-Report by Shreya Gupta

In the case of UNIVERSITY OF DELHI Vs. M/S KALRA ELECTRICALS, the two parties Delhi University and M/S Kalra Electricals were the former was the petitioner and the latter was the respondent. The dispute between the parties arose from a work contract and the dispute was referred to the arbitration for settlement where the arbitrator ordered the petitioner to pay rupees 20 lakhs for other 44 contracts which were not referred to it.

FACTS:

The case was filed under section 34 of the Arbitration and Conciliation act, of 1966. The dispute arose from the work contract dated 09.06.2005. There was no dispute regarding the other 44 contracts between the parties. The dispute was regarding the sum of Rs. 92,101.25. It was referred to arbitration in view of clause 25.

PETITIONER’S CONTENTIONS:

The petitioner’s advocate contends whether the arbitral tribunal can provide relief for the case that has not been referred to it. She contends that the awarded sum was time-barred. She further states about section 34 of the Arbitration and Conciliation Act, 1966 which states that “the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside”. She contended that the relief provided under the other 44 contacts to the respondent was not disputed and the respondent would have filed a claim under it if that was the case.

The court has separated the subject work contract from all other contracts and therefore it was beyond the arbitral tribunal’s jurisdiction. She further in support stated some of the previous cases- Ssangyong Engineering and Construction Company Limited vs. National Highways Authority of India (NHAI), MSK Projects India (JV) Limited vs. the State of Rajasthan and Another, State of Goa vs. Praveen Enterprises, Alupro Building Systems Pvt Ltd vs. Ozone Overseas Pvt Ltd, Indus Biotech Private Limited vs. Kotak India Venture (Offshore) Fund (Earlier Known as Kotak India Venture Limited) and Others5 and DLF Home Developers Limited vs. Rajapura Homes Private Limited and Another.

RESPONDENT’S CONTENTION:

The respondent’s advocate stated that the arbitrator was well within his jurisdiction because the case arose regarding the other 44 contracts from the subject contract and that the petitioner paid for it maliciously. He stated that the assistant engineer gave the letter to the arbitrator to give orders for the other 44 contracts as well.

JUDGEMENT:

The court stated that the payment of Rs. 93,033 is not due and is in order and so DU should deduct any amount in payment to KE. The court ordered DU to make the pending payments of 20lakh at 9% per annum interest to KE from the date of raising the bill to the date of actual payment. The court stated that the award of Rs. 20 lakhs regarding the other 44 contracts were out of the arbitral jurisdiction and is set aside. The court further stated that the arbitrator fell foul of Section 34 (2) (a) (ⅳ) which is impermissible in law as it caused patent illegality. The order of arbitration was set aside from the other contracts and was followed for the subject contract. The court stated in its order “I find that since there is no fraud committed by KE and since the contracts are not inter-related it was wrong and illegal on part of DU to withhold the amount of Rs 20 Lakh in 44 contracts for settling an amount of Rs.92,033/- or Rs. 93,688/-or even both related to just one or two contracts”.