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ASHWANI KUMAR MISHRA, J. (ORAL) –

1. This appeal arises out of an adjudication made by the Commercial Court, Gurugram, in Arbitration Case No. 92 dated 24.07.2018, whereby, objection filed by the appellant under Section 34 of the Arbitration & Conciliation Act, 1996 to the Award of the Arbitrator, has been rejected.

2. In order to appreciate the submissions advanced in the present appeal, certain facts would require narration at the outset.

3. Haryana Power General Corporation Limited (hereinafter referred to as ‘the appellant’) floated tender for supply of 990 Metric Tons (hereinafter referred as 'MT') Hi-Chrome grinding media size 30 MM, 40 MM and 50 MM for Ball Tube Mills for its 210 MW Unit-6, 250 MW Unit 7 & 8, at Panipat. In response to the tender so floated by the appellant, three firms submitted their bids. The High Powered Purchase Committee of the appellant decided to place supply order with M/s Balaji Industrial Products Limited (hereinafter referred to as 'BIPL)'. The offer submitted by the respondent contained technical specifications of the material and appended the wear rate calculated for grinding media supplied by it to the appellant.

4. The Notice Inviting Tender (hereinafter referred to as ‘NIT’), contained a clause specifying the maximum wear rate, which read as under:-

"The maximum wear rate of Hi Chrome Grinding Media would be 125 grams per metric ton of coal ground for all type of Indian Coal conditions. In case wear rate of grinding media is more than 125 grams per metric ton of coal ground, the grinding media required above 125 grams per M.T. of coal ground shall be supplied by the supplier at site free of costs".

5. The respondent BIPL in its bid document submitted on 20.06.2009 submitted a counter-proposal in respect of wear rate, which is as under:-

"18. Wear Rate Guarantee

We agree for your wear rate guarantee for Balls as per your tender documents Annexure C/4 in toto. Our wear guarantee would valid only if our balls are charged exclusively in a mill as it is very difficult to identify the source of ball and individual performance of balls from each vendor once they are mixed. Our guarantee would be void for those balls which are mixed with balls of other vendors."

6. When the High Powered Tender Committee examined the tender submitted by the respondent, it found departure in the bid of BIPL from the terms of the NIT. This departure was intimated to the respondent vide letter dated 25.06.2009. Clause 12 of this communication in respect of the guarantee/warrantee clause reads as under:-

7. The objection conveyed by the appellant, aforesaid, was responded by the respondent by stating as under:-

"Para No. 12: Guarantee/Warrantee: Our Guarantee/Warrantee clause No. 18 is very much clear for our products & as such you will find the same in order in the interest of plant/purchase/supplier which is in confirming to N.I.T."

8. Further communication was sent by the respondent in this regard, to the appellant which is reproduced hereinafter:-

"Para No. 12: Guarantee/Warrantee: Though we have cleared the guarantee/warrantee clause in detail of SPC yet we agree to your N.I.T. clause i.e wear date of calculation bases of coal crushed."

Accordingly, BIPL agreed to abide by the terms of NIT insofar as the wear rate was concerned.

9. The appellant found that the wear rate of Hi-Chrome Grinding was over 125 grams per MT of coal and consequently BIPL was held liable to supply, at site free of cost, excess quantity of wear. It is in this context that dispute was referred to the Arbitrator. This Court under Section 11 of the Act 1996, appointed Sh. M.K. Bahri, Engineer (retired) as the sole Arbitrator from the Delhi International Arbitration Centre. Statement of claim was submitted by BIPL to which a reply has been submitted on behalf of the appellant. Counter-claim was also raised by the appellant before the Arbitrator. The Arbitrator has gone through the respective claim of the parties and for the reasons recorded in the Award, the claim of respondent has been allowed vide Award dated 20.04.2015. Clause 8.1 of the Award, which contains the operative portion of the relief granted is reproduced:-

"8.1: AT has heard the pleadings of both the parties at length perused all the material filed and brought on record including case law and ensured that the parties were given fully opportunity to put up their respective case including arguments and documentary evidence. Both the parties concluded their arguments and closed their submission and confirmed that they have nothing further to add in respect of the disputed matter as recorded in the proceedings dated 06.12.2014. AT has applied its mind and after analysis of the disputes rationally. logically and consistent with the PO clauses has thoughtfully considered the various aspects pleaded before it. On consideration of the analysis as above AT concludes that the Claimant is entitled to receive payment from the Respondent as under:-

The Award as above is signed and delivered by the AT at New Delhi on this day the 20th of April, 2015."

10. Aggrieved by the aforesaid Award, the appellant submitted objection under Section 34 of the Act contending that the Arbitrator has not examined the terms of the contract and has erroneously and arbitrarily allowed the claim of the respondent. This objection has been dealt with by the Commercial Court vide order impugned in the present appeal. The Commercial Court has noticed the facts of the case as also the limited scope available to it to examine the legality of the Arbitrator's Award and has consequently rejected the objection of the appellant. Thus, aggrieved, the appellants are before this Court.

11. We have heard learned counsel for the parties and have pursued the materials placed on record. From the materials placed on record, it is apparent that the only dispute raised before the Arbitrator was with regard to supply of on site free of cost coal, which was in excess of the permissible wear rate of the Hi-Chrome Grinding Media i.e. 125 gms per MT of coal. The appellant has evaluated the actual losses in terms of the aforesaid clause and to such extent held the respondent liable.

12. The claim of the appellant has been resisted by the respondent primarily on two grounds:-

1. Firstly, it was urged that wear rate would be admissible only if no mixing of balls took place, whereas such mixing had taken place and therefore the demand is unsustainable.

2. Secondly, it was urged that no mixing of coal was permissible in terms of the contract and as it was admitted that foreign coal was also utilized, as such, the very clause invoked by the appellant was not applicable.

13. The Arbitrator has gone into the controversy and has accepted the claim of BIPL vide its Award. It would be appropriate to reproduce the relevant portion of the Award where this issue has been dealt with. Relevant discussion in that regard is extracted hereinafter:-

"(iv) Coal grounded: It is specifically provided in the PO, annexure C/iv clause (i) that the coal ground shall be for all types of Indian Coal Conditions. The Respondent has admitted vide its e-mail dated 06.11.2014 that 10% of imported coal was mixed with the Indian coal. Thus, the Respondent did not adhere strictly to the PO condition. The mixing of the coal with imported coal was not even mandated in the PO and was also not even intimated to the Claimant when its Hi Chrome Media balls were being used.

AT rules, therefore, that the guarantee /warrantee clause holds good for only Indian Coal Condition and not when it is mixed with imported coal Since, admittedly imported coal was also used by the Respondent while grinding the Hi Chrome Media balls supplied by the Claimant, the wear rate worked out by the Respondent has no sanctity and cannot be relied upon inspite of Respondents assertion that imported coal was of superior quality for which no evidence was produced."

14. The Arbitrator has further observed as under:-

"AT Observes that:

(i) The guarantee/warrantee clause at clause -1 in Annexure C/iv (page-31 of SOFAC) forms part of the PO.

(ii) The guarantee/warrantee clause in the PO has been accepted by the Claimant as it is to work out the wear rate.

(iii) The Respondents' SPC's minutes dated 06.07.2009 are not signed by the Claimant and were also not forwarded to the Claimant at that material time and hence the Claimant did not get an opportunity to oppose /agree to the same minutes as recorded by the SPC.

(iv) The Claimant's letter dated 06.07.2009 does not indicate withdrawal of para-18 of their bid dated 20.06.2009 i.e. they did not withdraw their objection to mixing of balls with that of other vendors.

(v) The SPC's minutes dated 06.07.2009 also do not convey withdrawal of para-18 of Claimant's bid dated 20.06.2009."

15. So far as the defence set up by the respondent to the claim of appellant, on account of aforesaid stipulations, in the bid document is concerned, we are not much impressed. The NIT clearly provides that maximum wear rate would be 125 gms per MT of coal ground. Where such wear rate is more than 125 gms per MT of coal ground, then the grinding media required above 125 gms per MT of coal ground was to be supplied by the supplier at site free of cost. In the bid document, the respondent BIPL had put a condition that their guarantee would be void, if their balls are mixed with the balls of other vendors. This is clearly reflected from the bid submitted by the respondent. The bid, however, was not accepted by the appellant and the respondent was confronted with the specific clause of NIT. In the NIT, there was no stipulation that the balls of other vendors could not be mixed. It is in this context that specific objection was raised by the appellant to the bid submitted by the respondent. Once such objection was raised by the appellant, the respondents vide their specific communication dated 28.06.2009 and 06.07.2009, accepted the stipulation in the NIT, and to such extent the stipulation made in the bid document was waived. Once the respondent waived the condition in its bid document with regard to non-mixing of balls of other vendors and undertook to honour the NIT, where no such stipulation existed, the respondent could not have disputed the claim of the appellant on this count. However, this, in and of itself, does not operate to the prejudice of the respondent, for the reasons set forth herein.

16. The respondents had admitted the conditions of NIT vide their subsequent letter dated 28.06.2009 and 06.07.2009. On account of such acceptance, the provisions of NIT became applicable. However, the NIT stipulates the requirement of use of Indian coal condition. This clause has to be examined in correct perspective.

17. The clause is in two parts. The first part contemplates use of coal of Indian coal conditions. It is only when this part is attracted i.e. the coal of Indian Coal condition is utilized, that the question of respondent making good the losses was to arise. In the facts of the present case, the Arbitrator has held that the appellant had utilized 10% of imported coal with Indian coal. This observation of the Arbitrator is based upon the email sent by the appellant itself on 06.11.2014. There is no challenge to this stand of the appellant either before the Arbitrator or before the Commercial Court or even in the present appeal. Once that be the position and use of foreign coal is admitted the condition of exceeding wear rate could not be pressed against the BIPL. The Arbitrator has taken the view that guarantee/warrantee clause was to hold good only for Indian Coal condition and not when it was mixed with imported coal. This conclusion drawn by the Arbitrator is a permissible view borne out from the specific clause of the contract itself. The further conclusion drawn by the Arbitrator that since foreign coal was mixed and had been utilized as such the guarantee/warrantee clause was not open to be invoked by the appellant, is clearly a permissible view in view of the specific clause of the contract.

18. Learned counsel for the appellant has attempted to assail the Award as well as the order of the Commercial Court on the ground that the Arbitrator was required to evaluate the impact of use of 10% of imported coal while analyzing the claim and appropriate the actual losses caused due to wear rate above 125 gms per MT of coal ground.

19. The submissions advanced on behalf of the appellant cannot be accepted as there is no stipulation in the contract which requires a proportional re-evaluation of the guarantee/warrantee clause when the coal used is of Indian Coal condition along with foreign coal. To what extent such mixing of foreign coal has impacted the liability of the BIPL was not the issue to be gone into by the Arbitrator in the absence of any such stipulation in the contract. This would have been required only if the contract itself contained a stipulation to that effect. The appellants, therefore, cannot be permitted to urge a ground which would virtually require re-writing of the terms of contract, itself. Law is, otherwise, settled that the terms of contract are open for analyses by the Arbitrator and if the view taken by Arbitrator is a permissible view then merely because a different view could be taken would ordinarily not be a ground for the concerned Court under Section 34 of the Act to interfere.

20. Similarly, this Court, in this appeal cannot interfere with the Award of the Arbitrator by re-writing the terms of the contract.

21. Various judgments have been relied on behalf of the parties on the scope of power under Section 34 of the Act but we do not want to burden this judgment by referring to all such cases inasmuch as of the principle of law stands crystallized in a recent decision of Hon'ble Supreme Court of India in 'Consolidated Construction Consortium Ltd Vs. Software Technology Parks of India' , 2025 (7) SCC 757, wherein the Supreme Court has observed as under:-

"46. Scope of Section 34 of the 1996 Act is now well crystallised by a plethora of judgments of this Court, Section 34 is not in the nature of an appellate provision. It provides for setting aside an arbitral award that too only on very limited grounds i.e. as those contained in sub-sections (2) and (2-A) of Section 34. It is the only remedy for setting aside an arbitral award. An arbitral award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law which would require re-appraisal of the evidence adduced before the Arbitral Tribunal. If two views are possible, there is no scope for the court to re-appraise the evidence and to take the view other than the one taken by the arbitrator. The view taken by the Arbitral Tribunal is ordinarily to be accepted and allowed to prevail. Thus, the scope of interference in arbitral matters is only confined to the extent envisaged under Section 34 of the Act. The court exercising powers under Section 34 has per force to limit its jurisdiction within the four corners of Section 34. It cannot travel beyond Section 34. Thus, proceedings under Section 34 are summary in nature and not like a full-fledged civil suit or a civil appeal. The award as such cannot be touched unless it is contrary to the substantive provisions of law or Section 34 of the 1996 Act or the terms of the agreement.

47. Therefore, the role of the court under Section 34 of the 1996 Act is clearly demarcated. It is a restrictive jurisdiction and has to be invoked in a conservative manner. The reason is that arbitral autonomy must be respected and judicial interference should remain minimal otherwise it will defeat the very object of the 1996 Act."

22. The scope of present proceedings under Section 37 of the Act has also been dealt with by the Supreme Court in 'Punjab State Civil Supplies Corp. Ltd. Vs. Sanman Rice Mills and Ors.' 2024 SCC Online SC 2632, wherein the Supreme Court has observed as under:-

"20. In view of the above position in law on the subject, the scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred and that the interference is confined only to the extent envisaged under Section 34 of the Act. The appellate power of Section 37 of the Act is limited within the domain of Section 34 of the Act. It is exercisable only to find out if the court, exercising power under Section 34 of the Act, has acted within its limits as prescribed thereunder or has exceeded or failed to exercise the power so conferred. The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence as if it is sitting in an ordinary court of appeal. It is only where the court exercising power under Section 34 has failed to exercise its jurisdiction vested in it by Section 34 or has travelled beyond its jurisdiction that the appellate court can step in and set aside the order passed under Section 34 of the Act. Its power is more akin to that superintendence as is vested in civil courts while exercising revisionary powers. The arbitral award is not liable to be interfered unless a case for interference as set out in the earlier part of the decision, is made out. It cannot be disturbed only for the reason that Instead of the view taken by the arbitral tribunal, the other view which is also a possible view is a better view according to the appellate court."

23. Having examined the controversy raised in the present matter, in light of the settled principles of law, as referred to above, we find that the Award of the Arbitrator contains an elaborate examination of the terms of contract and a plausible view is taken by way of a reasoned award after affording opportunity of hearing to the parties. Within the limited scope available to this Court under Section 37 of the Act, we are not persuaded to interfere with the Award of the Arbitrator or the Commercial Court as we find that the view taken by the Arbitrator is clearly a permissible view and is in consonance with the Clauses of the NITs/contract.

24. In such circumstances, the appeal fails and is dismissed.

25. All the pending miscellaneous applications, if any, also stand disposed of.

Appeal dismissed.

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