1) By this Petition filed under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), the Petitioner has challenged the Award of the learned sole Arbitrator dated 11 July 2024. By the impugned Award, the learned Arbitrator has awarded claim in favour of the Respondent in the sum of Rs.25,27,78,775/- alongwith interest @8% p.a. from the date of filing of the statement of claim till realisation. The Tribunal has also awarded costs of Rs.25,00,000/- to the Respondent.
FACTS
2) Petitioner is an unlisted public company, which is a public- private joint venture between Government of Maharashtra and Tata Consultancy Services Ltd. Petitioner is engaged in the business of IT services and IT consulting. Petitioner has undertaken the process of facilitating digitisation and strengthening penetration of information technology in various departments of Government of Maharashtra. Through its website, Petitioner provides various online services to the citizens, particularly relating to providing digitised copies of 7/12 extracts, renewal of licenses / permits, etc. The Respondent, who was formerly known as ‘Unity Telecom Infrastructure Ltd.’ is a technology company delivering industry-specific solutions. On 7 April 2011, Petitioner was appointed by Rural Development Department (RDD) of the Government of Maharashtra to execute the project of e-Panchayat Raj Institute (e-PRI project) and Citizen Services using GSK Wallet (GSK Top-Up). Under the project, Petitioner was to provide inter alia requisite trained and skilled personnel for implementation and maintenance of the software projects at Divisional, Zilla Parishad, Panchayat Samiti and Grampanchayat levels. Government Resolution dated 26 April 2011 was issued, by which the State Government decided the rates of operators for implementation of the project.
3) Business Associate Agreement (BAA) dated 30 April 2012 was executed between the Petitioner and the Respondent, under which e- PRI project was subcontracted to the Respondent. The Respondent was to provide requisite trained manpower at Grampanchayat, Panchayat Samiti and Zilla Parishad level for implementation of e-PRI project. The personnel supplied by the Respondent were to be deployed to Petitioner’s location or the location of the clients for working at the digitization project along with Petitioner’s team. The personnel of Respondent were supposed to execute implementation and maintenance activities in connection with computer software applications. Under the Agreement, Petitioner appointed Respondent on non-exclusive basis as its Business Associate on “person- month rate” basis. The term of the Agreement was for 5 years from 30 April 2012 to 29 April 2017. As a consideration, Petitioner was to pay to the Respondent as per the Schedule of Technical Fees. According to the Petitioner, the payments were to be released to the Respondent only after receipt of payment by Petitioner from RDD.
4) The Respondent commenced performance of the contract. The disputes arose between the Petitioner and the Respondent with regard to non-payment of amounts due to the Respondent under the Agreement. On 13 June 2019, Respondent filed Commercial Arbitration Application No.276 of 2019 under Section 11 of the Arbitration Act before this Court. By order dated 13 September 2019, the Arbitral Tribunal was constituted. The Respondent filed its Statement of Claim raising total four claims before the learned Arbitrator viz. (i) Claim No.1 for Rs.40,10,36,755/- being unpaid amount of consideration under the Agreement (ii) Claim No.1A of Rs.10,90,26,900/- being unpaid amount for the work of accounting and data entry for Sangram project, (iii) Interest @ 18% p.a. (iv) cost of Rs.50,00,000/-. Petitioner filed statement of defence resisting claim of the Respondent. Parties led evidence in support of their respective claims.
5) The Arbitral Tribunal has made Award dated 11 July 2024 partly allowing the claim filed by the Respondent. The Arbitral Tribunal has awarded sum of Rs.25,27,28,775/- in favour of the Respondent being the amount of consideration under the contract. The Arbitral Tribunal has further awarded interest of 8% p.a. on Rs.25,27,78,775/- from the date of filing of Statement of Claim i.e. 14 November 2019 till realisation. The Respondent is also awarded costs of Rs.25,00,000/- by the Arbitral Tribunal. Aggrieved by the Award dated 11 July 2024 passed by the learned sole Arbitrator, Petitioner has filed the present Petition under Section 34 of the Arbitration Act.
SUBMISSIONS:
6) Mr. Setalwad, the learned Senior Advocate appearing for the Petitioner would submit that the impugned Award is passed by ignoring the contractual clauses, under which the Respondent was to be paid only after release of the amounts by RDD. That the Arbitral Tribunal has failed to appreciate that the Petitioner did not have any independent contractual obligation to make any payment to the Respondent. That the Respondent had clearly agreed for payment of consideration only after release of payments by the RDD. That the learned Arbitrator has erroneously construed Clause 28(b) of the Agreement to mean a mere mechanism for releasing the payment when in fact the said clause is the arrangement agreed between the parties for making payments to the Respondent. That the Petitioner has acted as a intermediary between the Respondent and the Government of Maharashtra where it was entitled to receive mere commission on payments sanctioned by Government of Maharashtra to the Respondent. That the arrangement executed with the Respondent is not any standalone independent contract with the Petitioner. That the contract was ultimately for providing services to the RDD, who alone could certify execution of work and release payments therefor. That therefore it was an intertwined transaction between the RDD, the Petitioner, and the Respondent. That the Respondent has erroneously sought resolution of dispute with the Petitioner alone without involving RDD, who alone was in a position to certify the work allegedly performed by the Respondent. That under the contract, the Petitioner was not vested with any authority to certify the Respondent nor the Petitioner was to decide payment of consideration. That the rates were also prescribed by the State Government. That the Arbitral Tribunal, without appreciating the above position, has foisted a new commercial bargain on the Petitioner, which is not envisaged in the original contract. That the learned Arbitrator has re- written the terms of contract and that therefore the Award falls foul of Section 34 of the Arbitration Act as held by the Apex Court in PSA SICAL Terminals Pvt. Ltd. V/s. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin and others.(2021 SCC OnLine SC 508)
7) Mr. Setalwad would submit that apart from rewriting the terms of contract, the learned Arbitrator has ignored the evidence on record suggesting back-to-back payments made to the Respondent after release of payments by the RDD. That the learned Arbitrator has erroneously held that the Petitioner did not specifically take the defence of back-to-back payment in the Statement of Defence ignoring contents of paragraphs 10 and 17 of Statement of Defence and paragraphs 4,8, 15,16, 18, 32 and 45 of the Petitioner’s sur-rejoinder. He would submit that the claim was also barred by limitation.
8) Mr. Setalwad would further submit that the claim of the Respondent was barred by limitation and has been erroneously entertained and awarded by the learned Arbitrator.
9) Mr. Setalwad would further submit that the impugned Award suffers from patent illegality in granting the claim of Rs.25,27,78,775/- only on basis of Petitioner’s letter dated 15 November 2019. That the said letter nowhere states that amount of Rs.25,27,78,775/- was due and payable by the Petitioner to the Respondent. That the letter merely called upon the RDD to pay the amount to the Petitioner. That the letter could not have been treated as admission of liability to make any payment to the Respondent. That the learned Arbitrator has misread the document in an unreasonable and perverse manner. He would rely upon judgment of the Delhi High Court in Indian Oil Corporation Ltd. (IOCL) V/s. IL&FS Paradip Refineries Water Ltd(2023 SCC Online Del 2970) in support of his contention that perverse reading of a document constitutes a valid ground of challenge to the Award. Mr. Setalwad would submit that the said judgment is upheld in IL & FS Paradip Refinery Water Ltd. vs. Indian Oil Corporation Ltd. (IOCL)(2025 SCC Online Del 2464 (DB)). He would rely on judgment of Orchid Infrastructure Developers Pvt. Ltd . V/s. Five Star Constructions Pvt. Ltd.(2022 SCC Online Del 2111) as upheld in Five Star Constructions Pvt. Ltd.V/s. Orchid Infrastructure Developers Pvt. Ltd.(2024 1 HCC (Del) 163 (DB)). Mr. Setalwad would further submit that the Respondent did not lead any evidence to independently prove its claim for payment of Rs.25,27,78,775/-. That the said amount was never claimed in the Statement of Claim, which was for 40 odd crores. That in absence of any supporting invoices, the learned Arbitrator erred in awarding claim by picking up stray amount reflected in letter dated 15 November 2019. Mr. Setalwad would submit that since the Petitioner’s liability to pay the Respondent arises only after release of payment by the RDD, it cannot be contended that there is an admission on the part of the Petitioner to pay Rs.25,27,78,775/- to the Respondent. That the letter uses the word ‘approximate’. That the amounts were payable to the Respondent only against each invoice and the learned Arbitrator erred in dealing the case of the Respondent by assuming admissibility of claim on ledger book basis. That the Agreement did not provide for maintenance of any running amount and each invoice was to be paid on back-to-back basis.
10) Mr. Setalwad would further submit that even if amount of Rs.25,27,78,775/- is to be momentarily accepted as the amount payable in respect of services allegedly performed by the Respondent, the RDD did not approve the work worth Rs.17,53,78,157.75/- which was to be treated as write-off. That since the RDD was the only certifying authority, the amount written off by the RDD cannot be claimed by the Respondent from the Petitioner. That the learned Arbitrator has totally ignored this aspect while erroneously directing payment of the entire amount reflected in the letter dated 15 November 2019. Without prejudice, Mr. Setalwad would submit that it was Respondent’s own case that the Petitioner was entitled to commission @ 6.5% on amounts released by the RDD. That in the pleadings, the Respondent admitted entitlement of the Petitioner to deduct the amount of claim. That the learned Arbitrator himself has referred to the said admission in paragraph 218 of the impugned Award where the Respondent had claimed amount of Rs.23.70 crores. However, the learned Arbitrator completely ignored these admissions and proceeded to award entire amount reflected in letter dated 15 November 2019. Mr. Setalwad would rely upon judgment of the Apex Court in Vijay Karia V/s. Prysmian Cavi E Sistemi SRL & Ors.(2020 11 SCC 1) in support of his contention that failure to indicate breakup of amount of Rs.25,27,78,775/- warranted rejection of the entire claim. Mr. Setalwad would further submit that no reasons are recorded by the Arbitral Tribunal for awarding interest @8% p.a. That the contract did not provide for payment of interest. He would rely upon judgment of the Apex Court in Executive Engineer (R & B) & Ors. V/s. Gokul Chandra Kanungo (Dead) thr. his LRs.(2022 SCC Online SC 1336) in support of his contention of award of interest contrary to contractual clauses.
11) Lastly, Mr. Setalwad would object to award of costs of Rs.25,00,000/- by the learned Arbitrator. That the learned Arbitrator failed to appreciate that only half of the claim amount, is ultimately sanctioned and that therefore payment of costs of Rs.25,00,000/- was clearly unwarranted. He would rely upon judgment of the Delhi High Court in Union of India V/s. Roshan Real Estate Pvt. Ltd.(2025 SCC Online Del 4390). Mr. Setalwad would accordingly pray for dismissal of the Arbitration Petition.
12) The Petition is opposed by Ms. Ghone, the learned counsel appearing for the Respondent. She would submit that the Petition is filed by the Petitioner as if it is an appeal over findings recorded by the Arbitral Tribunal. She would highlight the extremely limited scope of interference in arbitral awards and relies upon following judgments:-
i. Associate Builders vs. Delhi Development Authority((2015) 3 SCC 49)
ii. Ssangyong Engineering & Construction Company Limited vs. National Highways Authority of India (NHAI)((2019) 15 SCC 131)
iii. S. V. Samudram vs. State of Karnataka and Anr.((2024) 3 SCC 623)
iv. Batliboi Environmental Engineers Ltd. vs. Hindustan Petroleum Corporation Limited((2024) 2 SCC 375)
v. Larsen Airconditioning and Regrigeration Company vs. Union of India & Ors.(2023 SCC OnLine SC 982)
vi. Reliance Infrastructure Ltd. vs. State of Goa((2024) 1 SCC 479)
vii. MMTC Limited vs Vedanta Limited((2019) 4 SCC 163)
viii. Somdatt Builders-NCC-NEV (JV) vs. National Highways Authority of India & Ors.((2025) 6 SCC 757)
13) Ms. Ghone would further submit that the Arbitral Tribunal has not ignored or rewritten terms of the Agreement. That the learned Arbitrator has merely construed the terms of contract for holding that the Petitioner is liable to pay to the Respondent. That the learned Arbitrator has rightly held that clause 28(b) of the Agreement merely provided for mechanism and timeline for payments and the said clause did not create obligation to pay, which otherwise flows out of Clause 7.1. That the view adopted by the learned Arbitrator is a plausible view, if not correct view. That interpretation of contractual terms is within the purview of the Arbitral Tribunal and Court cannot substitute its interpretation for plausible view taken by the learned Arbitrator. In support, she would rely upon following judgments:
i. Rashtriya Ispat Nigam Limited vs. Dewan Chand Ram Saran((2012) 5 SCC 306)
ii. Dyna Technologies Private Limited vs. Crompton Greaves Limited((2019) 20 SCC 1)
iii. Parsa Kente Collieries Limited vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited((2019) 7 SCC 236)
iv. South East Asia Marine Engineering and Constructions Limited (SEAMEC Ltd.) vs. Oil India Limited((2020) 5 SCC 164)
v. UHL Power Company limited vs. State of Himachal Pradesh((2022) 4 SCC 116)
vi. National Highways Authority of India vs. Hindustan Construction Company Ltd.(2024 INSC 388)
14) Ms. Ghone would further submit that by raising the ground of ignorance of evidence on record, the Petitioner is actually urging this Court to re-appreciate the evidence. That the Petitioner is deliberately attempting to misread one stray sentence in the Award about the Petitioner not taking specific stand in the Statement of Defence about absence of liability to pay the Respondent. That liability of the Petitioner to pay is not determined merely on the basis of the pleadings of the Petitioner in the Statement of Defence, but the same is determined by interpreting the contractual terms. Ms. Ghone would further submit that the Petitioner has raised erroneous ground of letter dated 15 November 2019 constituting an admission. That the amount of Rs.25,27,78,775/- due on the part of the Petitioner is gathered by the Arbitral Tribunal after appreciation of oral and documentary evidence and this Court cannot be urged to enter into the realm of appreciation of evidence. That the ground of non-impleadment of the RDD is baseless as there is no contract between the Respondent and the RDD.
15) Ms. Ghone would further submit that the objection of limitation raised by the Petitioner is baseless as the Petitioner never disputed the liability to pay amounts to the Respondent. That various invoices are produced by the Respondent, which are marked in evidence. The Arbitration was invoked on 10 October 2018, and the objection of limitation is rightly rejected.
16) Lastly, Ms. Ghone would submit that the learned Arbitrator has awarded reasonable interest of 8% as against the demanded rate of 18% by the Respondent. That though the Respondent incurred costs of Rs.50,00,000/- the learned Arbitrator has awarded costs of only Rs.25,00,000/-. On above broad submissions, Ms. Ghone would pray for dismissal of the Arbitration Petition.
REASONS AND ANALYSIS
17) Under the Business Associate Agreement dated 30 April 2012, Petitioner, which is a joint venture between Government of Maharashtra and TCS, appointed the Respondent as a business associate on a non-exclusive basis to assist the Petitioner in implementation and maintenance of various projects for Petitioner’s clients on ‘person-month rate basis’.
18) Under the contract, the Respondent was to offer technical assistance to the Petitioner through services of its selected employees to work on computer software application development, implementation and maintenance of specific project to be identified and located by Petitioner on a fixed person-month rate basis. The Respondent was to deploy technical manpower as per the requirement of the Petitioner for work carried out by the Respondent. Petitioner agreed to pay technical fees as provided in Clause 7.1 of the BAA.
19) Since the Respondent was not paid in respect of the services offered by it to Petitioner’s client - RDD, arbitration clause was invoked by the Respondent for following four claims:-
a) Claim No.1 – Rs.40,10,36,755/- “being unpaid amount of the total consideration for the development, implementation and maintenance by providing technical assistance to various projects of the [Petitioner] by the [Respondent]”;
Claim No.1A – Rs.10,90,26,900/- “being unpaid amount for the work of accounting and data entry under Sangram project for the National Health Mission”.
b) Claim No.2 – Interest at 18% p.a. in terms of Section 31(7) of the Act from the sate the amounts fell due to the dates of payment.
c) Claim No.3 – Costs of Rs.50,00,000/- in favour of the Respondent.
20) Learned Arbitrator has awarded only part of the first claim in the sum of Rs.25,27,78,775/- and claim No.2 by awarding interest @8% and claim No.3 by awarding cost of Rs.25,00,000/-. Claim No. 1A is not awarded.
OBJECTION OF LIMITATION
21) The first ground of challenge raised by the Petitioner is that the claim of Respondent was time barred. However, it is seen that Petitioner itself was pursuing the claim with RDD upto 15 November 2019. The invocation of arbitration is made by the Respondent on 10 October 2018 and therefore the objection of limitation is clearly misplaced and deserves outright rejection.
OBJECTION OF ABSENCE OF PETITIONER’S LIABILITY TO PAY TO RESPONDENT
22) The next ground of challenge raised by the Petitioner is about absence of any obligation for Petitioner to make any payment to the Respondent. According to the Petitioner, it was merely an intermediary and services were required to be provided by the Respondent to RDD and the RDD was to make payment to the Respondent. Reliance is placed on clause 28(b) of the Agreement in support of the contention that the Petitioner was only supposed to ‘release the payments after the same were paid to Petitioner by the RDD’. Petitioner has therefore contended that by directing Petitioner to pay part of the demanded amount, in absence of any contractual clause to that effect, the learned Arbitrator has rewritten the contract between the parties.
23) The Arbitral Tribunal has rejected the above contention of the Petitioner while answering issue No.2 relating to Petitioner’s liability for payment of amounts claimed in the arbitral proceedings. The Arbitral Tribunal has considered various contractual clauses and has concluded that upon reading of the Agreement on the whole, clause 28(b) thereof did not absolve Petitioner of liability of non-payment of amount by the RDD to the Respondent. The Tribunal held that clause 28(b) was a mere mechanism and arrangement of timeline for making of payment, which did not extinguish liability of Petitioner to make payment to the Respondent. The Tribunal held in paragraphs 194 and 210 of the Award as under:
194. The Tribunal finds that the contract, the said Agreement was executed between MahaOnline (a Joint Venture of the Government of Maharashtra and Tata Consultancy Services) and the Claimant. Tata Consultancy Services holds 74% shareholding in the Respondent whereas the balance is held by the Government of Maharashtra. The Respondent was incorporated for facilitating the digitization program of the Government of Maharashtra through its Rural Development Department. A perusal of the said Agreement shows business relationship between the Claimant and the Respondent. Clause 28(b) of the said Agreement needs to be considered harmoniously considering the purpose of Joint Venture, nature of Project which was to be executed and business relationship between both the parties. Clause 28 referring to financial arrangements specifically states "The payment to be made by the MOL to Unity shall be as follows". From the record, the said Agreement and considering various Government Resolutions, letters, the Tribunal finds substance in the submissions of the Claimant that the privity of Contract was between the Claimant and the Respondent. The Tribunal finds force in the submissions of the Claimant that clause 28(b) explains mechanism and arrangement as to when the payment was to be made but it does not extinguish the liability to make the payment as sought to be contended by the Respondent.
210. In the facts and considering the record placed, more particularly the said Agreement, the Tribunal holds that the Respondent is liable for making payment to the Claimant. The mechanism for releasing the amount is described under the clauses, more particularly clause 28(b). Considering the said Agreement on the whole and the record, the Tribunal holds that clause 28(b) of the said Agreement will not absolve the liability of the Respondent in case of delay or nonpayment of the amount by the RDD / Government of Maharashtra to the Respondent. The privity of contract was between the Claimant and the Respondent. The RDD or the Government of Maharashtra were not parties to the agreement executed between the Claimant and the Respondent. Clause 11 of the said Agreement states that all notices, requests, demands and other communications under the said Agreement or in connection therewith shall be given to or made upon the respective parties, i.e., the Respondent, MahaOnline and the Claimant, Aksentt Tech Services Limited (formerly Unity Telecom Infrastructure Limited). The Issue is answered accordingly.
24) The Arbitral Tribunal has thus construed the Business Associate Agreement as a commercial venture or business relationship between the Petitioner and the Respondent. Petitioner took shelter under clause 28(b) of the BAA to contend that payments were to be made to the Respondent only upon the same being released by the RDD. On the other hand, clauses 7.1 to 7.7 provided for payments as per the Schedule of Technical Fees. The Arbitral Tribunal was thus presented with the apparent conflict between Clause-7 and 28(b) of the Agreement. It would be apposite to reproduce both the Clauses.
25) There is error in numbering of clauses of the BAA. Para-6 bears the heading ‘Consideration’ and what is printed below, are paras 7.1 to 7.7. Clause-6 under the heading ‘Consideration’ and Clauses-7.1 to 7.7 of the Agreement reads thus :
6. CONSIDERATION
7.1 For the work to be carried out by UNITY for MOL, MOL shall pay UNITY technical fees as under:-
(a) MOL will pay to UNITY at the rates agreed in terms of Schedule of Technical Fees attached hereto. A person month shall consist of minimum eight (8) hours per day multiplied by number of working days in a calendar month at the location of work.
(b) All payments to UNITY in terms of clause (a) above shall be made in Rupees only as under:-
1. 80% of Invoice value within thirty (30) days of submission of invoice
2. balance payable within thirty (30) days' thereafter after proper scrutiny of the invoice submitted by UNITY.
(c) UNITY Employees shall not be entitled to any overtime charges or to work on any holidays as a compensation for the leave taken or absence from work on any other working days. UNITY employees shall also not be paid for working on any week ends or holidays declared by MOL or its Clients.
(d) All applicable taxes shall be deducted from the payments to be made to UNITY and/or in case of overseas assignment, from payments made on behalf of UNITY to its employees.
7.2 All taxes and levies as applicable shall be borne by UNITY. The rates agreed above are inclusive of all expenses of the Employees.
7.3 The above rate are subject to change as mutually agreed.
7.4 In case, on verification of an invoice, it is found that the UNITY personnel have not worked for the number of hours invoiced, MOL shall be at liberty to adjust the invoice value proportionately.
7.5 UNITY shall provide to MOL all documents, data and information about the salary and other benefits provided by it to its Employees as and when called upon to do so by MOL. However in the case of UNITY Employees sent on Overseas deputation UNITY shall provide this said information in the prescribed form every month.
7.6 Income Tax at source will be deducted at the prevailing rates and necessary certificate will be issued to UNITY.
7.7 MOL shall have the right to withhold payment under the following circumstances,
(a) If, upon a request by MOL, UNITY has not replaced any Employee(s) within a period of fifteen (15) days from such request having been made, which Employee(s) is (are), in the sole discretion of MOL, incapable of performing the functions assigned to him/her/them by the MOL Project Leader and/or is otherwise considered by MOL in its sole discretion to be replaced for whatsoever reasons.
(b) If, UNITY has not replaced the Employee(s) who has become incapable of performing the obligations of UNITY under the terms of this agreement, such incapability arising due to death, disease, resignation or by whatsoever means, within a period of fifteen days from such incapability.
(c) The amount that would be withheld is as stated in 4.4 herein.
(emphasis added)
26) Thus, under Clause-7.1, Petitioner agreed to pay to the Respondent, the rates agreed in the terms of the Schedule and technical fees. 80% of the invoice value was to be paid within 30 days of submission of invoice and balance 20% payment was to be made after scrutiny of the invoices submitted by the Respondent. Under Clause-7.4, it was agreed that on verification of an invoice, if it was found that Respondent’s personnel had not worked for number of hours invoiced, the Petitioner was at liberty to adjust the invoice value proportionately. Clause-28 of the Agreement dealt with ‘Financial Arrangements’ and provided thus :
28. Financial Arrangements:
The payment to be made by the MOL to Unity shall be as follows:-
Unity will provide following required manpower and services at below mention cost
Divisional Level:-
1. Network Administrator one in each Division (6) at the rate of 40000/- per head per month
Zilla Parishad Level (ZP):-
1. Software Programmer services one per ZP (33) at the rate of 30000/- per head per month
2. Computer Operator five (5) per ZP(33) at the rate of 7500/-
Panchayat Samiti (PS) Level:-
1. Computer Expert/Hardware Engineer one at each Panchayat Samiti (351) at the rate of 9000 per head per month.
2. Computer Operator Two (2) per PS at the rate of 7500/-
Gram Panchayat Level:-
1. Computer Expert/Hardware Engineer one (1) for each Twenty Five (25) Gram Panchayat at the rate of 9000/- per head per month.
2. Providing Computer operation and Computer Consumable services:- Computer operator and computer consumable services and other cost like training, travelling and establishment etc. cost required to maintain computer setup at Gram panchayat at the rate of 7500/- (Rupees Seven Thousand Five Hundred only) per head per month.
Following are the requirement of computer operation and consumables services at GP level.
| Sr. No. | Place | Gram Panchayat (Approximate count) | Quantity | Total Quantity |
| 1. | Gram Panchayat above 1000 population | 20500 | One per Gram Panchayat | 20500 |
| 2. | Gram Panchayat below 1000 population | 7500 | One per Gram Panchayat | 2500 |
| Total | 29000 | 23000 |
(b) The payments will be release to Unity only when MOL will get payment form RDD for the services provided by Unity to RDD on behalf of MOL.
(c) The monthly invoice including MIS reports shall be submitted by Unity to the Officer-in-Charge of MOL.
(d) The No. of Computer Operation & other services required at GP and Hardware Engineer required may change depend on the requirement of the Rural Development department/MOL.
(emphasis and underlining added)
27) Petitioner has strenuously relied upon Clause-28 (b) which provided for release of payments to Respondent upon receipt of payment from RDD for services provided by the Respondent to RDD on behalf of the Petitioner. However, opening part of clause 28 of the BAA made Petitioner (MOL) liable to make payments to Respondent (Unity) and the latter part provided for the rates at which the payments were to be made to the Respondent.
28) Thus, under Clause-6/7 and even under Clause-28, the Petitioner undertook the responsibility of making payment to the Respondent as per the rates agreed therein. Admittedly, there is no privity of contract between the Respondent and RDD. RDD had awarded concerned work to the Petitioner who had subcontracted the same to the Respondent. This is not a tripartite agreement where some contractual arrangement existed between the Respondent and RDD. Since the Petitioner unequivocally undertook the responsibility of making payment to the Petitioner as per the rates agreed in the Agreement, it cannot be construed that Clause 28(b) totally absolved the Petitioner of contractual obligation to make payments to the Respondent. At the highest, Clause 28(b) can be treated as the timeline within which payment was to be made by the Petitioner to the Respondent. When stipulation under Clause 7.1(b) for payment of 80% invoice value within 30 days and balance amount within 30 days of proper scrutiny of invoice is read alongwith Clause 28(b) of the Agreement, the only possible construction is that while payment of invoice amount is the responsibility of the Petitioner, but could release the payment only after receipt thereof from RDD. Clause 28(b) cannot be read in isolation and construed to mean as if Petitioner was a mere intermediary in the transactions occurring between the Respondent and RDD. As a matter of fact, there is no transaction between Respondent and RDD and therefore there is no occasion for Petitioner to act as intermediary. There is absolutely no material to interfere in Petitioner’s role as a mere intermediary or commission broker as sought to be canvassed by the Petitioner. The learned Arbitrator could not have read into the contract a provision making Petitioner a mere intermediary in transaction between Respondent and RDD, which is expressly absent therein. Being a creature under the contract, the learned Arbitrator could not read into the contract a condition which parties never agreed upon.
29) In my view therefore, the Arbitral Tribunal has rightly construed the terms of the Agreement harmoniously by holding that Clause-28(b) merely explained the mechanism and arrangement as to when the payment was to be made and that the same did not extinguish the liability to make payment by the Petitioner. Apart from the fact that interpretation of the contract is an exclusive domain of the Arbitral Tribunal, this is not a case where any other interpretation of the Agreement is possible. Therefore, there is no warrant for interference in the Award upholding the contractual obligation of the Petitioner to make payments in respect of the invoices raised by the Respondent. The learned Arbitrator has not rewritten the terms of contract nor has foisted a new bargain on the parties. As a matter of fact, what Petitioner expected the learned Arbitrator to do would have been an act of rewriting the terms of contract and creating a contract between Respondent and RDD, with Petitioner as a intermediary, when no contract exists between Respondent and RDD. If the Arbitral Tribunal was to accept the contention that Petitioner was an intermediary in contract between Respondent and RDD, its Award would have fallen foul of the ratio of the judgment of the Apex Court in PSA SICAL Terminal (supra). The contention of absence of contractual obligation for Petitioner to pay to Respondent, based on alleged ‘back-to-back’ payment concept, sought to be raised on behalf of the Petitioner therefore deserves rejection.
AWARD OF CLAIM BASED ON PETITIONER’S LETTER TO RDD
30) Now I turn to the next objection raised by the Petitioner that the Arbitral Tribunal has awarded the claim in the sum of Rs.25,27,78,775/- merely on the basis of Petitioner’s letter dated 15 November 2019. Before proceeding further, it must be observed here that there appears to be no major debate between the parties that the sum ultimately awarded by the Arbitral Tribunal is the one reflected in Petitioner’s letter dated 15 November 2019. It would be apposite to reproduce the Letter dated 15 November 2019, which was addressed by the Petitioner to the Principal Secretary Information Technology (General Administrative Department), Government of Maharashtra and the same reads thus:
(emphasis and underlining added)
31) Alongwith the letter dated 15 November 2019, district-wise details of amount payable to the Petitioner was reflected. The said district- wise details are as under:
e-PRI Outstanding As On 15/11/2019
| Sr. No. | District | Payable to MahaOnline |
| 1 | NASHIK | 2,24,47,298 |
| 2 | THANE | 1,57,04,641 |
| 3 | AMRAVATI | 1,50,75,977 |
| 4 | YAVATMAL | 1,44,39,510 |
| 5 | BEED | 1,38,35,114 |
| 6 | SATARA | 1,31,23,708 |
| 7 | BULDHANA | 1,30,72,251 |
| 8 | PARBHANI | 1,29,26,480 |
| 9 | CHANDRAPUR | 1,27,47,155 |
| 10 | RATNAGIRI | 99,29,862 |
| 11 | NANDED | 97,98,374 |
| 12 | LATUR | 97,69,582 |
| 13 | NAGPUR | 93,11,629 |
| 14 | SOLAPUR | 86,31,527 |
| 15 | HINGOLI | 80,13,888 |
| 16 | KOLHAPUR | 79,56,166 |
| 17 | AHMEDNAGAR | 76,96,704 |
| 18 | GADCHIROLI | 70,12,286 |
| 19 | GONDIA | 70,05,119 |
| 20 | WARDHA | 66,00,428 |
| 21 | WASHIM | 58,50,868 |
| 22 | NANDURBAR | 51,75,110 |
| 23 | PUNE | 44,87,796 |
| 24 | DHULE | 44,01,700 |
| 25 | AURANGABAD | 17,12,286 |
| 26 | SINDHUDURG | 15,67,966 |
| 27 | BHANDARA | 15,41,192 |
| 28 | JALGAON | 12,84,094 |
| 29 | RAIGAD | 7,11,056 |
| 30 | PALGHAR | 6,55,022 |
| 31 | OSMANABAD | 2,04,047 |
| 32 | JALNA | 89,939 |
| Total | 25,27,78,775 |
47. With reference to para 64 & 65, Respondent denies the contents of the para stated therein, and below are the table which the Respondent is following with the RDD:
| Outstanding receivable in MOL books | Disputed write off | Total |
| 7,74,00,617.25 | 17,53,78,157.75 | 25,27,78,775.00 |
(emphasis added)
33) If the amount reflected in the above table was not due or payable to the Respondent, there was no reason for the Petitioner to urge to the Respondent to get the payment released from RDD.
34) According to the Petitioner, since the Respondent is the Claimant whose raised the claim for amount of Rs.40,10,36,755/-, the burden of proving that the claim amount was due, was on the shoulders of the Respondent who was required to discharge the burden by leading evidence. According to the Petitioner, the Agreement provided for invoice- wise payment and therefore it was necessary for the Respondent to prove each and every invoice, as well as the work performed in respect of each invoice. It is contended by the Petitioner that the Respondents failed to discharge the said burden and merely relied upon ledger/running account which is not the agreed method of payment under the Agreement.
35) In my view, Tribunal’s criticism by Petitioner by accusing it of awarding claim in absence of evidence is incorrect. It is not that the Respondent did not lead any evidence in support of its claim. The Tribunal had both documentary as well as oral evidence. It has taken into consideration letters dated 29 July 2016 addressed by CEO of the Petitioner together with the details of invoices, communication dated 3 May 2021 by Chief Accountant of the Petitioner to RDD highlighting pendency of dues to the tune of Rs.27 crores from various Zilla Parishads and communication dated 15 November 2019 addressed by the CEO of Petitioner seeking amount of Rs.25,27,78,775/-. The Tribunal thereafter went through the oral evidence by discussing depositions of various witnesses in paras-227 till para 277. After the Tribunal took note of maintenance of running account by the Petitioner as was admitted by Petitioner’s witnesses during their cross-examination. The Tribunal also noted admission given by one of the witnesses of the Petitioner about amount of Rs.25,27,78,775/- being the outstanding amount payable to the Petitioner. The Tribunal also took into consideration the defence raised by the Petitioner that an amount of Rs.17.34 crores was written off by RDD and therefore the said amount was required to be deducted from Respondent’s claim. After considering the documentary and oral evidence, the Tribunal concluded in para-277 and 279 as under :
277. From the record and the quality of evidence led by the parties, the Tribunal finds that an amount of Rs. 17.34 Crores and amount of towards GSK Top-Up of Rs. 9,44,11,978/- (Rupees Nine Crores Forty Four Lakhs Eleven Thousand Nine Hundred and Seventy Eight Only) have been seriously questioned by the Respondent to be paid to the Claimant. However, it is clear by now that none of the parties is in a position to point out particular invoices against which an amount of Rs. 17.34 Crores was written off by RDD or was disputed / denied to be paid to the Respondent and consequently to the Claimant. GSK Top-Up was not a payment to be made against particular invoices but it was sort of a contribution in the wallet by the Respondent.
279. Considering the record placed, the communication made by Mr. Nilesh Ravrane and Mr. Prasad Kolte and evidence of witnesses particularly RW-1 Shanti Nair, the Tribunal is convinced to hold that the Claimant is entitled for an amount to the extent of Rs. 25,27,78,775/- (Rupees Twenty Five Crores Twenty Seven Lakhs Seventy Eight Thousand Seven Hundred and Seventy Five Only) from the Respondent for the execution of the work under the said Agreement. The Issue Nos. 1 and 3 are answered accordingly.
36) Thus, it cannot be contended that the findings recorded by the Arbitral Tribunal about entitlement of the Respondent is based on no evidence. The findings recorded by the Arbitral Tribunal thus cannot be treated as perverse by no stretch of imagination. This Court cannot go into the issue of adequacy and sufficiency of evidence. This Court is also not expected to re-appreciate the evidence on record. Even Petitioner has not taken the pains to drive me through the invoices placed on record for making out a case of perversity. The Arbitral Tribunal, being a fact-finding authority, has rendered a finding with regard to the amount due and payable to the Respondent, excepting one small inadvertent error, which is being discussed in the latter part of the judgment. The findings recorded by the Arbitral Tribunal after considering the evidence on record do not warrant for interference in exercise of power under Section 34 of the Arbitration Act.
37) The letter dated 15 November 2019 not only contained an admission in respect of the amounts due and payable to the Respondent but is merely an additional facet of evidence available before the Arbitral Tribunal. It therefore cannot be contended that reading of the said material by the Arbitral Tribunal was perverse in any manner. In that view of the matter, reliance by the Petitioner on Delhi High Court judgments in IOCL and Orchid Infrastructures (supra) is inapposite.
38) It is further sought to be contended on behalf of the Petitioner that the Arbitral Tribunal did not take note of various payments made by the Petitioner to the Respondent from time to time. Following chart in para-23 of the Arbitration Petition is sought to be highlighted in support of the contention that various payments were made by the Petitioner to the Respondent :
| Project Name | EPRI Project (in Rs.) | Citizen Service (GSK) (in Rs.) | Total (in Rs.) |
| Outstanding as on March 31, 2017 | 23,79,97,614/- | 1,39,75,259/- | 25,19,72,873/- |
| Payment | 15,01,22,385/- | 12,646,804/- | 16,27,69,189/- |
| 13-Apr-17 | 5,56,87,277/- | 5,56,87,277/- | |
| 29-Sep-17 | 9,44,35,108/- | 12,646,804/- | 10,70,81,912/- |
| Balance | 8,78,75,229/- | 1,328,455/- | 8,92,03,684/- |
AWARD OF INTEREST BY ARBITRAL TRIBUNAL:
40) The next objection raised by the Petitioner is about award of interest at the rate of 8% p.a. by the learned Arbitrator. It is contended the contract did not provide for payment of interest. It is well settled principle that the Arbitral Tribunal can award pendent lite interest if the contract is silent about award of interest. In the present case, there is no contractual clause that parties would not be entitled to interest on outstanding sums payable under the contract. It is next contended that no reasons are recorded by the Arbitral Tribunal for awarding interest @8% p.a. and reliance is placed on judgment of the Apex Court in Executive Engineer (R & B) & Ors. V/s. Gokul Chandra Kanungo (supra). In case before the Supreme Court the issue of award of interest under provisions of Section 31(7)(a) of the Arbitration Act 1996 was involved. The Respondent therein had initiated arbitral proceedings after long delay. In facts of that case, award of 18% interest without recording reasons is frowned upon by the Supreme Court. In the present case, Petitioner itself is found to have pursued the case of releasing payments of Respondent upto April 2019, i.e. well past invocation of arbitration. Arbitral Tribunal has awarded reasonable rate of interest of 8% p.a. Also, it is seen that 8% interest is not awarded by the Arbitral Tribunal from the day on which the amount became due and payable to the Respondent. Interest is awarded only from the date of filing of Statement of Claim. This was possibly on account of peculiar arrangement accepted by the Respondent under Clause 28(b) making payments after receipt of amounts from RDD. The Arbitral Tribunal has in fact saved the Petitioner from liability of paying interest to the Respondent from the dates the payments were due to it under the invoices and has awarded interest only from the date of filing of Statement of Claim.
41) No interference is therefore warranted in award of reasonable interest @ 8% p.a. that too from the date of filing of Statement of Claim.
NON-DEDUCTION OF PETITIONER’S COMMISSION FROM AMOUNT DEMANDED FROM RDD
42) However, there is only one area where the Arbitral Tribunal has apparently committed an inadvertent error in computations. While awarding sum of Rs.25,27,78,775/- to the Respondent, the Arbitral Tribunal has completely ignored the position that the parties were following the system of deducting commission of Petitioner on the amounts received from RDD. In para-9 of the Award, the Tribunal has noted the fact that the Petitioner used to add 6.5% commission on the invoices raised by the Respondent while claiming amounts from RDD. Para-9 of the Award reads thus :
9. It is contended that the normal procedure, which was followed by the Claimant, was that the Claimant would raise an invoice upon the Respondent and the Respondent would raise a corresponding invoice on the Government of Maharashtra. From the total invoice amount raised by the Claimant on the Respondent, the Respondent would add an additional 6.5% of their margin and raise an invoice on the Government of Maharashtra.
43) The fact that some commission was payable to the Petitioner is also admitted by the Respondent. In fact, para-218 of the Award contains a clear admission on the part of the Respondent that it was not entitled to the entire Award of Rs.25,27,78,775/- which Petitioner had demanded from RDD. In that para, the learned Arbitrator has recorded Respondent’s contention that its claim was limited to the extent of Rs.23.70 crores. Para- 218 of the Arbitral Award reads thus :
218. The Claimant has placed reliance on a letter dated 15th November 2019 and 26th June 2020 written by the Respondent informing the Government of Maharashtra that an amount of Rs. 25,27,78,775/-(Rupees Twenty Five Crores Twenty Seven Lakhs Seventy Eight Thousand Seven Hundred and Seventy Five Only) is due from RDD towards the services provided under the Project (paragraph 20 of the Rejoinder by the Claimant to the Statement of Defence). The Claimant submits that one of the letters was written prior to the Respondent filing its Statement of Defence. The Claimant therefore stated that it confirms the Claimant's claim to the extent of approximately Rs. 23.70 Crores (after deducting the commission of the Respondent).
(emphasis and underlining added)
44) Even in the Rejoinder filed by the Respondent, following admissions were given:
44. With reference to paragraph no. 17 of the SOD, it is submitted that the Respondent had outsourced the aforesaid projects to the Claimant herein for a commission. The Claimant was responsible for, inter alia, executing all the work and was to raise invoices/bills for the work performed, to the Respondent. The Respondent, in turn, raised invoices to RDD after adding their commission (say 6.61% for the ePRI Project). The Respondent was solely liable and responsible for making all payments to the Claimant. However, considering the magnitude of the projects which was potentially ranging around 1000 crores, for the ease of cash flows, it was agreed that the Respondent shall release payment to the Claimant, as and when the RDD made payment to the Respondent. To reiterate, the payment liability was solely fastened on the Respondent and release mechanism was agreed only for the ease of cash flow. This in no way absolved the liability of the Respondent, in case of delay in payment/non-payment by the RDD.
(emphasis added)
45) Thus, there is a specific admission on the part of the Respondent in the pleadings that Petitioner was entitled to deduct its commission from the amounts demanded from RDD of Rs.25,27,78,775/-. The Arbitral Tribunal has apparently ignored this aspect while awarding the entire sum of Rs.25,27,78,775/- to the Respondent. To this extent only, the Arbitral Tribunal has committed the error in operative part of the Award.
46) Ms. Ghone has strongly objected to reduction of claim amount awarded by the Arbitral Tribunal contending that the sum of Rs.25,27,78775/- has been rightly awarded after considering the evidentiary admission by the learned Arbitrator. She would particularly highlight the admission given by Petitioner’s witness Ms. Nair in her evidence about amount of Rs.25,27,78,775/- being due and payable to the Petitioner. However, though Petitioner seeks to highlight evidentiary admission of Petitioner's witness-Ms. Nair, there is a judicial admission by Respondent in the rejoinder, as discussed above wherein the Respondent has admitted that the Project was outsourced to it for commission and that agreed commission was 6.61%. Again in para-65 of the rejoinder, Respondent gave admission of entitlement of the Petitioner for deduction of commission. In para-65 of its rejoinder, Respondent pleaded thus :
65. In relation to paragraph no. 63 of the SOD, the Claimant denies what has been stated therein and reiterates what has been stated by the Claimant in this Rejoinder and the Statement of Claim. The Claimant is also annexing the Schedule of payments, as well as the accounts in the books of the Claimant showing in detail, the payments made under the Agreement and also those pending payment. Without prejudice to what has been stated herein, the Respondent vide Exhibit R of the SOD, admits that an amount of approximately INR 25.19 crores is the balance payable. Even if, the amount of approximately INR 16.0 crores is disputed (and has been written off in Exhibit R of the SOD) and deducted here for the sake of argument, the balance amount of INR 8.79 crores is admitted to be payable to the Claimant, even as per the Respondent's SOD and Exhibit R. Therefore, on several instances in previous correspondences and even in the SOD where the Respondent has claimed that no amount is payable, an amount of approximately INR 8.79 crore, at the least, still remained unpaid. Further, as stated hereinabove, the Respondent is continuing to claim an amount of INR 25.27 Crores (Indian Rupees Twenty-Five Crore and Twenty-Seven Lac) from the RDD, towards services provided for the ePRI Project, which the Respondent is liable to pay to the Claimant, after deducting its commission.
(emphasis added)
47) It is well-settled position of law that judicial admissions stand on a higher footing than evidentiary admissions. In Nagindas Ramdas Versus. Ganpatrao Ichharam and Ors.(1974 1 SCC 242), it has held that judicial admissions, which are admissions given in pleadings, stand on a higher footing than evidentiary admissions and constitute waiver of proof. In the present case, there are express admissions in pleadings by Respondent that commission of Petitioner was liable to be deducted while making payments to the Respondent. Such judicial admissions given by Respondent would stand on higher footing on the evidentiary admission made by Petitioner’s witness. In my view therefore, the entire amount of Rs.25,27,78,775/- could not have been awarded to the Respondent both on account of judicial admissions made by it, as well as specific confirmation made before the learned Arbitrator that its claim was only to the extent of Rs.23.70 crores.
48) Since the Arbitral Tribunal has ignored the pleadings as well as specific admission by Respondent of restriction of its claim at Rs, 23.70 lakh, the Award to the extent of allowing the Respondent’s claim in the sum of Rs.25,27,78,775/- is grossly perverse. Ignoring an admission, especially in pleadings, by the Arbitral Tribunal would constitute patent illegality in the Award. Therefore, the part of the Award to the extent of allowing the claim in the sum of Rs. Rs.25,27,78,775/- is liable to be set aside.
MODIFICATION OF AWARD BY APPLYING PRINCIPLE OF SEVERANCE
49) Having arrived at the conclusion that the Arbitral Tribunal is by and large correct, but has committed an error in awarding the entire sum of Rs. 25,27,78,775/- instead of awarding Rs. 23,70,00,000/-, the next issue that arises for consideration is whether the entire arbitral Award is required to be set aside on account of the above error or whether good part of the Award can be saved by severing and by setting aside the bad part. Under sub-section (4) of Section 34 of the Arbitration Act, this Court can adjourn the proceedings of the present Petition by giving an opportunity to the Arbitral Tribunal to resume the arbitral proceedings or to take such other action as may be necessary to eliminate grounds for setting aside the arbitral award. Sub-section (4) of Section 34 of the Act provides thus :
(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.
50) In Gayatri Balasamy vs. ISG Novasoft Technologies Limited((2025) 7 SCC 1), the Constitution Bench has dealt with the issue of modification of arbitral award. By majority of 4 : 1, the Apex Court has held that a Court reviewing the Award under Section 34 possesses the authority to rectify computational, clerical or typographical errors as well as other manifest errors provided that such modification does not necessitate a merit-based evaluation. The Apex Court has recognised limited and restricted power of severing an Award while exercising power to vary or modify the Award. The Apex Court held that silence in the Arbitration Act with regard to the power to vary or modify the Award cannot be read as complete prohibition. The Apex Court held in paras-44 to 46, 49, and 57 to 60 as under :
44. We are of the opinion that modification represents a more limited, nuanced power in comparison to the annulment of an award, as the latter entails a more severe consequence of the award being voided in toto. Read in this manner, the limited and restricted power of severing an award implies a power of the Court to vary or modify the award. It will be wrong to argue that silence in the 1996 Act, as projected, should be read as a complete prohibition.
45. We are thus of the opinion that the Section 34 Court can apply the doctrine of severability and modify a portion of the award while retaining the rest. This is subject to parts of the award being separable, legally and practically, as stipulated in Part II of our Analysis.
46. Mustill and Boyd have observed that an order varying an award is not equivalent to an appellate process. [ Sir Michael J. Mustill & Stewart C. Boyd QC, Commercial Arbitration (2nd Edn., 2001) p. 617.] The authors suggest that a modification order would only be appropriate where the modification, including any adjustment of costs, follows inevitably from the tribunal's determination of a question of law. [ Ibid.] This approach would be beneficial, as it would reduce costs and delays. The courts need not engage in any fact- finding exercise. By acknowledging the Court's power to modify awards, the judiciary is not rewriting the statute. We hold that the power of judicial review under Section 34, and the setting aside of an award, should be read as inherently including a limited power to modify the award within the confines of Section 34.
49. Notwithstanding Section 33, we affirm that a Court reviewing an award under Section 34 possesses the authority to rectify computational, clerical, or typographical errors, as well as other manifest errors, provided that such modification does not necessitate a merits-based evaluation. There are certain powers inherent to the Court, even when not explicitly granted by the legislature. The scope of these inherent powers depends on the nature of the provision, whether it pertains to appellate, reference, or limited jurisdiction as in the case of Section 34. The powers are intrinsically connected as they are part and parcel of the jurisdiction exercised by the Court.
57. However, the power of remand permits the Court only to send the award to the Tribunal for reconsideration of specific aspects. It is not an open-ended process; rather, it is a limited power, confined to limited circumstances and issues identified by the Court. Upon remand, the Arbitral Tribunal may proceed in a manner warranted by the situation — including recording additional evidence, affording a party an opportunity to present its case if previously denied, or taking any other corrective measures necessary to cure the defect. In contrast, the exercise of modification powers does not allow for such flexibility. Courts must act with certainty when modifying an award — like a sculptor working with a chisel, needing precision and exactitude. Therefore, the argument that remand powers make modification unnecessary is misconceived. They are distinct powers and are to be exercised differently.
58. Section 34(4), derived from the Model Law, is discretionary in nature. This is evident from the use of the word “may” in the provision. The Court may invoke this power when it identifies a defect in the award that could lead to its setting aside. In such cases, the Court may seek to prevent this outcome by granting the Arbitral Tribunal an opportunity to rectify the defect.
59. While it is not appropriate to establish rigid parameters or a straitjacket formula for the exercise of this power, it is clear that Section 34(4) does not authorise the Arbitral Tribunal to rewrite the award on merits or to set it aside. Rather, it serves as a curative mechanism available to the Tribunal when permitted by the Court. The primary objective is to preserve the award if the identified defect can be cured, thereby avoiding the need to set aside the award. Accordingly, a court may not grant a remand when the defect in the award is inherently irreparable. A key consideration is the proportionality between the harm caused by the defect and the means available to remedy it.
60. While exercising this power, the Court must also remain mindful that the Arbitral Tribunal has already rendered its decision. If the award suffers from serious acts of omission, commission, substantial injustice, or patent illegality, the same may not be remedied through an order of remand. Clearly, there cannot be a lack of confidence in the Tribunals' ability to come to a fair and balanced decision when an order of remit is passed.
51) The Apex Court concluded in para-87 as under :
87.1. When the award is severable, by severing the “invalid” portion from the “valid” portion of the award, as held in Part II of our Analysis;
87.2. By correcting any clerical, computational or typographical errors which appear erroneous on the face of the record, as held in Parts IV and V of our Analysis;
87.3. Post-award interest may be modified in some circumstances as held in Part IX of our Analysis; and/or
87.4. Article 142 of the Constitution applies, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power as outlined in Part XII of our Analysis.
52) In my view, the error committed by the Arbitral Tribunal is more of computational in nature and not an adjudicatory error. The error appears to have crept in due to sheer inadvertence. The Arbitral Tribunal has noted in para-218 of the Award that the claimant’s claim was required to be restricted after deducting the commission of the Petitioner at Rs. 23.70 crores. If 6.5% commission is deducted from the amount of Rs.25,27,78,775/-, the amount would be roughly to the tune of Rs. 23,63,48,154.62/-, which more or less matches the amount of Rs. 23.70 crores as indicated in para 218 of the Award. The Respondent appears to have admitted before the Arbitral Tribunal that it is entitled to claim amount of Rs. 23.70 crores out of the amount reflected in letter dated 15 November 2019.
53) Thus, though the Arbitral Tribunal has noted in para-218 of the impugned Award that the amount of commission was required to be deducted, it did not actually deduct the amount of commission and has committed an inadvertent error in awarding the sum of Rs. 25,27,78,775/-. This inadvertent error can be corrected by awarding the sum of Rs. 23,63,48,154.62/- to the Respondent instead of setting aside the entire Award. The computational and inadvertent error committed by the Arbitral Tribunal forms a bad part of the Award, which can easily be separated from the good part of the Award. It cannot be stated by any stretch of imagination that the bad part of the Award is so inseparably intertwined with the good part that the whole Award must be invalidated. At the same time, it is not necessary to remand the arbitral proceedings under Section 34(4) for correction of this inadvertent error which neither requires evidence nor any detailed exercise of computation. In my view therefore, it would be appropriate for this Court to exercise the power of modification of the Award as recognised by the Constitution Bench in Gayatri Balasamy (supra) by awarding correct claim in the sum of Rs. 23,63,48,154.62/- in favour of the Respondent.
AWARD OF COSTS OF ARBITRATION
54) The Arbitral Tribunal has awarded costs of Rs.25,00,000/- in favour of the Claimant. Under Section 31-A of the Arbitration Act, the Arbitral Tribunal has the discretion to award costs. The general rule is that unsuccessful party needs to be ordered to pay costs of the successful party. However, the Arbitral Tribunal or the Court may make a different order for reasons to be recorded in writing. Under sub-section (3) of Section 31A of the Arbitration Act, the Court or the Arbitral Tribunal needs to have regard to all the circumstances including whether a party has succeeded partly in a case.
55) In the present case, the Respondent has succeeded partly before the Arbitral Tribunal. The amount of Rs.25,27,78,775/- awarded in favour of the Respondent is found to be erroneous. Accordingly, the claim of the Respondent is restricted to Rs.23,63,48,154.62/-. Originally, the Respondent had raised two claims for Rs.40,10,36,755/- and Rs.10,90,29,900/-. Out of the claim of Rs.51 crores, the sum due and payable to the Respondent is only Rs. 23,63,48,154.62/-. It must also be noted that the Respondent could not prove the exact due amount by proof of each of the invoices. The amount of Rs. 23,63,48,154.62/- crores is being awarded to the Respondent only on account of admission of amount of Rs.25,27,78,775/- by the Petitioner in letter dated 15 November 2019, after deducting commission therefrom. It also appears that Clause 28(b) of the Agreement envisaged payment to the Respondent only after receipt of amounts from RDD. It appears that RDD has rejected amount of Rs.17.53 crores. The Petitioner is made liable to pay the entire amount of Rs. 23,63,48,154.62/- irrespective of the fact whether the said amount is paid to the Petitioner by RDD or not. Considering these circumstances, it would not be appropriate to put any further financial burden on the Petitioner, which is also partly a Government venture. In my view therefore, the direction for award of costs of Rs.25,00,000/- in favour of the Respondent deserves to be set aside.
ORDER :
56) The Petition accordingly succeeds partly, and I proceed to pass the following order:
(a) The Award dated 11 July 2024 is modified to the following extent:
i) Award of Petitioner’s claim in the sum of Rs. Rs.25,27,78,775/- and award of interest thereon is set aside.
ii) Instead, Respondent is awarded claim in the sum of Rs. 23,63,48,154.62/- alongwith interest at the rate of 8% p.a. on the said amount w.e.f. 14 November 2019 till realisation.
iii) Award of costs of Rs.25,00,000/- to the Respondent is set aside.
57) Arbitration Petition is partly allowed to the above extent. There shall be no order as to costs.
58) With dismissal of the Petition, nothing would survive in the Interim Application and the same is also disposed of.