Delhi High Court Upholds ₹46.92 Lakh Bajaj Electricals Arbitral Award Against ITDC

The Delhi High Court on 17 August upheld the arbitral award directing India Tourism Development Corporation (ITDC) to pay Bajaj Electricals Ltd. Rs. 46.92 lakh along with pre-award, pendente lite and future interest, finding that the arbitrator had based the findings on the evidence and contractual terms on record.

Justice Mini Pushkarna noted that courts cannot interfere with an arbitral tribunal's interpretation of a contract under Section 34 of the Arbitration and Conciliation Act, 1996, merely because another interpretation is possible. She observed:

“If the Contract and the liabilities therein have been interpreted by the learned Arbitrator in a certain way, then the same would not be re-examined by this Court, in a petition under Section 34 of the Arbitration Act. Considering the narrow scope of judicial interference in a petition under Section 34, this Court finds no reason to interfere with the conclusion arrived at by the learned Arbitrator."

The dispute arose from an ITDC tender issued in 2007 for specialised illumination works at Safdarjung Tomb in New Delhi. Bajaj Electricals submitted its bid on 6 February 2007. ITDC awarded the Rs. 2.08 crore contract through a Letter of Intent dated 4 April 2007. ITDC issued the Work Order on 10 April 2007 and entered into the formal contract with Bajaj Electricals on 22 May 2007.

After reports of damage to the monument in October 2007, the Archaeological Survey of India (ASI) sought changes to the lighting layout. The parties finalised the revised drawings, which ITDC forwarded to Bajaj Electricals on 5 May 2008. The ASI took over the illumination system on 1 June 2009.

Bajaj Electricals submitted its final bill for Rs. 1.18 crore on 8 June 2009. The parties subsequently disputed the unpaid dues. On 17 April 2013, the High Court appointed an arbitrator with the consent of both parties.

The sole arbitrator passed an award on 30 October 2018, directing ITDC to pay Bajaj Electricals Rs. 46.92 lakh as principal, Rs. 33.27 lakh as pre-award interest and Rs. 31.17 lakh as pendente lite interest, besides future interest.

ITDC challenged the award under Section 34, which permits a court to set aside an arbitral award only on limited grounds. It argued that the arbitrator had wrongly disregarded a deduction of Rs. 11.07 lakh for alleged non-execution of works. It also submitted that the arbitrator had wrongly allowed amounts withheld towards Employees' State Insurance (ESI), Employees' Provident Fund (EPF), service tax and labour cess. It further challenged the award of 12% interest.

Bajaj Electricals argued that the arbitrator had based the findings on the contract and evidence placed before the tribunal.

The Court held that Section 34 does not permit courts to re-appreciate evidence or substitute their own interpretation for that of the arbitrator merely because another view remains possible. It found no deficiency in the execution of the work recorded by ITDC and noted that Bajaj Electricals had carried out the work under the supervision of ITDC officials.

Therefore, it upheld the arbitrator's findings on the alleged deduction and the amounts withheld towards ESI, EPF, service tax and labour cess and declined to interfere with the award of 12% interest. The Bench also left open ITDC's plea to adjust the Rs. 13.93 lakh payment it made on 9 July 2019 after the award, allowing it to raise the issue before the executing court.

Accordingly, the High Court dismissed ITDC's petition and upheld the arbitral award dated 30 October 2018.

Appearances for petitioner (India Tourism Development Corporation): Senior Advocate Mr. S.D. Sanjay, with Advocates Mr. Krishan Kumar, Mr. Seemant K. Garg, Mr. Nitin Pal, Ms. Parthvi Ahuja and Mr. Akanksha Raj.

Appearances for respondent (M/s Bajaj Electricals Ltd.): Advocates Mr. B. Devasekhar and Mr. Pawan Kumar.