The Bombay High Court has dismissed a challenge filed by the Uttar Pradesh Legislative Assembly Secretariat under Section 34 of the Arbitration and Conciliation Act, 1996, thereby upholding the arbitral award in favour of Tata Consultancy Services (TCS) in a dispute arising from the conduct of online recruitment examinations for Review Officers and Assistant Review Officers.
The arbitral tribunal had declared that the Secretariat’s termination of the 5 December 2015 service agreement was illegal, directed payment of ₹5.37 crore with 1.5% monthly interest, and awarded ₹11 lakh in costs. The High Court found no perversity or grounds to set aside the award.
The Bombay High Court rejected the Uttar Pradesh Legislative Assembly Secretariat’s preliminary objection that the arbitral award was unenforceable because the State of Uttar Pradesh was not a party to the arbitration agreement. Justice Sandeep V. Marne noted that the description “State of UP through UPLA Secretariat” was adopted only after the Court’s own query during Section 11 proceedings, and held that for enforcement purposes, the Secretariat cannot be treated as an entity entirely distinct from the State. The Court concluded that this objection was hyper-technical and did not affect the validity of the award.
The Court then dismissed the Secretariat’s argument that the contract had been frustrated under Section 56 of the Contract Act. It found that TCS had already completed all essential services under the agreement, including conducting online examinations for 77,804 candidates, and that only result preparation remained. The delay in publishing results, the Court noted, was due to the Secretariat’s failure to supply necessary inputs rather than any impossibility of performance arising after the contract was executed.
Justice Marne further held that the cancellation of the examination by the Speaker amounted to “self-induced impossibility,” which cannot be the basis for invoking frustration. Referring to the Supreme Court’s ruling in Boothalinga Agencies v. VTC Poriaswanmi, AIR 1969 SC 110, the Court observed that a party cannot rely on frustration when the impossibility arises from its own election or conduct. The Secretariat’s attempt to distinguish the role of the Speaker from that of the Secretariat was rejected as an untenable and convenient argument.
The Court also rejected the contention that TCS could claim only reimbursement under Section 70 of the Contract Act. It clarified that Section 70 applies only where there is no subsisting contract, whereas in the present case, an express written agreement existed and had been substantially performed by TCS. The arbitrator had rightly granted the full contractual consideration and not merely quantum meruit or reimbursement for expenses.
Lastly, the Court held that none of the grounds for interference under Section 34 of the Arbitration and Conciliation Act were established. The arbitrator’s findings were based on evidence, were neither perverse nor contrary to public policy, and represented a plausible view of the dispute. Consequently, the High Court upheld the award directing payment of ₹5.37 crore with 1.5% monthly interest and ₹11 lakh in costs to TCS.
Appearance
For Petitioner: Dr. Abhinav Chandrachud, Mr. Pranit Kulkarni, Mr. Shailendra Singh, Mr. Kushal Choudhary, Mr. Ismail Shaikh
For Respondent: Mr. Rohan Kelkar, Ms. Riya Pichaya
