CHENNAI: In what could be a temporary relief saving much money, the Chennai Metro Rail Limited (CMRL) won the legal fight against granting an extension of time to a joint venture firm for two stretches of the metro rail constructions in Chennai.
This comes after a division bench of the Madras High Court confirmed the order of a single judge in overturning two awards of an arbitration tribunal.
Finding that a “grave error” committed by the tribunal in passing the awards by “taking materials behind the back of the parties” and without giving an opportunity to comment upon them, the first bench of Acting Chief Justice T Raja and Justice D Bharatha Chakravarthy, recently, dismissed the appeals filed by Transtonnelstroy-Afcon, a joint venture firm, which challenged the order of the single judge.
The single judge had overturned two awards of the arbitration tribunal which ruled in favour of Transtonnelstroy-Afcon in giving them the relief for extension of time (EOT) for construction work.
Pointing out that the arbitration tribunal had called for new evidence, in the form of native files and data from the joint venture (JV) firm, after reserving the orders, for analysis to decide upon EOT without giving opportunities to CMRL to respond, the division bench said, quoting a judgment of a foreign court, it is vividly clear that if the ultimate analysis and conclusions are based on the expertise of the Arbitrator arising out of his “intracranial information”, then the same would not amount to creating new evidence.
“Thus, applying the above principle to the case on hand, it can be seen that in this case the Arbitrators proceeded to adopt Critical Path Method which is the correct method as per the Contract and they had the expert knowledge within them, (intracranial information), to carry out such an exercise.
But unfortunately, in this case, so as to apply their knowledge, there was no material, on record, to carry out such an exercise, they needed additional evidence in the form of the native files and the data contained therein.
Therefore, having found the necessity of the said documents, simply calling for the documents without divulging the reasons, after reserving the case for orders and after their internal deliberation, it clearly amounts to taking these materials behind the back of the parties,” the judgment said.
Assailing the tribunal for not giving an opportunity to the parties and informal manner for calling for evidence and acting upon them without marking as exhibits, it underscored that it certainly amounts to a “departure from the agreed procedure”, and has caused “huge prejudice” to the other side (CMRL).
Saying that a duty is enjoined on the Tribunal to provide the parties an opportunity to be heard when it decided to deviate from the already agreed procedure of evaluating the case on the basis of evidence adduced, the court said, “Therefore, the error on part of the Tribunal is grave in nature.”
Despite confirming the single judge’s order on overturning the award of the tribunal in granting EOT, the bench, however, did not agree with reverting the matter back to the tribunal for adjudication.
Such an exercise of remand can only be resorted to if only a written application is made under Section 34(4) of the Arbitration Act which would be without setting aside the Award. Once the award has been set aside, the Court (single judge) has no other option than to leave the matter for fresh proceedings, the bench said.
It said it is open for the parties to commence de nova proceedings in the manner known to law.
The JV firm was awarded two contracts for the construction of metro rail from Washermanpet to May Day Park and from Central to Egmore in 2011. Citing certain reasons, it sought EOT for both projects, for which, the CMRL did not agree, leading to the dispute reaching the arbitration tribunal. The tribunal ordered in favour of the JV firm.