DELHI HIGH COURT: ARBITRATOR FAILED TO DEAL WITH MATERIAL CONTENTIONS, ARBITRAL AWARD WOULD NOT SATISFY THE REQUIREMENT OF A REASONED AWARD

The Delhi High Court in the case Samrata Constructions Company v.Union of India observed and has held that when the arbitral tribunal fails to deal with submissions of a party on a contentious issue, the resultant award would not fulfil the requirements of a reasoned award as required under Section 31 of the Arbitration and Conciliation Act.

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The court held that the tribunal cannot simply accept unquantified claims without assigning reasons and without dealing with the objections to those claims.

The bench comprising of Justice Vibhu Bakhru and Justice Tara Vitasta Ganju in the case observed and has held that once it is found that the agreement has been validly terminated in accordance with the terms of the Contract, it follows that the earnest money is not liable to be refunded.

FACTS OF THE CASE:

The parties entered into an agreement dated February 25, 2005, wherein the appellant agreed to carry out certain construction work for the respondent. The Agreement provided for resolution of dispute through arbitration.

The dispute arose between the parties due to the slow progress of the work. The agreement was terminated by the respondent and the earnest money was forfeited.

Thereafter, the respondent got the balance work executed at the risk and cost of the appellant. Aggrieved thereby, the appellant invoked arbitration clause and the dispute was referred to arbitration.