Sourabha, NGO, Khurdha v. State of Odisha & Ors.

Case Number: W.P.(C) No.22195 of 2022
Date of decision: 25th July 2023

In this case, the Petitioner (NGO) challenged the order passed by the Joint Secretary to Government, S.T. and S.C. Development Department terminating the existing agreement in respect of two Projects in the district of Sundargarh which were allotted to the petitioner. The duration of the programme was seven years and it was decided that the Entry Point Activities of the NGOs will be reviewed after one year. If the performance was found satisfactory, the said NGO shall proceed for another six years.

However, the Opposite Party No.4 terminated the contract with the Petitioner NGO within a period of 30 days i.e. 17.06.2018 as per Clause-2.8. Thereafter, the Petitioner approached this Court challenging the termination order dated 19.05.2018 in W.P. (C) No.9559 of 2018 which was disposed of on 31.08.2021 with a direction to “the Petitioner to appear before the Programme Director, OPELIP, ST & SC Development Department (Opposite Party No-4) either physically or through Video Conferencing mode on 06.09.2021, who in turn is directed to fix a date for giving personal hearing to the Petitioner. Upon completion of such hearing, the Opposite Party No-4 is directed to pass the final order in accordance with law” The Opposite Parties clarified that with due regard to the order dated 19.05.2018 in WP. (C) No.9559 of 2018, the Programme Director (Opposite Party No.4) had directed the petitioner to appear before the Opposite Party No.4 either physically or in Video Conference mode on 06.09.2021 to fix a date for personal hearing. The petitioner did not appear. Subsequently, on 23.09.2021, the petitioner replied to the Show Cause Notice No.920 dated 09.05.2018 of the Programme Director (Opposite Party No.4), explaining the reasons for taking up Entry Point Activity (EPA) in PBDA, Khuntagaon, Sundargarh District, and KKDA, Belghar, Kandhamal District.

This Court has held that the Petitioner’s assertion that the Show Cause Notice in the Writ Petition does not align with the operational guidelines of Entry Point Activity (EPA) issued by the Programme Implementation Agency (PLA) and, consequently, cannot serve as a valid basis for the termination of the agreement is entirely misconstrued. The main objectives of the Entry Point Activity (EPA) are (i) Community Mobilisation for effective and participatory project implementation (ii) gaining confidence of the targeted community on the project and their management skills (iii) endowing tangible assets to the targeted communities and (iv) providing short term financial benefits and incentives to the villagers (wages). Based on these broad objectives, the show cause notice was issued seeking reply on (i) How the Entry Point Activity (EPA) taken up in the financial year 2017-18 led to the empowerment of the targeted communities (ii) the effect of Entry Point Activity (EPA) work made on capacity building to the targeted community (iii) Whether the Entry Point Activity (EPA) works taken up led to sustainable livelihoods development and (iv) number of man days generated after terminate the contract and consequently, disengage the Petitioner’s organization with immediate effect.

Moreover, this court held that the Opposite Party No.4 offered opportunity for personal hearing on 07.10.2021. Accordingly, the Petitioner along with NGO President attended the personal hearing. During the course of hearing, they failed to explain their case. Therefore, this Court held that there has been no violation of the principle of natural justice as the petitioner was provided sufficient opportunities to present its case.

Ashok Kumar Mohapatra v. State of Orissa & Ors.

Case Number: W.P.(C) No.19642 of 2022 and batch
Date of decision: 1st February 2023

Untrained teachers can be appointed against the trained graduate posts and will be
entitled to trained graduate scale of pay after acquiring the required qualification.

In this case, the Petitioner (Headmaster in Sundargram High School, Sundargram), challenged the legality of the Order passed by the Opposite Party No.3/District Education Officer, Cuttack in not granting 3rd MACP with effect from 13.01.2018 and also not treating the payment of Trained Graduate Scale after acquiring Trained Graduate qualification as one upgradation. He challenged the said order on the ground that the said order has been passed in clear violation of the order passed by the Odisha Administrative Tribunal, Principal Bench, Bhubaneswar in O.A. No.1668 of 2017 (Ashok Kumar Mohapatra vs. State of Orissa and Ors.) which has been upheld in Orissa High Court and Supreme Court.

The Petitioner submitted that, admittedly, the Petitioner having B.Sc. qualification was appointed as an Assistant Teacher against a Trained Graduate post and his post was approved by the Managing Committee vide received untrained scale from 01.01.1987 to 11.01.1988 and trained scale from 12.01.1988 i.e. the date of acquiring B.Ed. qualification. Under the ORSP Rule, 1998 the Time Bound Advancement (TBA) scale like ACP/RACP was given to the Petitioner after completion of 15 years of service with effect from 12.01.2003. He further submitted that vide Resolution dated 06.02.2013 by the Finance Department, Government of Odisha, the Petitioner was allowed to avail the benefits of RACP after completion of 10/20 years of service with effect from 12.01.1998 and 12.01.2008 respectively. The Order issued by the District Education Officer, Cuttack on 28.02.2014, and the subsequent action taken by the District Education Officer in modifying the earlier order to grant RACP in favor of the Petitioner after completing 10/20 years of service and receiving the Trained Graduate scale is also legally unwarranted.

The opposing parties argued that the Petitioner’s Grade Pay under RACP was mistakenly fixed. The appointment of the petitioner ought to have been at a Grade Pay of Rs.2800/-, the entitlement of the Petitioner under RACP would have been 1st stage RACP @ Rs.4200/-; 2nd stage RACP @ Rs.4600/-. However, from the pay fixation order, it appears that he has been allowed the 2nd stage RACP @ Rs.4500/-; an error made while considering the Grade Pay at the time of the Petitioner’s appointment to the entry-grade scale. Nevertheless, this mistake does not provide a valid basis for the Petitioner to claim a right to correction of the pay fixation.

This Court held that prior to introduction of the Orissa Subordinate Education (Methods of Recruitment and Conditions of Service) Rules, 1993, the Orissa Subordinate Education Service (General Branch) Rules, 1972 was in force and under the said Rules, two posts were available (i) Trained Graduate post and (ii) Untrained Graduate post. This Court considering the statutory provisions of 1972 Rules read with 1974 Rules, had held in the case of Vivekananda Das v. State of Orissa (1997 (ii) OLR 122) that untrained teachers can be appointed as against the Trained Graduate post and will get untrained scale till acquiring the training qualification and thereafter trained scale with effect from acquiring the training qualification. The said judgment of this Court has been affirmed by the Apex Court. In fact, there is no legal bar in appointing untrained teachers as against Trained Graduate post. It is also submitted that with regard to grant of higher scale of pay on acquiring higher qualification has already been resolved in O.A. No.520 of 2014 which has been confirmed in W.P.(C) No.2831 of 2016 as well as by the Apex Court in Diary No.20358 of 2017.

It is clear from the facts that the Government in principle has accepted the ratio of the judgment (Ashok Kumar Mohapatra’s Case) of the Petitioner’s case, and also has acted upon by issuing the letter dated 14.07.2022 by the Director of Secondary Education to grant the similar benefits to other similarly placed persons. Accordingly, almost all District Education Officers have started processing for sanction of RACP/MACP in favor of similarly placed persons. Therefore, this Court quashed the impugned order issued by the District Education Officer, Cuttack.

GMR Kamalanga Energy Ltd. v. SEPCO Electric Power Construction Corporation
Tower, A, Chengcheng Mansion No.10567, Jingshi Road Jinan, Shandong, China.

Case Number: ARBA (ICA) No.1 of 2023
Date of decision: 27th September 2023
Coram: Former Chief Justice S. Talapatra, Justice Sanjeeb Kumar Panigrahi

Arbitral Tribunal can neither ignore the terms of contract
nor can it rewrite clauses of the contract.

In this case, disputes had arisen between the parties in relation to the delays in construction and various technical issues relating to the construction and operation of a power plant. Consequently, the Respondent served a ‘notice of dispute’ against the Appellant and initiated arbitration proceedings by its Notice of Arbitration. As per the agreement between the parties, the Governing Law was English Law and the arbitration was to be decided in accordance with the Indian Arbitration and Conciliation Act. The “seat” of arbitration was India though the “venue” was determined to be in Singapore.

On 17.11.2020, the Arbitral Tribunal issued a corrected award under Section 33 of the Arbitration and Conciliation Act, 1996 wherein it awarded an amount of approximately Rs.1100 crores to the Respondent. The Arbitral Tribunal issued the final award dated 24.6.2021 on the issues of interest and costs. The present Appellant preferred a petition under Section 34 of the Arbitration and Conciliation Act against the aforementioned award as well as moved an application requesting a stay against the aforementioned award on multiple grounds before this Court. The same was registered as ARBP (ICA) No.1 of 2021. The District Court dismissed the petition and thereafter an appeal under section 37 of the Act was filed.

The Appellants contended that Tribunal erroneously held that the Appellant is estopped from seeking enforcement of contractual notice provisions relying primarily upon an equivocal e-mail communication without appreciating the context in which it was sent. Thus, it is argued that the finding of the Tribunal that compliance with the contractual notice was waived with effect from March, 2012 is contrary to law. While dealing with the issue, the Tribunal has treated the parties unequally by applying a different standard to each of the parties by disallowing the Appellant’s counterclaim amounting to more than Rs.150 crores approximately at the threshold; on the basis that the Appellant had failed to serve notice even though such claim for default arose after March, 2012. Thus, by rejecting the claim of the Appellant in its counter-claim and allowing the same in favour of the Respondent, the total impact was approximately Rs.300 crores on the Appellant.

The Respondent contended that interference of the arbitral award on the ground of patent illegality is not available in an international commercial arbitration in view of Section 34(2) of the Arbitration Act. Referring proviso to Section 34(2A) of the Arbitration Act, it is submitted that even a domestic award shall not be set aside merely on the ground of erroneous application of law or by re-appreciation of evidence. Thus, the merit of international commercial arbitral award is completely beyond the scope of challenge under Section 34 of the Arbitration Act. It was further submitted that the Tribunal in its finding of waiver and estoppel has limited the scope of applicability of waiver and estoppel to notices arising out of delays and costs, and not to all the notices required as per the terms of the Agreement. The Respondent further contended that the Tribunal has adhered to the principles of equity enshrined in the Indian Contract Act and correctly held that there was estoppel by conduct limited to notices arising out of delays and costs.

With respect to the issue of Tribunal’s interpretation of contractual provisions, this Court held that in this case the Tribunal has chosen to completely ignore the existing mandatory terms of the contract. In doing so, the Tribunal has effectively rewritten the contract; altering its very nature which it is not permitted to do for it is a creature of the same contract. Furthermore, as the law stands today, it is the exclusive domain of the arbitrator to interpret the contractual provisions or construe the facts of the case in a certain way. However, while arriving at such a decision, the arbitrator is not permitted to travel beyond the four-corner of the contract.

With respect to the issue of estoppel, this Court held that issuance of notice was a condition precedent. There was a ‘No Waiver clause’ in the agreement between the parties. The said clause, as other clauses of the agreement, could only be amended upon following the procedure laid down in Clause 25.5.3 of the Agreement. The said procedure having not been followed, the conduct of the parties also does not show that there was an intention to waive off the requirement of issuance of notice as they had adhered to the requirement on multiple occasions thereafter. Therefore, no reasonable man could have come to the conclusion that the Appellant had by its conduct attempted to waive of the requirement of issuance of notice and, therefore, it was estopped from claiming otherwise.

With respect to the issue of dismissing of section 34 petition at the stage of admission, this Court held that when a petition under Section 34 is dismissed at a preliminary stage, i.e. at the stage of admission, the grounds are usually limited to delay or jurisdiction. In the present case, the Single Judge has partially considered the case on merits but dismissed the matter at a preliminary stage. The Tribunal’s interpretation of the contractual provisions vis-a-vis Respondent’s entitlement of delay related damages for prolongation and disruption costs in contravention of the express terms of the contract, and its ascertaining that the agreements excluded the common law right of termination, are in gross violation of the terms of the contract entered into by the parties themselves. The Arbitral Tribunal has not only ignored the express terms of the contract to arrive at its findings; but it has also rewritten certain clauses thereby grossly exceeding the scope of its jurisdiction. This Court therefore allowed the appeal.

Jindal India Thermal Power Ltd. v. Quartz Infra and
Engineering Pvt. Ltd., Bhanjara Hills, Hyderabad

Case Number: ARBA No.4 of 2021
Date of decision: 3rd July 2023

Scope of interference of Court in arbitral award is limited and it can disturb
findings of the arbitrator only if there is error apparent on the face of record.

In this case, disputes arose between the parties when the present Appellant terminated the aforementioned contracts on 16.2.2013 and further encashed the Bank Guarantees furnished by the Respondent Company between December, 2012 and January, 2013. The Respondent Company contended that the delay in performance was triggered due to hindrances and obstructions for which the Appellant was responsible, and therefore invoked arbitration. In the course of 55 sittings, the Arbitral Award was passed by Justice SB. Sinha (Retd.) and Shri P.S. Rao whereas Justice R.C. Chopra (Retd) passed a dissenting opinion on the same day. The Ld. Tribunal in its majority award awarded Rs.9,71,06,938/- in favour of the present Respondent including their interest on the awarded amount at the rate of 12% per annum. It has been further directed that if the payment is not made within one month from the date of the award, the present Appellant would be liable to pay interest at the rate of 18% per annum till the date of actual payment. Aggrieved by the arbitral award, the present Appellant challenged the Award the District Judge, Angul on various grounds in a petition under Section 34 of the Arbitration and Conciliation Act which was ultimately dismissed by the District Judge.

The Appellant contended that the refusal of the Tribunal to entertain the application filed under Section 27 of the A&C Act (to call upon additional witnesses) was a breach of the principles of natural justice. The same is contended to have seriously aggrieved the present Appellant, who submits that such denial resultantly disallowed them from bringing some relevant material evidence on record. The Respondent contended that the scope of interference of this Court in an application under Section 37 of the Arbitration and Conciliation Act is extremely limited and this Court cannot reappreciate evidence at this stage, therefore his Court may not revisit the factual findings of Tribunal apart from testing the same on the mantle of reasonableness.

This Court held that when the Arbitral Tribunal has thoroughly evaluated the materials and evidence presented to them, the court, when considering objections under Section 34 of the Arbitration and Conciliation Act, does not act as a court of appeal and is not required to reexamine all of the evidence or the parties’ case on merits. An award made by an Arbitral Tribunal cannot be revoked on the ground that another viewpoint is conceivable in the court’s eyes. In these cases, the court’s responsibility is to determine whether the Arbitral Tribunal’s point of view on the relevant facts, pleadings, and evidence is a reasonable one The court should be reluctant to intervene even if, after considering the objections under Section 34, it this court is determined that there this were two possible assessments of the material and that the Arbitral Tribunal had taken one route instead of the other.

The scope of interference of this Court being very limited, this Court would not be justified in reappraising the material on record and substituting its own views in place of the arbitrator’s view. Where there is an error apparent on the face of the record or if the arbitrator has not followed the statutory position, then and then only would it be justified for this Court to interfere with the award published by the arbitrator. Once the arbitrator has applied his mind to the matter before him, this Court is not permitted to reappraise the matter as if it this were an appeal and even if two views are possible, the view taken by the arbitrator would prevail.

This Court also observed that the Arbitration and Conciliation Act does not provide for a dissenting award. It only prescribes the form of an award. The “Operative Part of The Award”, signed by all three members of the Arbitral Tribunal, which states that “The decision of the Arbitral Tribunal by the Majority of the Members shall be treated to be the Award of the Tribunal in terms of Section 29(1) of the Arbitration and Conciliation Act, 1996” shows that the majority award fulfills the requirements of a valid Arbitral Award as envisioned in the Arbitration and Conciliation Act. The dissenting award referred to by the Appellant or the dissenting procedural orders are at the end of the day merely dissenting opinions and can only be used to buttress the submissions, but not to conclusively justify findings. The parties are bound by the findings that the majority award arrives at and the Court in an appeal against the arbitral award only has to consider those findings and their reasonableness. There could be various perspectives on a given set of facts, but the court only needs to assess whether the majority award’s interpretation of the facts was reasonable, fair, and justifiable, supported by sound reasoning. Accordingly, this court rejected the appeal.