08 March 2021 | State of Goa v. Reliance Infrastructure Limited | MS Sonak & Bharati H Dangre JJ | SCC OnLine Bom 306

Applying the grounds under Section 34 ACA, an appellate court partially set aside the award and overturned the decision of the single judge affirming the award. The dispute arose out of a power purchase agreement. Reliance had been awarded INR 278.89 crores with interest for its several claims. The appellate court found that the set-aside court did not satisfactorily deal with the case. It just adopted some paragraphs from the award without considering the rival contentions. This is how the set-aside grounds were applied:

1. The court found that an award of INR 24.66 crores was made on a claim of “variable charges” but without adverting to, much less considering or evaluating the issue and evidence concerning applicability and non-compliance of the contractual provisions. Thus, the award was vitiated by patent illegality for ignoring evidence. It was also an unreasoned award. Also, the counsel’s suggestion that even if the clauses were considered, the result would be no different was rejected. Held, it is not for the party to supplant reasons into the award or for the appellate court to consider the impact of the contract for the first time.
   
   
2. An award of INR 18.63 crores was made, rejecting the State’s defence on downrating (i.e., by not applying downrating, the respondent's invoices were inflated). The arbitrator ignored the contract and assumed it had been amended or deleted. This, held, was ex facie perverse finding and patently illegal on its face.
   
   
3. To the extent of INR 3.94 crores, the award unjustly enriched the respondent and was perverse, patently illegal and conflicts with the most basic notions of morality and justice.
   
   
4. An award of INR 2.36 crores was made again, ignoring the contract and finding that the parties had agreed to do away with specific provisions. This was not even a plausible finding, and hence the award was vitiated by perversity and patent illegality.
   
   
5. An award of 15% interest from the date of the award till payment, following MMTC Ltd. v. Vedanta Limited, (2019) 4 SCC 163 warranted a reduction and was reduced to 9% per annum.

Read the judgment here.