In O.M.P. (COMM) 477/2022-DEL HC- Order of Arbitral Tribunal, in order to constitute Award, would be one which decides substantive dispute or question existing between parties: Delhi HC
Justice Yashwant Varma [22-12-2022]

Read Order: NATIONAL HIGHWAY AUTHORITY OF INDIA v. LUCKNOW SITAPUR EXPRESSWAY LTD 

Mansimran Kaur

New Delhi, December 24, 2022:  For order of Tribunal to be understood as award, it is essential that it answers attributes of decision touching upon merits of the dispute between parties or conclusively settling an issue or answering a question which pertains to the heart of the dispute, the Delhi High Court has observed.

Justice Yashwant Varma dismissed the instant petition by observing that that the petitioner had woefully failed to establish that the impugned order amounted  to the Arbitral Tribunal recording a finding which touched  upon the heart of the dispute or that it decided an issue which impacts substantive rights of parties. It would clearly not amount to an “arbitral award” within the meaning of Section 2(1)(c) of the Act.

The present petition impugned an order passed by the Arbitral Tribunal rejecting an application made by the petitioner for impleadment of the State of Uttar Pradesh as a party in the ongoing arbitration proceedings. The petition terms the aforesaid order as being an “interim award” and purports to have been preferred under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act).

The dispute inter parties emanated from a Concession Agreement dated  December 23,  2005 executed between the petitioner, the National Highways Authorities of India (NHAI) and the respondent and pertained  to a project for improvement, operation and maintenance, including strengthening and widening of an existing 2-Lane Road from KM 488.270 to KM 413.200 section of NH-24 and for its conversion into a 4 lane-dual carriageway. 

The aforenoted stretch falls within the territorial boundaries of the State of U.P. From the record it transpires that apart from the C.A. signed by the petitioner and the respondent here, a Tripartite Agreement (State Support Agreement) came to be executed between the State of U.P., NHAI and the respondent.

Pursuant to the reference of disputes to arbitration and with such process having been initiated, pleadings were completed.The application for impleadment thereafter came to be filed on or about May 2022. In the aforesaid application, NHAI referred to the various obligations which stood placed upon the State of U.P. under the SSA and appears to have urged that since the obligations of the said State Government were inextricably intertwined with the rights and obligations of parties stipulated in the C.A., its presence before the Arbitral Tribunal as a necessary party was imperative.

After considering the submissions, the Court  at the outset, noted  that the order which stands impugned in the present petition did  not decide a fundamental question or a substantive dispute that may be said to form the subject matter of arbitration. 

Noting that the Arbitral Tribunal had also not ruled upon any claim which may have been raised by parties, the Bench said,“For an order of the Tribunal to be understood as an award, it is essential that it answer the attributes of a decision touching upon the merits of the dispute between the parties or conclusively settling an issue or answering a question which pertains to the heart of the dispute.” 

An order of the Arbitral Tribunal, to put it differently, in order to constitute an award, interim or otherwise, would be one which decides a substantive dispute or question which exists between the parties. In order to qualify as an award, the decision must be with respect to an issue which constitutes a vital element of the dispute.

The Bench was  of the firm opinion that the same failed to answer the attributes of an award as was  understood under the provisions of the Act. The order impugned neither finally decides a question touching upon the merits of the respective claims nor does it decisively conclude a dispute which exists between the parties, the Court noted. 

The impugned order also failed to answer to the attributes of a determination of an issue which could be said to have a bearing on the ultimate reliefs sought by parties. The respondent would still have to establish whether the concession period is liable to be extended in light of the provisions contained in the C.A. Whether the expressways alluded to would constitute competing roads would also be a question which would be open to be agitated before the Arbitral Tribunal. The Tribunal would still have to consider and decide whether the claim would sustain in terms of Clause VIII, the Court further stated. 

The Court ultimately came to the conclusion that the petitioner had woefully failed to establish that the impugned order amounted to the Arbitral Tribunal recording a finding which touched upon the heart of the dispute or that it decided an issue which impacts substantive rights of parties. It would clearly not amount to an “arbitral award” within the meaning of Section 2(1)(c) of the Act, the Bench opined while dismissing the petition.