Delhi District Court
Commanding Officer, Ins India vs Sarvesh Security Services Pvt. Ltd on 8 April, 2026
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1. Memo of Parties 2
2. Description of the Case 2
3. Brief Facts of the Case 2-4
4. Grounds of Challenge 4-12
5. Reply/Plea of respondent 13
6. Arguments on behalf of Petitioner 13-20
7. Arguments on behalf of Respondent 20-25
8. Appreciation of Arguments, Facts & Law 25-37
(i) Limitation 28-35
(ii) Mandate of Section 12 of the Act 35-37
9. Decision 37
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 37 Patiala House Court, New Delhi
OMP (COMM) No.96/2021
In the matter of: -
Commanding Officer, INS India
NSB-II, Naraina
Dara Shukhon Road, New Delhi-110011.
...Petitioner
Versus
Sarvesh Security Services Pvt. Ltd.
Registered Office: 413, Pocket-E, Mayur Vihar
Phase-II, Delhi -110091.
...Respondent
Date of Institution : 09.10.2021
Arguments heard on : 17.03.2026
Decided on : 08.04.2026
Decision : Petition is allowed.
JUDGMENT
DESCRIPTION OF THE CASE
1. Petitioner has filed present petition under Section 34 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as
“the Act”), assailing the arbitral award dated 12.02.2020 passed
by learned Sole Arbitrator.
BRIEF FACTS OF THE CASE
2. Briefly stated, the relevant facts are that a tender for providing
security service was floated by petitioner, to which respondent
was the successful bidder. The contract for 08 Security
watchman for a period of one year from the date of the award of
the contract at a total cost of Rs. 12,47,153/- (Rupees Twelve
Lac Forty Seven Thousand One Hundred Fifty Three only) was
awarded vide letter dated 01.01.2014. As per the terms of the
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contract, respondent was to provide security services for a period
of minimum 1 year and as per Clause-1 of ‘Part-IV: Special
Condition of Contract Agreement’ it had to submit a Performance
Bank Guarantee equal to 10% of the contract value i.e. Rs.
1,25,000/- within 30 days of signing of the contract. The
payment to the respondent for the services provided, could only
be made subject to satisfaction of the ‘payment terms’ as provided
in the Clause no. 5 of ‘Part-IV: Special Condition of Contract
Agreement’.
3. Petitioner has averred that respondent failed to submit the PBG
within the stipulated period of 30 days and it only submitted the
same on 15.03.2014 after a delay of 45 days. Petitioner issued
letter dated 12.03.2014 to respondent to submit the PBG and also
to submit the bills pertaining to months of January and February
of 2014 along with the requisite documents, so that the same
could be processed in the financial year 2013-14.
4. Petitioner has pleaded in the petition that respondent had
consistently been violative of the terms of the contract and had
not submitted the performance certificate, payment wages sheet,
attendance sheet duly signed by it or its representative, which
was in complete contravention of Clause-S of ‘Part-IV: Special
Condition of Contract Agreement’.
5. Petitioner has further averred that the contract rates were based
on the exiting minimum wages promulgated by the Delhi
Government and were subject to revision based on revision of
minimum wages by the Delhi Government, provided that the
respondent provided an intimation letter along with copy of the
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government orders to this effect. Petitioner averred that even
though there was revision of minimum wages twice during the
currency of the contract, but same was never intimated to the
petitioner. Petitioner has averred that respondent throughout the
currency of the contract, failed to adhere by the terms of the
contract and had not submitted the bills in the designated format
along with the documents and records of EPF and ESIC
deductions. Petitioner tried to resolve the issue of the payment
and invited the respondent to a meeting vide letters dated
14.11.2014 and 17.11.2014, but respondent never responded to
any of the letter. Respondent sent a legal notice dated 23.02.2017
addressed to Directorate of Administration, which was forwarded
to the petitioner and was duly replied by the petitioner.
6. Respondent moved Hon’ble High Court of Delhi under Section-
11 (6) of the Arbitration and Conciliation Act, 1996 for
appointment of Arbitrator. Delhi High Court appointed
Arbitrator and arbitration took place at DIAC. Ld. Sole
Arbitrator pronounced Arbitral Award on 12-02-2020 for an
amount of Rs. 31,84,869/- in favour of the respondent/claimant
and against the petitioner, with interest@ 12% per annum from
the date of demand notice i.e. 23-02-2017 till the payment, along
with litigation charges of Rs. 1,50,000/-.
GROUNDS OF CHALLENGE
7. Aggrieved by the arbitral award dated 12.02.2020, petitioner has
preferred the present objections under Section 34 of the Act, inter
alia, on the following relevant grounds: –
i. That the impugned Award is patently illegal on the face of record
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and same suffers from perversity and violates the basic notion of
justice and rationality. That the impugned Award is liable to be
set aside being in contravention of Section 34 (2A) of the Act.
(Ref. Ssangyong Engineering and Construction Co. Ltd. v.
National Highways Authority of India, 2019 (8) SCALE 41.)ii. That while adjudicating issue no.1, ld. Arbitrator failed to
distinguish between the limitation period for filing petition for
appointment of Arbitrator u/s. 11 of the Act and the limitation
period for filing the claims before the court of law or Arbitral
Tribunal. That ld. Arbitrator failed to consider that for each bill
there was a different cause of action and the dispute between the
parties had commenced when petitioner had refused to make any
payment to respondent. That no proper bills along with requisite
documents were submitted and the same was informed to
respondent multiple times through different letters dated
12.03.2014, 01.10.2014, 04.02.2015 etc. That the limitation
period even for the last bill had expired on 10.01.2018 and the
claims were barred by time, when the arbitration was invoked on
17.09.2018 i.e. beyond three (3) years limitation period. That
petitioner never acknowledged the liability u/s. 18 of Limitation
Act, 1963. (Ref. Micrographics India v. Govt. of NCT of Delhi
& Ors., 2018 VAD (Delhi) 139).
iii. That while adjudicating issue no.2, ld. Arbitrator did not dismiss
Statement of Claim despite the fact that same had not been
verified by respondent, recording the reason that provisions of
CPC were not strictly applicable in Arbitral proceedings. That
this reasoning is in complete contravention of the material on
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record. Reliance has been placed upon the case of ONGC v. M/s.
Interocean Shipping (India) Pvt. Ltd., Arbitration Petition
No.549 of 2013, decided on 09.06.2017 by Hon’ble High Court
of Bombay, to submit that the arbitral proceedings have to be
carried out as per the provisions of substantial laws and
procedural laws, as are carried out in any Court of Law in Delhi.
iv. That while deciding issue no.3 in favour of respondent, ld.
Arbitrator failed to appreciate the difference between a company
and a partnership firm with respect to authorised representatives
for filing cases before Court of Law. That merely being Director
or major shareholder does not ipso facto make that person an
authorised person to file the case on behalf of a company. That
ld. Arbitrator also failed to appreciate the cross-examination of
CW-1 as well as the judgment of Hon’ble High Court of Delhi in
the case of Escorts Limited v. Sai Auto & Ors., 42 (1990) DLT
446, which provides the manner in which a board resolution is to
be proved.
v. That ld. Arbitrator conveniently neglected to appreciate the
Clause 5(b) of ‘Special Conditions of Contract Agreement’
prescribing conditions, which were to be fulfilled by the claimant
for getting the payment for its services. That ld. Arbitrator has
gone beyond the scope of the contract to adjudicate the issue in
favour of respondent. Reliance was placed upon the case of State
of Rajasthan v. Nav Bharat Constructions Co., (2006) 1 SCC 86;
wherein Hon’ble Supreme Court held that an Arbitrator cannot go
beyond the terms of the contract and in the guises of doing
justice, he cannot award contrary to the terms of the contract.
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vi. That the bills submitted by respondent do not bear any
signature/receipt of respondent and those bills have been denied
by petitioner in its affidavit of admission/denial. Reliance has
been placed upon the case of Pradyuman Kumar Sharma & Ors.
v. Jaysagar M. Sancheti & Ors., 2013 SCC OnLine Bom 453,
wherein Hon’ble High Court of Bombay observed that
consideration of an unproven document by an Arbitrator would
be in violation of the principles of natural justice and a ground to
set aside the Award. That respondent/claimant had failed to bring
on record any evidence to prove the existence of the said bills.
That ld. Arbitrator has gravely erred in awarding the claim
amount to the claimant/respondent herein, which is against the
established principles of law. (Ref. Delhi Jal Board and Ors. v.
Dev Raj Kataria and Ors. 2016 (1) ARBLR 196 (Delhi). That
said alleged bills had been filed by the Claimant in contravention
of order dated 18.09.2019 as passed by ld. Arbitrator, wherein he
himself had instructed that for any electronic evidence filed by
the parties, they need to file an affidavit u/s. 65B of I.E. Act.
vii. That the respondent had admittedly not submitted the required
documents as per Clause 5(a) & (b) of the ‘Part- IV: Special
Conditions of the Contract’ i.e. proof of payment of statutory
dues like bonus, EPF, ESI, Service Tax, etc., still ld. Arbitrator
has awarded Rs. 31,84,869/- to the claimant without explaining
the basis of this decision. Reliance has been placed upon the case
of India in Associate Engineering Co. vs. Govt. of Andhra
Pradesh, (1991) 4 SCC 93; to highlight the observations of
Hon’ble Supreme Court that “The arbitrator cannot act
arbitrarily, irrationally, capriciously or independently of the
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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…”. That no basic/
supporting document like bills/vouchers/payment proofs/bank
statements, etc. had been filed by claimant to substantiate the
calculation sheets, still ld. Arbitrator awarded the amount, which
was mentioned in the undated and unsigned calculation sheets,
which were furnished by claimant without there being any
supporting document.
viii.That ld. Arbitrator has failed to give reasons for adjudicating the
claim in favour of respondent. (Ref. MKU Ltd. v. Union of India,
243 (2017) DLT 198)
ix. That ld. Arbitrator while adjudicating issue no. 6, has illegally
put the burden of proof on petitioner to find out whether
respondent was in existence in the record of the Registrar of
Companies and whether it was operational as on that day.
x. That ld. Arbitrator with regard to issue no.7, baselessly presumed
that ld. counsel for respondent committed lapse in getting the
affidavit sworn before signing of the claim petition, while there
were no such submissions by the respondent/claimant. That ld.
Arbitrator wrongly observed that “it would have been proper on
the part of the claimant to have sworn the affidavit on 01-01-
2019 on the date of signing the claim petition “. That it is
necessary to verify the contents of pleadings with duly sworn
affidavit and such affidavit can be sworn only after signing of the
pleadings and not before that. Ld. Sole Arbitrator further
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mentioned about some judicial pronouncement without
disclosing its name/citation ignoring the case of Oil and Natural
Gas Corporation Ltd. vs. Joint Venture of M/s Sai Rama
Engineering Enterprises (sree) & M/s Megha Engineering &
Infrastructure Limited (meil) MANU/DE/3294/2019, relied upon
by the Petitioner.
xi. That ld. Arbitrator while adjudicating issue no. 8, gave sole
reason that ‘natural justice’ demanded that petitioner must pay
for the services availed by it. Thus, the award is patently illegal
as the same has been based on natural justice instead of clear
contractual and statutory provisions in clear contravention of
Nav Bharat Construction Co. (supra).
xii. That ld. Arbitrator while adjudicating the issue no. 9, wrongly
ignored severe violation of the contractual provisions by
respondent. That ld. Arbitrator allowed all the baseless claims
made by the respondent despite there being no provision in the
contract for redemption of the bonus, if paid to the employees.
That ld. Arbitrator did not consider that respondent had neither
informed petitioner nor had provided requisite documents
showing payment of various statutory dues.
xiii.That ld. Arbitrator has allowed payment of damages and interest
@18% p.a. on account of alleged non-payment of EPFO, ESIC
and Service Tax by petitioner. In doing so ld. Arbitrator has
failed to consider that the contract does not allow grant of
damages or interest and that it is an established position of law
that damages can only be awarded when loss is proved and that
the award has to be reasoned. That the Indian Contract Act, 1872
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provides u/s. 73 that party claiming damages/compensation have
to prove the actual loss incurred by it. That ld. Arbitrator has not
given any reason that why damages along with interest have been
allowed. That ld. Arbitrator also failed to consider that the basis
of quantification of damages and interest has neither been given
by the respondent nor has been stated/disclosed by ld. Arbitrator.
That ld. Arbitrator did not consider that respondent has claimed
damages @ 25% without giving any basis for arriving at this
figure.
xiv. That ld. Arbitrator has caused undue enrichment to respondent
by granting interest @12% per annum from the date of demand
notice dated 23.02.2017 till the payment is made, while the
claimant had itself not prayed for the interest from 23.02.2017.
That respondent had already included interest @18% on all
claimed amounts in the table of Claims written just before Prayer
Clause (page no. 12 of the Statement of Claims) till 01.01.2019.
That respondent had prayed for pendente lite and future interest
in the prayer clause (e) of the Statement of Claim, which means
from 02.01.2019 onwards. However, ld. Arbitrator knowingly
committed duplication of claims by allowing interest from
23.02.2017 that too at the rate of 12% per annum, which is on
higher side considering prevailing rate of interest by nationalized
banks. That pendente liteinterest from 2014 till 2019 has been
allowed @18% per annum by ld. Arbitrator without giving any
justification for grant of interest at such a high rate. Thus, ld.
Arbitrator has discreetly allowed the claimant to enjoy interest at
the rate of 18% per annum till 01.01.2019 on all the claimed
amounts and further awarded interest @12% from 23.02.2017 on
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the awarded amount. Reliance has been placed upon the case of
Patel Engineering Ltd. v. North Eastern Power Corporation Ltd.,
2020 SCC OnLine SC 466, to highlight the observations of
Hon’ble Supreme Court that ‘undue enrichment’ is contrary to
the public policy doctrine u/s. 34 (2) (b) (ii) of the Act and
therefore, the impugned award is liable to be set aside.
xv. That ld. Arbitrator has also not decided the issue of improper
verification of the evidence by way of affidavit by the
respondent’s/claimant’s witness. That respondent’s/claimant’s
witness was cross examined on this issue, oral arguments were
made and written arguments were submitted under the head of
“Additional issues raised during oral arguments”. That
respondent’s witness had verified that each and every averment
made in its evidence by way of affidavit was based on legal
advice believed to be true. While replying to the question no. 26
of the counsel for the petitioner, the CW-1 had categorically
stated that whatever paper he had submitted was true to the best
of his knowledge. The CW-1 had not denied the suggestion of
the counsel for the petitioner that his affidavit had been prepared
by his counsel only and was based upon counsel’s legal advice
only as stated by him in the verification clause of affidavit of
evidence. That since all the factual contents of evidence by way
of affidavit were based upon the legal advice of ld. counsel of the
respondent/claimant, then this evidence did not hold any
merit/weight in the eyes of law. Therefore, whole of the
Statement of Claim was liable to be dismissed in toto as held by
the Hon’ble Punjab and Haryana High Court in Registrar of
Companies v. New Suraj Financiers & Chit Fund, (1990) 69
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CompCas 104 P&H. That ld. Tribunal did not intentionally
deliberate upon this issue and did not return any finding on the
same which amounts to violation of public policy of India as well
as misconduct.
xvi. That there is patent illegality on the part of ld. Arbitrator as he
has deliberately overlooked the contents of Statement of
Defence, Evidence by way of affidavit, Cross-examination of
claimant’s witness, Oral and written submissions of petitioner.
xvii. That ld. Arbitrator has failed to provide any reason while
adjudicating the claims and that he has acted on some
presumptions and he has awarded the claims of the claimant
based on ratios and logics which were never pleaded before him
by respondent/claimant. (Ref. State of Kerala vs. K. Kurian P.
Paul, AIR 1992 Ker 180).
xviii. That ld. Arbitrator has wrongly awarded Rs.1,50,000/- towards
the litigation charges without stating anywhere in the award the
basis for the same. That respondent/claimant had neither
provided any proof of litigation charges incurred by it nor had
prayed for any specific amount towards the same. That ld.
Arbitrator has simply added in his handwriting ‘with litigation
charges of Rs.1,50,000/-‘ at the end of the line on the last page of
the arbitral award without giving any reasoning for the same.
xix. On the basis of aforesaid grounds, prayer has been made to: – (i)
set aside the impugned Award dated 12.02.2020; and (ii) award
the cost of the proceedings in favour of petitioner and against
respondent.
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Page No.12 of 37 Patiala House Court, New Delhi
REPLY OF THE RESPONDENT
8. Respondent filed its reply opposing the petition and contended
that petition filed by applicant is not maintainable and is liable to
be dismissed, as none of the grounds raised by petitioner falls
within limited sphere of Arbitration and Conciliation Act, 1996
(as amended time to time). Respondent averred that it is settled
law that under the provisions of Section 34 of the Act, the Court
does not sit as court of appeal against award passed by ld.
Arbitrator. Respondent averred that no new grounds have been
raised in the petition, wherein the grounds, which are raised,
have already been adjudicated by ld. Arbitrator with valid and
legal reasoning. Respondent averred that petitioner has concealed
material and vital facts from this court.
ARGUMENTS ON BEHALF OF THE PETITIONER
9. Learned counsel for the petitioner argued that ld. Arbitrator while
adjudicating issue no.1 has wrongly taken the commencement of
the cause of action from the date when the legal notice was
served by the respondent/claimant on the petitioner, which is
contrary to the provision of the contract as well as law of
limitation. Ld. counsel argued that ld. arbitral tribunal has failed
to distinguish between the limitation period for filing application
for appointment of arbitrator u/s 11 of the Act and the limitation
period for filing the claims before the Court of law or Arbitral
Tribunal. Ld. counsel averred that the arbitral tribunal while
adjudicating the issue no.2 did not dismiss the statement of
claims, though the same had not been verified by the
respondent/claimant, by giving the reason that the provisions of
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CPC were not strictly applicable in arbitral proceedings. Ld.
counsel argued that respondent/claimant had not filed the
authorization letter of the authorized person with the statement of
claim. Ld. counsel argued that respondent/claimant had not filed
its bills along with requisite documents within prescribed time as
required in clause 5 (b) of the Contract Agreement and ld.
Arbitral Tribunal had wrongly adopted negative reasoning while
adjudicating issue no.4. While making his submissions on issue
no.5, ld. counsel argued that respondent had admittedly not
submitted the required documents as per clause 5(a) and (b) of
the Contract. Ld. counsel argued that ld. tribunal has failed to
give reasons for adjudicating the claim in favour of the
respondent and therefore, the award is in contravention of
Section 31 (3) of the Act. While arguing on issue no.6, he argued
that respondent/claimant had not filed with its SoC or evidence
affidavit, any document to prove that it was in existence in the
record of the ROC and that it is in operation as on day, despite
the fact that petitioner had raised specific preliminary objection
no.8 with this regard. As regard, issue no.7, ld. counsel argued
that the SoC had been signed on 01.01.2019 but the affidavit had
been sworn and attested on 29.12.2018. As regard, issue no. 8,
petitioner averred that petitioner herein was supposed to make
the payments for the bills received by its office along with the
requisite documents on monthly basis, but the petitioner did not
receive the bills along with the requisite documents from the
respondent/claimant. Ld. counsel argued that sole reason given
by Arbitral Tribunal for deciding the claim in favour of the
respondent was that ‘natural justice’ demanded that the petitioner
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must pay for the service availed by it. As regards issue no.9, ld.
counsel argued that no interest or damages were payable as per
the contract by the petitioner herein to the respondent/claimant,
particularly when the respondent/claimant had itself been
negligent in providing the bills and required documents on time
on the petitioner. As regards, issue no.10, ld. counsel argued that
respondent/claimant has not verified its evidence.
10. A written argument was filed on behalf of petitioner, reiterating
the above-mentioned plea. Apart from above-mentioned plea, it
has been mentioned that respondent/claimant itself had
calculated interest on the principal amount from the year 2014,
which proves that the cause of action had accrued in 2014 itself
and the claims were time barred at the time of invocation of
arbitration clause. It has been further mentioned that if the cause
of action had arisen on 23.12.2017, then the interest could not
have been awarded from the year 2014. No such letter dated
23.12.2017 has been filed by respondent/claimant along with its
pleadings or affidavit of CW-1. It has been further mentioned
that respondent/claimant did not file its bills within prescribed
time and these alleged bills do not bear any signature/receipt of
respondent and have been denied by petitioner in its affidavit of
admission/denial. It has been further mentioned that working
sheets/calculation sheets filed by respondent were undated and
unsigned and are not evidence in themselves, but were at the best
just extracts of the base documents like bills/vouchers/payment
proofs/bank statements, etc. which were not filed by the
respondent. Ld. Arbitral Tribunal has failed to give reasons for
adjudicating the claim in favour of respondent and therefore, the
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award is in contravention of Section 31(3) of the Act. It has been
further mentioned that petitioner did not receive the bills along
with the requisite documents from respondent, to make payments
for those bills. Petitioner herein kept on writing letters to
respondent asking it to submit the bills along with the requisite
documents, but respondent failed to comply with the conditions
of the contract. Petitioner is justified in not making the complete
payment to respondent for the period of 01.01.2014 to
31.12.2014. It has been further mentioned that ld. Arbitral
Tribunal has not specified as to which of the principles of the
natural justice provides for payment of bills without complying
with the terms and conditions of the contract and particularly in
violation of the principles of substantial laws of the land like
limitation Act, CPC & Evidence Act. It has been further
mentioned that ld. Arbitral Tribunal allowed all the baseless
claims made by respondent despite there being no provision in
the contract for redemption of the bonus, if paid to the
employees. No interest or damages were payable as per the
contract by the petitioner to the respondent particularly when
respondent had itself been negligent in providing the bills and
required documents on time to the petitioner herein. It has been
further mentioned that ld. Arbitral Tribunal has not decided on
the issue of improper verification of evidence by way of affidavit
by the respondent’s witness. It has been further mentioned that
ld. Arbitral Tribunal knowingly committed duplication of claims
by allowing interest from 23.02.2017 that too at the rate of 12%
per annum which is on higher side considering prevailing rate of
interest by nationalized banks. Similarly, pre lite interest from
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2014 till 2019 has been allowed @ 18% per annum by ld. Sole
Arbitrator without giving any justification for grant of interest at
such a high rate.
11. An additional written arguments was also filed by ld. counsel on
behalf of petitioner. In the additional written arguments, in
respect of issue no.12, it has been mentioned that the tribunal has
not given any reason and breakup of the amount of awarded costs
with reference to S.31A(3) of the Act, while adding in its
handwriting an arbitrary sum of Rs.1,50,000/- as litigation
charges after printing the award on papers. It has been further
mentioned that when respondent/claimant neither prayed for any
specific amount in its statement of claims nor has provided any
proof of litigation charges allegedly incurred by it. In respect of
issue no.13, it has been mentioned that when a statute confers
discretionary powers upon an adjudicatory authority then it has
to be exercised with reasons. It has been further mentioned that
award of interest without assigning any reason for awarding the
same, is also against the fundamental policy of India. It has been
further mentioned that by awarding unquantified amount of pre-
lite and pendente-lite interest, Tribunal has not performed its part
of contract. In respect of issue no.14, it has been mentioned that
ld. Arbitrator suo moto awarded pre-lite interest @ 12% p.a. on
the awarded amount (which already included pre-lite interest @
18% p.a. till 01.01.2019), which has resulted into double
jeopardy to the petitioner herein. No reasons have been given for
awarding such amounts to the respondent/claimant by ld.
Arbitrator. The claimant has failed to bring on record any
evidence to prove the existence of the said bills. In respect of
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issue no.15, it has been mentioned that ld. Arbitrator had not
furnished his declaration of independence and impartiality to the
parties before entering into the reference, while S.12 of the Act
casts a mandatory duty upon the prospective arbitrator to give
disclosure in writing.
12. In support of his contentions, ld. counsel for petitioner relied
upon certain case laws, which are as under: –
i. Micrographics India v. Govt. of NCT of Delhi & Ors., 2018
VAD (Delhi) 139.
ii. Avalon Investment Private Ltd. v. Mukesh Brokerage &
Financial Ltd. Appeal No. 692 of 2011, 2012 (114) 5 Bom. L.R.
2716.
iii. Ssangyong Engineering & Construction Co. Ltd. v. National
Highways Authority of India, 2019 (8) SCALE 41.
iv.Bharat Sanchar Nigam Limited & Anr. v. Nortel Networks India
Pvt. Ltd., (2021) 5 SCC 738.
v. M/s. ONGC v. M/s. Interocean Shipping (India) Pvt. Ltd., Arb.
Pet. No. 549 of 2013, AIR OnLine 2018 BOM 270.
vi.V. Narayanaswamy v. C.P. Thirunavukkarasu, (2000) 2 SCC
294.
vii.Escorts Limited v. Sai Autos & Ors., 42 (1990) DLT 446.
viii.M/s. Nibro Limited v. National Insurance Co. Ltd. 1990 SCC
OnLine Del 65.
ix.State Bank of Travancore v. Kingston Computers (I) P. Ltd.,
MANU/SC/0280/2011.
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.18 of 37 Patiala House Court, New Delhi
x. United Bank of India v. Naresh Kumar, AIR 1997 SC 3.
xi.State of Rajasthan v. Nav Bharat Construction Co., (2006) 1 SCC
86.
xii. Pradyuman Kumar Sharma & Ors. v. Jaysagar M. Sancheti &
Ors., 2013 SCC OnLine Bom 453.
xiii.Delhi Jal Board & Ors. v. Dev Raj Kataria and Ors., 2016 (1)
ARBLR 196 (Delhi).
xiv. State of Rajasthan v. Nav Bharat Construction Co. (2006) 1 SCC
86.
xv. Associate Engineering Co. v. Govt. of Andhra Pradesh, (1991) 4
SCC 93.
xvi. MKU Ltd. v. Union of India, 243 (2017) DLT 198.
xvii. Oil and Natural Gas Corporation Ltd. v. Joint Venture of M/s.
Sai Rama Engineering Enterprises & M/s. Megha Engineering &
Infrastructure Ltd. O.M.P. (COMM.) 97/2019, AIR OnLine 2019
DEL 1753.
xviii. Padmabati Dasi v. Rasik Lal Dhar, ILR 37 Cal 259.
xix. Hira Lal v. Amarjit Singh, 1977 RLR 520.
xx. Registrar of Companies v. New Suraj Financiers & Chit Fund,
(1990) 69 CompCas 104 P&H.
xxi. Patel Engineering Ltd. v. North Eastern Power Corporation Ltd.,
2020 SCC OnLine SC 466.
xxii. Ram Kumar & Anr. v. Shriram Transport Finance Co. Ltd.,
2022/DHC/005313.
xxiii. Bridge Building Construction Co. Pvt. Ltd. v. Bharat Heavy
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.19 of 37 Patiala House Court, New Delhi
Electricals Ltd., MANU/DE/0262/2023.
xxiv. State of Maharashtra v. Hindustan Construction Company, AIR
2010 SUPREME COURT 1299.
xxv. Era Constructions (India) v. Mr. D.K. Sharma, Prop. Keshav,
2008 (1) ARB LR 205 Delhi.
xxvi. Steel Stripes Wheels Ltd. v. Tata AIG General Insurance Co.
Ltd. 2020(3)ARBLR 451 (Delhi).
xxvii. K. Lubna & Ors. v. Beevi & Ors., AIR 2020 SC 429.
xxviii.Union of India & Anr. v. Alcon Builders and Engineer Pvt. Ltd.,
2023/DHC/000304.
xxix. Morgan Securities and Credits Pvt. Ltd. v. Videocon Industries
Ltd., (2023) 1 SCC 602.
xxx. ONGC v. Afcons Gunanusa JV, AIR 2022 SC 4413.
ARGUMENTS OF RESPONDENT
13. Per contra, learned senior counsel for the respondent argued that
issue of limitation was rightly decided by ld. Arbitrator, as the
limitation started from the date of giving notice to the petitioner.
She also argued that in DIAC there was practise of taking
disclosure from the Arbitrator, and same should have been so
made by ld. Arbitrator. Such question was never raised by
petitioner and now this plea cannot be allowed to be raised. At
the same time ld. senior counsel submitted that interest w.e.f.
2014 cannot be payable, being beyond the period of three years,
and only such part of the award is liable to be modified. She
argued that under s. 34, award can be modified or partly set aside
in respect of portion which is severable from other part of the
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award.
14. Written submission/argument was filed on behalf of respondent
as well. It has been mentioned that it is not open for the
petitioner to allege that the award is not correct on facts or that
ld. Arbitrator came to a wrong decision, wherein the arbitration
proceedings went on for months together and every arbitration
proceeding was duly attended and contested by petitioner along
with counsel. It has been further mentioned that provisions of
S.34 of the Act are not inconsistent with the Award and
therefore, the Award cannot be challenged. It has been further
pleaded that no new grounds have been raised in the petition
under reply, wherein the grounds have already been properly
adjudicated by ld. Arbitrator with valid and legal reasoning. It
has been further pleaded that respondent being the service
provider, provided continuous services to petitioner and raised
and submitted the bills not just once, but multiple times as per
the demand of the petitioner, which petitioner failed to process
and pay. This clearly establishes unjust and arbitrary act of
petitioner to misuse their dominant position and same has been
dealt by ld. Arbitrator. It has been further mentioned that once
the contract was concluded and claimant did not receive any
payment from petitioner in spite of submissions of bills,
respondent wrote numerous letters and reminders requesting
petitioner to make payment against the security services enjoyed
by petitioner. It has been further mentioned that post the legal
notice of claimant and during talks of pending wage bills,
respondent released 6 Earnest Money Deposit (EMD’s) in the
form of DD and FDR of claimant company and further assured
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that the wage bills would be processed, however, no payment
was made against the same. It has been further mentioned that
despite making all possible efforts and personal visits by the
Director himself and through his AR, only FDRs were released,
but no payment against the wage bills were made. It has been
further mentioned that being aggrieved by the arbitrary act of
respondent, the claimant being a retired Army Officer, was
constrained to write a DO letter to respondent vide letter dated
10.10.2017. It has been further mentioned that respondent not
only failed to reply to the requests of claimant, but further did not
seek or provide reasons for non-payment. Thereafter claimant
was constrained to invoke the Arbitration Clause between the
parties vide its letter dated 17.09.2018, so that claimant could
receive its due payment from the respondent against the security
services availed by the respondent. It has been further mentioned
that the issue regarding the cause of action was duly
acknowledged, addressed and reasoned by ld. Arbitrator in para-
26 of the Award, wherein it was rightfully adjudicated that the
cause of action arose from the date of the service of legal notice
as the petitioner admitted that the payments were not made by
them. It has been further mentioned that the cause of action was
continuous in nature as the legal dues of petitioner were accrued
over the time period of the subsistence of the contract. It has
been further mentioned that ld. Arbitrator has rightfully granted
interest in favor of respondent as it is settled principal of law that
the interest has to be considered from the date of first demand,
which in this case arose in the year 2014. It has been further
mentioned that the claims of claimant filed before ld. Arbitrator,
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was within limitation and was not barred by law and is a well-
reasoned and legal award. It has been further mentioned that the
claim was filed by the Director of the claimant company, whose
authorization was not only filed in the Section 11 petition before
Hon’ble High Court of Delhi, but also before the Tribunal. In
respect of issue no.4, it has been mentioned that there was no
clause in the agreement that the payment of the services given by
the respondent would be stopped merely on the ground of alleged
omission on the part of respondent in submitting its bills within
the prescribed time along with the required documents as
reasoned by ld. Arbitrator in the para-29 of the award. In respect
of issued no. 5, it has been mentioned that as per clauses of the
contract, the statutory dues like EPFO, ESIC etc. were to be
submitted by the respondents and no prejudice was caused to the
petitioner, which is so addressed by ld. Arbitrator in para-30 of
the Award. In respect of issue no.6, it has been mentioned that in
para-31 of the Award it is stated by ld. Arbitrator that the record
of the company could have easily be taken from the Registrar of
the Company. The pending dues were from the period of January
2014 to December 2014, when the company was in the existence.
In respect of issue no.7, it has been mentioned that the provisions
of Code of Civil Procedure, 1908 and Indian Evidence Act, 1872
Act, were not strictly applicable in arbitral proceedings. The
claim petition was signed by the Director, who was present in all
proceedings and a mere technical error could not be taken as a
patent illegality in the award. In respect of issues no.8 and 9, it
has been mentioned that petitioner enjoyed the services provided
by the respondents for a whole year without paying even a single
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penny to them, which is unjust, illegal, and arbitrary, and which
is strictly against the principles of natural justice. Ld. Arbitrator
took notice of all the above-mentioned material facts and passed
a self-explanatory and well-reasoned Award. In respect of issue
no.10, it has been mentioned that evidence by way of affidavit
was properly verified and the provisions of CPC, 1908 and
Indian Evidence Act, 1872, were not strictly followed in the
arbitration proceedings as mutually agreed by the parties. In
respect of issue no.11, it has been mentioned that petitioner is
liable to pay the interest for the delay and loss caused to the
respondent, which has been justly and fairly adjudicated by ld.
Arbitrator.
15. A gist of oral arguments/plea made on behalf of respondent in
reply to the preliminary objections of petitioner on claims being
time barred and declaration made by ld. Sole Arbitrator under
Section 12(1) of the Act, was also filed. Through this gist on the
point of limitation, it has been pleaded that limitation in the
present case is a mixed question of law and fact, and that any
factual finding cannot be interfered u/s 34. It has been further
pleaded that in cases where parties are in correspondence with
each other, the cause of action for initiating legal proceedings
arises, when a breaking point is reached by the parties.
16. In support of the contentions, ld. counsel for respondent relied
upon certain case laws, which are as under: –
i. Consolidated Construction Consortium Ltd. v. Software
Technology Parks of India, (2025) 7 SCC 757.
ii. Hindustan Construction Company v. National Highways
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.24 of 37 Patiala House Court, New Delhi
Authority of India, (2024) 2 SCC 613.
iii. M/s. Welspun Enterprises Ltd. v. M/s. NCC Ltd., FAO (OS)
(COMM) No. 9/2019, decided on 10.10.2022 by Hon’ble High
Court of Delhi.
iv. Geo Miller and Co. Pvt. Ltd. v. Chairman, Rajasthan Vidyut
Utpadan Nigam Ltd. (2020) 14 SCC 643.
v. M/s. Hyder Consulting (UK) Ltd. v. Governor State of Orissa
Through Chief Engineer, (2025) 2 SCC 189.
vi. Associate Builders v. DDA, (2015) 3 SCC 49.
vii. Ssangyong Engineering & Construction Co. Ltd. v. National
Highways Authority of India, AIR 2019 SC 5041.
viii.Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp(1)
SCC 644.
ix. Patel Engineering Limited v. North Eastern Electric Power
Corporation Ltd., AIR 2020 SC 2488.
x. Canara Nidhi Ltd. v. M. Shashikala, 2019 SCC OnLine SC 1244.
xi. Associated Construction v. Pawan Hans Helicopters Ltd., (2008)
16 SCC 128.
xii. NTPC Ltd. v. M/s. Deconar Services Pvt. Ltd. Civil, Civil
Appeal No.6483/2014, decided on 14.05.2015.
APPRECIATION OF ARGUMENTS, FACTS & LAW
17. The crux of the legal principals explained by superior courts in
respect of ambit of Section 34, is that Arbitrator is a Judge of the
choice of the parties and his decision, unless there is an error
apparent on the face of the award which makes it unsustainable,
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is not to be set aside even by the Court, even if the Court of law
could come to a different conclusion on the same facts. The
Court cannot reappraise the evidence and it is not open to the
Court to sit in appeal over the conclusion of the Arbitrator. It is
not open to the Court to set aside a finding of fact arrived at by
the Arbitrator and only grounds on which the award can be set
aside are mentioned in the Arbitration Act. Where the Arbitrator
assigns cogent grounds and sufficient reasons and no error of law
or misconduct is cited, the award will not call for interference by
the Court in exercise of the power vested in it. Where the
Arbitrator is a qualified technical person and expert, who is
competent to make assessment by taking into consideration the
technical aspects of the matter, the Court would generally not
interfere with the award passed by the Arbitrator.
18. Hon’ble Supreme Court in the case of Associate Builders vs.
Delhi Development Authority, (2015) 3 SCC 49 held that the
interference with an arbitral award is permissible only when the
findings of the arbitrator are arbitrary, capricious or perverse or
when conscience of the Court is shocked or when illegality is not
trivial but goes to the root of the matter. It was held that once it is
found that the arbitrator’s approach is neither arbitrary nor
capricious, no interference is called for on facts. The arbitrator is
ultimately a master of the quantity and quality of evidence while
drawing the arbitral award. Patent illegality must go to the root
of the matter and cannot be of trivial nature.
19. Hon’ble Supreme Court in case of Ssangyong Engineering &
Construction Co. Ltd. vs. National Highways Authority of India,
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.26 of 37 Patiala House Court, New Delhi
2019 SCC OnLine SC 677 held that under Section 34 (2A) of the
Act, a decision which is perverse 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.
A finding based on the documents taken behind the back of the
parties by the arbitrator would also qualify as a decision based on
no evidence inasmuch as such decision is not based on evidence
led by the parties and therefore, would also have to be
characterized as perverse. It was held that 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.
20. In the present case, ld. Arbitrator had framed following issues: –
i. Whether claim petition is barred by limitation?
ii. Whether claimant has not verified the claim petition and if so, its
effect?
iii. Whether the statement of claim has been filed by the
unauthorised person and if so, its effect?
iv.Whether claimant did not file its bills within prescribed time
along with required documents if so, its effect?
v. Whether claimant has not provided to the respondent till date
proof of payment of statutory dues like bonus, EPF, ESI, service
tax etc., if so, its effect?
vi.Whether claimant company is in existence in the record of
Registrar of the companies and that it is in operation as on today?
vii. Wheat will be impact on claim petition as the affidavit has been
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shown on 29.12.2018 while claim petition has been signed on
01.01.2019?
viii.Whether the respondent is justified to withheld the complete
payment of claimant company for the period 01.01.2014 to
31.12.2014?
ix. Whether the workman [security guard] are the employees of the
respondent and whether compliance of statutory dues of ESI,
EPF, Service tax and labour law, is to be seen by the respondent
or by statutory competent authority?
x. Whether the claimant is entitled for the reliefs claimed? OPP
LIMITATION
21. In the present proceeding, though the arguments were made on
behalf of petitioner in respect of all the afore-said issues to
contend that ld. Arbitrator has given wrong findings, but keeping
in view the narrow scope of Section 34 of the Act, more focus
was given on the legal issues. The issue related to limitation was
very extensively argued by both the parties. The relevant factual
matrix without any controversy, is that 31.12.2014 was the last
day of contract between the parties. As per contract between the
parties, bills were to be raised on monthly basis and same were
payable on monthly basis. Part-IV of the contract contained the
relevant contractual terms related to payment. Clause 5 mentions
that payment was to be made every month on production of
certain documents. The notice u/s. 21 of Arbitration and
Conciliation Act was given by respondent herein on 17.09.2018.
Petitioner took stand that this notice was issued after lapse of
three (3) years from the date when even the last bill became due
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and hence, all claim of the respondent was time barred. However,
respondent took plea that demand notices were sent subsequently
and the cause of action to invoke arbitration arose when notice
was issued to petitioner on 23.02.2017, which was even replied
by the petitioner, vide reply dated 10.03.2017.
22. While deciding the issue of limitation, ld. Arbitrator made
following observations: –
“26. …………….
Hon’ble Supreme Court discussed this aspect in judgment
cited as Union of India vs. L.K. Ahuja, 1988 RLR SC 293. In
that case between 29.5.1972 and 19.6.1972, respondent
accepted four final bills. The parties in 1976,
respondent/claimant wrote a letter to additional CE that about
Rs.2 lakhs was due to him and matter be referred to
arbitration. Government denied claim on 4.6.1976 and
declined reference on 13.12.1972, respondent applied to civil
court Allahabad for appointment of arbitrator. It was
dismissed as barred by time, that order was referred by High
Court and Union of India appealed to Supreme Court. It was
held by Hon’ble Supreme Court that claim for reference if
made within three years from date of demand, then it is
within time. This question was again considered by Hon’ble
Supreme Court in case cited Punjab State vs. Executive
Engineer Anandpur Sahib, AIR 2007 SC 2157. In para no.24
of the judgment, it was held that reference of the dispute of
the arbitration is required to be filed within three years, when
right to file accrue and that said right accrued when
differences or disputes arise between the parties to the
arbitration agreement. Now it is to be seen when dispute
arose between the parties. According to claimant, he was
pursuing the matter with respondent to make payment of the
services rendered and the resident of respondent for one year
from January 2014 to till December 2014. Claimant has
placed on record legal notice sent to respondent, Mark-B
dated 28.01.2017. The service of this notice on respondentOMP (COMM.) No. 96/2021 (Pulastya Pramachala)
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has not been proved, marked documents can not be taken into
consideration. However another notice Ex.CW1/10 dated
23.02.2017 has been admitted by the respondent in their
affidavit filed in respect of document by claimant. In column
No.10 of the affidavit, receipt of this notice has been
admitted. In legal notice sent by the claimant Ex.CW1/10, it
is mentioned that the respondent has enjoyed security
services provided by claimant from January 2014 till
December 2014 under contract dated 30.1.2014. Agreement
executed between the parties is Ex.CW1/3. Respondent gave
reply to this notice, which is Ex.CW1/12 dated 10.3.17 in
which it is mentioned that the firm has not been providing
requisite document, which are required by CDA[N] and
which are explicitly mentioned in the contract agreement for
payment to the firm. Claimant was asked to provide requisite
document as mentioned in the contract agreement at the
earliest for the duration January 2014 to December 2014 for
onwards submissions of the bills to CDA [N] so that payment
may be made to the firm.
To my opinion, the limitation starts on the date of demand
by the claimant. The claim has been filed within three years,
when cause of action arose. Limitation period starts not from
January 2015, but it starts from 23.12.2017, when notice was
issued by the claimant to respondent. This issue is decided
accordingly in favor of the claimant and against the
respondent.”
23. First of all the date of 23.12.2017 as mentioned in the concluding
part of the finding, appears to be a case of typographical mistake
and ld. Arbitrator basically treated the date of legal notice sent by
respondent to petitioner on 23.02.2017, as the date of accruel of
cause of action.
24. According to ld. Counsel for respondent there had been
negotiation going on between the parties and it was only when a
breaking point was achieved that the actual cause of action arose
to invoke arbitration clause. Ld. Senior Counsel referred to
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observations made by three judge bench of Hon’ble Supreme
Court in paragraph 28 of the case of Geo Miller (supra). The said
observations are as follows: –
“28. Having perused through the relevant precedents, we agree
that on a certain set of facts and circumstances, the period
during which the parties were bona fide negotiating towards
an amicable settlement may be excluded for the purpose of
computing the period of limitation for reference to arbitration
under the 1996 Act. However, in such cases the entire
negotiation history between the parties must be specifically
pleaded and placed on the record. The Court upon careful
consideration of such history must find out what was the
“breaking point” at which any reasonable party would have
abandoned efforts at arriving at a settlement and contemplated
referral of the dispute for arbitration. This “breaking point”
would then be treated as the date on which the cause of action
arises, for the purpose of limitation. The threshold for
determining when such a point arises will be lower in the case
of commercial disputes, where the party’s primary interest is
in securing the payment due to them, than in family disputes
where it may be said that the parties have a greater stake in
settling the dispute amicably, and therefore delaying formal
adjudication of the claim.”
25. The above observations made by Hon’ble Supreme Court, make
the pleading very important, which has to be considered in
accordance with the observations of the court. In the Statement
of Claim filed by respondent herein, it was pleaded that
claimant/respondent herein was contrained to file the claim
petition against the unjust, unfair and arbitrary actions of the
respondent of not making the due payment to the claimant
company against the security services enjoyed by them from
January, 2014 till December, 2014 till date. It was also alleged
that respondent (in the arbitration proceedings) had also failed to
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release the bank guarantee. It was further alleged (para-12 & 13
of SOC) that claimant company personally as well as through
representative time and again requested the respondent to release
the due payment of the claimant against their security services
provided for a year, and that aggrieved by non-payment of the
wage bills the claimant personally as well as vide letter dated
06.12.2015 requested the respondent for kind intervention as
well as hold meeting in order that the dispute could be settled
amicably. Thereafter, the pleadings in the SOC straightaway
referred to the legal notices allegedly sent on 28.01.2017 and
23.02.2017 to the respondent for release of payment. In para-17
of SOC, it was further pleaded that during the process respondent
assured to process and release the payment to the claimant and
that it was during that time when petitioner herein also released
three (3) FDRs. It was further pleaded that inspite of the
assurance given, the respondent failed to release a single
payment to the claimant company and accordingly aggrieved by
the same, claimant invoked arbitration clause vide letter dated
17.09.2018.
26. The afore-said pleading did not in any manner project any
scenario of negotiation towards amicable settlement actually
taken place between the parties at any particular period of time.
In the same judgment, Hon’ble Supreme Court in respect of
stretching the period of cause of action, observed as under: –
“29. Moreover, in a commercial dispute, while mere failure to
pay may not give rise to a cause of action, once the applicant
has asserted their claim and the respondent fails to respond to
such claim, such failure will be treated as a denial of the
applicant’s claim giving rise to a dispute, and therefore theOMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
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cause of action for reference to arbitration. It does not lie to the
applicant to plead that waited for an unreasonably long period
to refer the dispute to arbitration merely on account of the
respondent’s failure to settle their claim and because they were
writing representations and reminders to the respondent in the
meanwhile.”
27. It is, thus, well clear that the concept of breaking point is based
on some actual negotiation going on between the parties, with a
scope of settlement of the dispute. But the negotiation cannot be
unilateral, meaning thereby just because one party says that
meeting be held to settle the dispute amicably, but the opposite
does not respond at all positively or otherwise, then it cannot be
said that any negotiation was underway. Demand in respect of
the due amount is implicit when a bill for such due amount is
given to the opposite party.
28. In the case of Era Constructions (India) Limited (supra), while
dealing with a case of security agency services provided by the
claimant, Hon’ble Delhi Court held as under: –
“In the Award itself it is noted that the contract between the
parties was essentially one for payment of wages in respect of
the security personnel provided by the respondent to the
petitioner. The specific period of limitation provided in respect
of such contracts is indicated in Article 7 of the Limitation Act,
1963 and it is three years from when the wages accrue due.”
29. In the name of any response from the respondent (in the
arbitration proceedings/petitioner herein) there is reference to
only one reply dated 10.03.2017, which is Ex.CW-1/12 in the
arbitral record. This reply refers to the claimant’s letter dated
23.02.2017. In this reply or even in the letters sent by
claimant/respondent herein, there had not been any reference to
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any talk of negotiation for amicable settlement. It was only a
desire/request made by claimant to arrange for a meeting to
resolve the matter amicably, as mentioned in the letter dated
23.02.2017. All these letters refered to monthly wage bills, which
had remained due for payment. In the reply of petitioner herein,
it was mentioned that repeated reminders were given to claimant
to provide requisite documents which were explicitly mentioned
in the contract agreement and same advise was again repeated in
the reply dated 10.03.2017. Thus, even if I go beyond pleading of
claimant/respondent herein, to infer any kind of negotiation
actually going on between the parties, I do not find any material
to presume so. Actually no negotiation was going on and that is
the reason that claimant could not plead anything about any such
negotiation talk or conversation/communication. From the side
of claimant, the first letter referred in the pleading is dated
06.12.2015, wherein same grievance was made about non release
of even single payment and request was made to look into the
matter and to hold the meeting. Legal notices dated 28.01.2017
or 23.02.2017 also remained silent in respect of failure of any
negotiation talk (because there had not been any). Thus, it was
case of unilateral letters form the side of claimant to keep making
demand and also to make request for a meeting. In that situation,
there was no ocassion to have a breaking point (as referred in the
case of Geo Miller (supra)). Thus, I do find that the finding given
by ld. Arbitrator on the point of limitation was contrary to the
law of limitation. Referring to some case laws based on different
set of facts, was only to be oblivious of the actual facts involved
in this matter. Even the approach was contrary to legal concept,
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in reaching to the conclusion that the cause of action started from
23.02.2017 that is the second legal notice sent by claimant. The
right approach was to treat the documents and facts pleaded by
claimant binding upon the claimant, which did not require any
admission from the respondent/petitioner herein, for the purpose
of calculation of limitation. Thus, ignoring the notice dated
28.01.2017 as pleaded by claimant, on the basis of reasoning that
respondent did not admit the same, was altogether approach
contrary to law to look into the limitation aspect. Since petitioner
herein had raised this issue of limitation, such issue was not to be
decided only on the basis of documents admitted by petitioner. It
was always onus of the claimant/respondent herein to establish
that the claim was within limitation and therefore, any fact
pleaded or document referred by the claimant, was to be read
against claimant for the purpose of deciding limitation. In these
circumstances, I do find that the illegality in the decision making
process as well as the decision given on the aspect of limitation,
goes into the roots of the complete matter and apparently this
cannot be something minor diffect in nature, which can be
ignored by the court.
MANDATE OF SECTION 12 OF THE ACT
30. Another substantial legal question raised by the petitioner was
compliance of mandate of Section 12 of the Act. It remained
admitted position that on the arbitral record no such
declaration/disclosure was found by anyone. Argument was
made on behalf of respondent that it is not a case of non-
disclosure, rather it is a case of missing of such disclosure from
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the arbitral record. Ld. Counsel for petitioner had submitted that
such oral assertion cannot be entertained and if disclosure was
acctually filed/made by ld. Arbitrator, then respondent could file
affidavit to that effect. In response to this argument, it was
submitted that such affidavit was not being filed because the
present counsel or AR did not participate in that proceeding and
hence, they could not vouch for the same.
31. Apparently, benefit of absence of such disclosure in the arbitral
record cannot be given blindly, merely on the basis of oral
submissions that it is part and parcel of practice in DIAC to make
such disclosure and hence, such disclosure must have been made
by ld. Arbitrator. At least some sort of reference could have been
shown to me from any material placed on the record, in order to
raise such presumption, but it was not so done. If I refer to the
first order dated 18.09.2019, as passed by ld. Arbitrator, there is
no reference of making any such declaration by ld. Arbitrator.
Similarly, there is no reference of making such disclosure even in
the Award. In the file pertaining to correspondence as received
from DIAC, I could find one email dated 30.08.2019 sent to ld.
Arbitrator from DIAC, wherein he was asked to send the
declaration of acceptance and statement of independence, but I
could not find any reply to that email so as to confirm about
having sent such declaration nor could I find any declration in
the file. In such situation, I cannot treat it to be a case wherein
declaration u/s. 12 of the Act was filed by ld. Arbitrator. It is
well settled that absence of such declaration is not mere
irregularity, rather it goes into the roots of the arbitration
proceedings. The judgments passed in the case of Ram Kumar
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.36 of 37 Patiala House Court, New Delhi
(supra) and Bridge Building (supra), leave no doubt about
indispensable mandate of Section 12 of the Act and on account
of non-compliance of the same also, this arbitration proceedings
stood vitiated.
DECISION
32. In view of my foregoing discussions, observations and findings, I
find that the Award in question does not stand the test of
fundamental laws of the land and hence, petition is allowed and
Award is set aside.
33. File be consigned to record room after due compliance.
Pronounced in the (PULASTYA PRAMACHALA)
Open Court on this District Judge (Commercial Court)-01,
08th Day of April, 2026 Patiala House Court, New Delhi
OMP (COMM.) No. 96/2021 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.37 of 37 Patiala House Court, New Delhi
