded for the post-award period till realization. Such rates, as well as interest on cost on non-payment within the directed period, as deemed reasonable by the arbitrator, was lawful under the 1996 Act, since not excluded by or provided otherwise in the agreement between the parties.32. Ssangyong Engineering and Construction Company Limited (supra), in particular paragraph no. 78 thereof, is relied on by the respondent, wherein the Supreme Court was pleased to allow pre-reference and pendente lite interest "compounded monthly".33. Hence, learned counsel for the respondent submits that this court ought not to interfere under Section 34 of the 1996 Act in the facts and circumstances of the case.34. In order to adjudicate the present challenge, it is necessary to examine the parameters of interference under Section 34 of the 1996 Act. Paragraphs 31 to 33 of Associated Builders (supra) lay down that a decision would be perverse where :i) a finding is based on no evidence, orii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; oriii) ignores vital evidence in arriving at its decision.It was further held, by relying on the previous judgment of the Supreme Court itself, that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then the finding is rendered infirm in law.35. A broad distinction, it was held, was to be maintained between the decisions which are perverse and those which are not. In the event there is some evidence on record which is acceptable and could be relied upon, however compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with. While applying the "public policy" test to an arbitration award, a court 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 score.36. In paragraph no. 52 of Associated Builders (supra), it was held inter alia that the Division Bench therein obviously exceeded its jurisdiction in interfering with the pure finding of fact, forgetting that the arbitrator is the sole Judge of the quantity and quality of evidence before him and necessarily bringing in facts which were neither pleaded nor proved and ignoring a vital completion certificate granted by the DDA in the said case.37. Moreover, it was held by the Supreme Court in paragraph no. 56 of the said judgment that the Division Bench of the High Court had applied the formula that it would itself do "rough and ready justice". The Hon'ble Supreme Court was at a complete loss to understand how this can be done by a court under the jurisdiction exercised under Section 34 of the 1996 Act. The expression "justice", when it comes to setting aside an award under the public policy ground, can only mean that an award shocks the conscience of the court. It cannot possibly include what the court thinks is unjust on the facts of a case for which it then seeks to substitute its view for the arbitrator's view and does what it considers to be "justice". Such approach was deprecated by the Supreme Court.38. In paragraph no. 41 of Ssangyong Engineering and Construction Company Limited (supra), relied on by the petitioner, it was held that the decision which is perverse, as understood in paragraphs 31 and 32 of Associated Builders (supra), while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.39. However, paragraph no.41 of Ssangyong Engineering and Construction Company Limited (supra) cannot be read in isolation. The view of the Supreme Court, as comprehensively reflected in paragraphs 40 and 42 of the same report, which are immediately next to paragraph 41, is that as per the change made in Section 28(3) of the 1996 Act by amendment, if the arbitrator wanders outside the contract and deals with a matter not allotted to him, he commits an error of jurisdiction. Moreover, the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would. The Supreme Court held that, given the fact that the amended Act will now apply, and that the "patent illegality" ground for setting aside arbitral awards in International Commercial Arbitration will not apply, it is necessary to advert to the grounds contained in Sections 34(2)(a)(iii) and (v).40. Section 34 of the 1996 Act is quoted hereunder for a proper understanding of the issue:"Arbitration and Conciliation Act, 1996:34. Application for setting aside arbitral award. - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).(2) An arbitral award may be set aside by the Court only if-(a) the party making the application establishes on the basis of the record of the arbitral tribunal that -(i) a party was under some incapacity; or(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or(b) the Court finds that-(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or(ii) the arbitral award is in conflict with the public policy of India.Explanation 1. -For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if, -(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or(ii) it is in contravention with the fundamental policy of Indian law; or(iii) it is in conflict with the most basic notions of morality or justice.Explanation 2. - For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.(2-A) An arbitral award is arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon other party."41. As is evident from several paragraphs of Ssangyong Engineering and Construction Company Limited (supra), including paragraphs 35, 38, 69, 70, 72, 76 as well as 77, the Supreme Court has clearly laid down that interference under Section 34 of the 1996 Act, insofar as it concerns "interest of India" has been deleted and equally, interference on the basis of the award being in conflict with justice or morality is now to be understood as conflict with "most basic notions of morality or justice", which has to shock the conscience of the court to be set aside. Re-appreciation of evidence, as permitted to an appellate court, cannot be allowed under the ground of patent illegality appearing on the face of the award.42. It was further held by the Supreme Court in the said judgment that, in the guise of misinterpretation of the contract and consequent "errors of jurisdiction", it was not possible to state that the arbitral award would be beyond the scope of submission of arbitration if otherwise misinterpretation, (which would include going beyond the terms of the contract), could be said to have been fairly comprehended as "disputes" within the arbitration agreement. It would be a jurisdictional error if the arbitrator wandered outside the contract and dealt with matters not allotted to him, which could be corrected on the ground of "patent illegality" in domestic arbitrations. To bring in by the backdoor grounds relatable to Section 28(3) of the 1996 Act to be matters beyond the scope of submission to arbitration under Section 34(2)(a)(iv) would not be permissible as this ground must be construed narrowly and must refer only to matters which are beyond the arbitration agreement for reference.43. The expression "most basic notions of ... justice" finds mention in Explanation-1 to sub-clause (iii) of Section 34(2)(b). Here again, what is referred to is, substantially or procedurally the same fundamental principle of justice which has been breached and which shocks the conscience of the court. "Public policy", as a ground for setting aside or refusal to enforce an arbitral award is very narrow in scope and has to be shocking to the conscience or be clearly injurious to the public good or wholly offensive to the ordinary reasonable and fully informed member of the public, or violate "the forum's most basic notion of morality and justice".44. When it comes to the public policy of India, it was reiterated by the Supreme Court, an argument based upon the "most basic notions of justice" can be attracted only in very exceptional circumstances when the conscience of the court is shocked by infraction of fundamental notions or principles of justice and is available only in very exceptional circumstances. There cannot be any interference with an arbitral award on the ground that justice has not been done in the opinion of the court. In the said case, however, the Supreme Court, invoking its power under Article 142 of the Constitution relied on the minority award impugned therein and upheld the same and the said award, together with interest was directed to be executed between the parties.45. As far as the cited judgment of M/s Utility Powertech Limited (supra) is concerned, a learned Single Judge of the Delhi High Court was dealing with a regular appeal from a civil court's decree. In the said case, although it was indicated in a cursory manner that the deduction of TDS does not constitute an admission of liability and the trial court might have been wrong in holding that the TDS certificate, by itself, constitutes an admission of liability, the learned Single Judge went on to peruse the evidence and the pleadings on record which revealed that no deficiency in the work executed by the plaintiff therein had been pointed out and thus, there was no justification in withholding payments. It was also held that although a TDS certificate itself does not amount to admission of liability, but in the totality of facts if it is clear that the defendant is liable, the court can come to such finding.46. As such, the distilled ratio of the above judgment clearly indicates that although a TDS certificate, by itself, cannot be a sole indicator of the admission of liability, it may be construed, taken circumstantially with other evidence, to establish such liability. Moreover, the scope of interference in a regular appeal, as was the case in the reported judgment, is entirely different from interference under Section 34 of the 1996 Act, as settled by the previous judgments of the Supreme Court, cited by the petitioner itself.47. As far as the unreported judgment of the learned Single Judge of this court, dated February 7, 2019, in J.K. Engineering Pvt. Ltd. (supra), is concerned, the same related to an adjudication of an application for judgment on admission made by the plaintiff in a suit for a money claim and fell within the scope of Order XII Rule 6 of the Code of Civil Procedure.48. It was held, inter alia, upon a discussion of Section 194C of the Income Tax Act that a TDS certificate is evidence that a person is liable for the amounts raised by a contractor for work done and that a jural relationship exists between the parties. One can even go to the extent of saying that, based on the act of a person depositing tax at source, the existence of a debt is admitted to the contractor concerned; but the quantum of debt to a contractor can only be ascertained from a conjoint reading of the balance sheets of the respective parties.49. On such considerations, the learned Single Judge was pleased to hold that there was other circumstantial evidence, including an e-mail and working notes, showing that the defendant had agreed on 95% of the bill amount and 5% commission in relation to the RA Bills enumerated in the e-mail, and accordingly a partial decree was granted in favour of the plaintiff within the ambit of Order XII Rule 6 of the Code of Civil Procedure.50. As such, it can be clearly interpreted that the crux of the aforesaid decisions do not debar an arbitrator from considering a TDS certificate as a piece of evidence in conjunction with other evidence on record (in the present case, the RA Bill and other documentary evidence). Rather, the same would constitute an initial indicator of the admission of liability, if supported by other circumstantial evidence.51. As regards the Delhi High Court judgment cited by the petitioner, the same pertains to a regular appeal. Even in the single bench judgment of this court, the adjudication revolved around an interlocutory application under Order XII Rule 6 of the Code of Civil Procedure and was not rendered after completion of evidence and trial. That apart, the said matter was also in the context of a regular suit and not an arbitral proceeding, as in the present case. Hence, the principles laid down therein cannot bolster the arguments of the petitioner in respect of the evidentiary value of a TDS certificate, in the factual conspectus of the present case. Moreover, the limited scope of interference under Section 34 of the 1996 Act has been highlighted time and again by the Supreme Court as well as various High Courts.52. Hyder Consulting (UK) Limited (supra) is cited for the proposition that if no interest on the principal amount is awarded then the expression "sum" would comprise only the principal amount and if only pre-award interest is awarded and there is no principal amount then such interest would become the "sum" for which award is made under Section 31(7)(a). It was laid down in the said judgment, also cited by the petitioner, as to what was the connotation of the expression "sum". It was laid down therein that, for the purpose of an award, there is no distinction between a "sum" with interest and a "sum" without interest. Once the interest is included in the "sum" for which the award is made, the original "sum" and the interest component cannot be segregated and be seen independent of each other. The interest component then loses of its character of an "interest" and takes the colour of "sum" for which the award is made.53. There is also justification in the argument of the respondent that in paragraph no. 78 of Ssangyong Engineering (supra

Please Login To View The Full Judgment!

), the Supreme Court itself was pleased to allow pre-reference and pendente lite interest "compounded monthly".54. The logic of the learned Arbitrator, as reflected from the award impugned herein, gives clear justification for the interest as awarded. It was entirely within the bounds of logic and reason to divide the award into several time-periods, being the pre-award, pendente lite and post-award periods, each of which would have to focus on interest on the sum due at that stage. As such, since the principal awarded carried interest for the prelitigation period, there is no bar in considering the principal sum, for the purpose of interest pendente lite at the next stage to be the sum total of the pre-litigation interest added to the interest thereon. By similar logic, each of the stages entitled the award-holder to interest and the interest component, along with the principal, of each previous stage would be taken as the principal "sum" for the purpose of levying interest for the next.55. Hence, there is no justification in finding fault with such ratio of the arbitrator in imposing interest, all the more since the scope of interference under Section 34 is extremely limited.56. As regards the argument that there was no corroborative evidence in support of the 5th RA Bill work being done, the same cannot hold water, since the RA Bill, by its very definition and nature, is a running account bill which is raised from time to time. The amount on the 1st to 4th bills were not claimed since the same was already credited to the account of the claimant. As such, the question of abandonment of work being a basis of refusal of such amount does not arise.57. The TDS certificate, read in conjunction with the RA bill itself, particularly in view of the clearance of the previous RA Bills, clearly weigh the preponderance of probability in favour of amount claimed on the 5th RA Bill being justifiable.58. Insofar as the petitioner's arguments of there being contemporaneous proof as to defect in work not being considered, it cannot be said that the arbitrator proceeded on total non-consideration of material evidence and/or consideration of evidence immaterial in the context. Further, entering into such question would tantamount to considering the quantity/quality of evidence while sitting in the limited jurisdiction conferred by Section 34 of the 1996 Act, which approach has been deprecated time and again by the Supreme Court, even as per the cited judgments.59. It is a fallacious argument that different yardsticks were followed in respect of refusal of the claims on the 1st to 4th RA bills while granting the 5th RA bill dues. This is for the simple reason that the 1st to 4th bill amounts were already credited by the respondent company to the claimant's account and there was no claim in the arbitral proceeding, as such, for the said amount. Any question of the claimant being not entitled to the previous bill dues would be superfluous in the context. The arbitrator sufficiently applied his mind in considering the relevant materials on record in conjunction with each other and was justified in granting the partial award, including interest, in the present case.60. For the reasons discussed above, the stringent tests of Section 34(2) of the 1996 Act are not satisfied at all in the instant case to justify interference under the said provision.61. As such, A.P. No.858 of 2012 is dismissed on contest, thereby affirming the arbitral award impugned therein.62. There will be no order as to costs.63. Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.