The Bombay High Court dismissed a Commercial Arbitration Petition filed by Patel Engineering Ltd. under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the Arbitral Award dated 1 February 2020.
The dispute arose out of a construction contract executed between the parties concerning a residential apartment project in Bengaluru. Disagreements emerged regarding final payments, claims of additional construction, delays in project completion, and imposition of penalties. The Petitioner terminated the contract in October 2011; however, at the Respondent’s request, the contract was subsequently reinstated through a Settlement Deed dated 31 October 2011.
Subsequently, the matter proceeded to arbitration. The Respondent sought claims for unpaid dues and additional works, while the Petitioner raised counterclaims, including claims for liquidated damages. The Arbitral Tribunal, by majority, ruled substantially in favour of the Respondent and dismissed the Petitioner’s counterclaims.
The Petitioner premised their case on the claim of ‘patent illegality’ within the meaning of Section 34(2)(a), arguing that the Tribunal had failed to properly consider material facts and circumstances, including the Settlement Deed. It was contended that the Award was premised on insufficient and incomplete evidence, rendering it legally unsustainable.
The bench comprising Justice R.I. Chagla relied on landmark judgements laying down the law that in a Section 34 challenge, evidence cannot be re-appreciated, particularly where the Tribunal has appreciated the evidence and come to a possible view. The Court found that the findings of the Tribunal represent not only a plausible but a correct view and merit no interference.
Further, the Court emphasised the legal principle that where a party fails to adduce evidence that it was in a position to produce in support of its case, such omission gives rise to a presumption under Section 114(g) of the Indian Evidence Act, 1872, that the withheld evidence would have been adverse to that party, thereby justifying an adverse inference.
Some key judgements referred to by the Court include Associate Builders vs Delhi Development Authority[1], Maharashtra State Electricity Distribution Co. Ltd. vs Datar Switchgear Ltd.[2], Ssangyong Engineering and Construction Co. Ltd. vs National Highways Authority of India (NHAI)[3], and Delhi Airport Metro Express Pvt. Ltd. vs Delhi Metro Rail Corporation Ltd[4].
Accordingly, the Court dismissed the petition and upheld the impugned Arbitral Award.
[1] (2015) 3 Supreme Court Cases 49.
[2] (2018) 3 Supreme Court Cases 133.
[3] (2019) 15 Supreme Court Cases 131.
[4] (2022) 1 Supreme Court Cases 131.
Appearances in the case:
Petitioner: Mr. Venkatesh Dhond, Senior Counsel with Mr. Rohan Kelkar, Mr. Ravitej Chilumuri, Ms. Muskan Arora and Mr. Kunal Parekh i/b. Khaitan and Co. for the Petitioner.
Respondent: Mr. J.P. Sen, Senior Counsel, Mr. Karl Tamboly with Mr. Hrushi Narvekar, Vivek Vashi, Ms. Shaheda Madraswala, Ms. Rajvi Mehta and Ms. Khushi Dhanesha i/b. Vashi and Vashi for the Respondent.
