ITI Limited v.

Renasia (to set aside arbitral award)

Para 11 – Entered into LoI, The LoI The LoI is not disputed, the application
incorporated the Tender, thus the T&C of Tender with the LoI is denied as
of the Tender apply along with the LoI. false and baseless.
The theatre was handed to the
Respondent on 17.07.2017 after the
Petitioner carried out the civil works
within its responsibility under Clause
XXIV (A) of the Tender.
Para 12 – Theatre handed out on “as is Denied as false and baseless
where is” basis. The Respondent made
extra – contractual demands to carry
on civil works out of the Scope of
Petitioner as agreed. As per letter
27.04.2018 it is agreed only electricity
demand remains and the other works
have been completed.
Para 13 – Clause 30 of LoI, Petitioner The arguments regarding the power
to only provide 15KVA back up. The supply is baseless. The 15KVA is just
respondent was well aware of backup by way of diesel generator and
electricity capacity available. The not the raw power supply. The LoI
electricity is on the “as is where is” clause 13 the petitioner agrees 100%
basis. First demand by email dated power supply. The 160KVA
15.09.2017 for 160KVA in spite of the requirement by email is not disputed.
terms of Tender and LoI. The
respondent refused to signing of a
definitive licence agreement.
Para 14 - In reference to email Para 14 – 15 Denied as being false and
demands dated 25.04.2018 by baseless. Only after practical power
respondents. The petitioner out of requirement the supply of 45KVA was
goodwill agreed on providing 45KVA agreed and not out of goodwill, but out
back up even though it was agreed to of rightful and persistent demand by
be 15KVA. The Respondent had also Respondent. The averments regarding
failed to get necessary NOCs which is NOC are denied.
the duty of Respondent under C-II. The
licence agreement was ready and
Respondent was called upon to sign to
start the lease.

Para 15 – The 45KVA peak load was

agreed after negotiations by way of
minutes of meeting dated 08.08.2018.
the Respondent forwarded a draft
licence agreement wherein they agree
the infrastructure to be provide by
Petitioner is 15KVA back up.
Para 16 – the draft lease deed by the Para 16 – 21 denied as being false and
Respondent was unacceptable as it was baseless
not in consonance with the Contract.
The negotiation of lease deed went on
throughout 2018. On 22.08.2018 the
Petitioners sent a draft deed. The
Respondent by email dated 26.08.2018
refused the draft alleging that the terms
of LoI was not included. The objection
of the Respondent was that the term of
lease was to be 4Y 11M and renewed 3
times at the option of the Respondent

Para 17 – the demand of the

Respondent regarding the term of lease
is unacceptable as it was contrary to
the Clause XIII of the Tender and the
LoI it was also set out in the letter
dated 08.12.2018. The petitioners also
noticed that certain documents had not
been furnished by the Respondent.

Para 18 – By an undated letter the

Respondent furnished the documents.
It was noticed that the Respondent was
incorporated on 11.05.2017 which was
subsequent to the bidding. This
rendered the Respondent ineligible to
the Contract. It also had submitted a
net worth certificate of another entity.
The petitioner realised that the
Contract was induced by fraud and
misrepresentation. It is clear that the
bid was submitted through Renasia
Cinema Services Private Limited, but
the Respondent entered under its own
name despite knowing the bid was
accepted under the other entity.
Para 19 – the petitioner addressed the
irregularities by a letter dated
02.01.2019. notifying the Respondent
of the irregularities which rendered the
bid invalid. However, the petitioner
was ready to execute the lease
agreement in line with the LoI. The
Respondent by letter dated 03.01.2019
indicated its willingness to execute the
lease agreement by the petitioner.

Para 20 – the respondent sent a legal

notice alleging that since April 2018
that there were pending works
remaining to be completed. It was
filled with falsity to 0the extent of
saying it was the petitioner’s
responsibility to obtaining licences and
permissions. The Respondent once
again stated it wouldn’t accept the
licence agreement unless the term was
effectively 20Yrs which is against the
Contract. The Respondent is not
entitled to modification as per Clause
XIII (B) (7) of Tender.

Para 21 – in view of the

misrepresentation and fraud by the
Respondent the petitioner was
constrained to terminate the Contract
by letter dated 11.02.2019. for failure
to cure defect within the 30-day period
as per Clause XV (6) of the Tender
Para 26 - The Award has failed to
appreciate the evidence adduced by the
parties. It has arrived at findings based
on no evidence therefore a patent
illegality under Sec 34 (2-A). thus, it is
liable to be set aside.
Para 27 – the learned sole arbitrator
refused to apply terms of Tender
holding that the LoI was binding.
Para 26 – 32 denied as being false and
baseless. The contention of the T&C
contained in Tender to be part of LoI is
baseless and untenable and was not
pleaded in Arbitral proceeding hence it
cannot be raised in this petition.
As per clause (3) of XXV stipulates the
license agreement prevails over
Tender. Careful reading of LoI clearly
Para 28 – the first page of the LoI makes out that the duties and its
states that the tender is explicitly a part discharge is as per LoI.
of the LoI. This is complete ignorance
of the terms of Tender and hence
illegal.
Para 29 – the finding that as per Clause
XXV (3) of tender the LoI would
prevail over the Tender is ex facie
incorrect as it reads the Lease
Agreement Prevails over the Tender.
The LoI was not a final agreement and
the terms LoI and Lease Agreement are
not interchangeable. Thus, the
Respondent sought for specific
performance for execution of Lease
Agreement.
Para 30 – the finding that LoI and
Lease Agreement is perverse and hence
it cannot be permitted to stand. Thus,
the award is liable to be set aside.
Para 31 – these findings have the effect
of creating new contractual obligations
which never existed. This is beyond
the scope of arbitration and there is no
jurisdiction. This is patent illegality.
Thus, liable to be set aside.
Para 32 – The findings only on the
terms of the LoI, while not considering
the pleas of the Petitioner that the
Tender is applicable is a perverse
finding.
Para – 33 The learned sole arbitrator Para 33-38 are denied as false and
purporting to apply the LoI found the baseless. The Respondent has
petitioner to be in default of its submitted Ex P9-P12 to substantiate
obligation to procure necessary the same as evidence which was also
approvals to run the theatre, though no admitted in Cross of RW 1. There were
such obligation is cast under the LoI. several remainders to Petitioner to
The arbitrator in the absence of such a complete the civil works and hand over
finding could not have found the the same within 2 months from LoI. If
Petitioner to be in breach of contract. not, it would give right to Respondent
Para – 34 The arbitrator came to a to renegotiate the LoI.
finding that the Petitioner had not
completed its scope of work under the
LoI, despite the fact under the Tender
the premise was handed over in “as is
where is” basis. Moreover, the
Respondent in its mail date 26.04.2018
have admitted that the issues had been
rectified saving the electricity issue.
Para 35 – the crux of the issue was in
relation to the electricity t be provided
by the Petitioner. It is stated that there
will e 15KVA back up power. It also
provided further that electricity would
be provided at a chargeable basis as
per existing infrastructure available.
Even the draft lease agreement from
the Respondent mentions that the
Petitioner shall provide only 15KVA
power back up.
Para 36 – In the view of the
Respondent having examined the
premises in terms of the Tender the
Respondent was well aware of the
existing infrastructure. The electricity
is not under the scope o work of the
Petitioner under Clause 30 of LoI. The
Respondent if required more power
had to procure it through whatever
means by themselves.
Para 37 – The learned arbitrator has
come to a finding that it was the
obligation of the Petitioner to provide
such power supply without further
delay. The LoI does not require the
Petitioner to install infrastructure over
and above what was existing. The
Respondent was to arrange for the
requirement of 160KVA themselves.
The arbitrator failed to appreciate that
the Petitioner had agreed to provide
45KVA going out of its way.
Para 38 – the arbitrator has not
indicated in the award as to where such
obligation was cast on the Petitioner to
provide such extra electricity as per the
Contract. Hence in the absence of such
obligation the arbitrator could not have
to such a finding.
Para 39 – the arbitrator has found the Para 39 – 44 are denied as being false
Petitioner was unwilling to execute a and baseless. The mandatory clause
lease agreement in terms of LoI. The required both the petitioner and
main basis of this finding is through a Respondent to execute lease
letter by the Petitioner dated agreement. As per ex 26 the petitioner
02.01.2019. This statement with has mentioned that execution of lease
regards to the draft sent by the deed in line with LoI is not acceptable.
Respondent. The said statement is Though later had agreed to terms as
followed by the Petitioner being per LoI but made various deviations
willing to execute the lease agreement and compelled the claimant to agree.
as per the draft send by the Petitioner
dated 22.08.2018. this alone shows the
willingness to of the Petitioner to
perform its obligation of executing a
lease deed under the Contract.
Para 40 – the arbitrator has come to
such finding that the Petitioner was
unwilling to execute the lease
agreement completely ignoring the
very next statement is contrary to the
evidence adduced by both parties. The
main reason for the non-execution of
the lease deed as per the draft of the
Respondent is because the draft was
not in consonance with the terms of the
LoI regarding the term of the Lease
and the insistence of 20yrs. This is
contrary to both LoI and Tender.
Para 41 – The arbitrator has ignored
the vital evidence produced shows that
in fact It is the Respondent who has
insisting the execution of lease
agreement was not in the line with the
LoI or Tender. This was not acceptable
by the Petitioner hence no lease
agreement was executed. This itself is
sufficient ground to set aside the
award.
Para 42 – The Petitioner was always
ready to perform its obligations it is the
Respondent who was unwilling to
perform as per the LoI while insisting
an extra contractual lease agreement.
The Clause XIII (B) (7) of the Tender
provides the successful bidder shall not
be entitled to any modification of the
Lease agreement.

Para 45 - Since December 2018 it is Para 45 – 52 are denied as being

the recorded stand of Petitioner that the baseless and false. The contention that
Respondent bid was invalid as the the Respondent company was
Respondent was not incorporated subsequently incorporated and it is an
entity at the time of submission of the uncurable defect is perverse. The
bid, in terms of Clause III of the petitioner cannot take advantage of
Tender. The said incorporation their own lapse and voluntarily
certificate was first provided by the executing material documents of
Respondent on 15.12.2018. This was binding nature such as LoI. The
the Petitioner realised that the petitioners did not arrive at a
Respondent was not qualified under consensus regarding the lease deed and
the Tender conditions. thus came up with this belated strategy.
Para 46 – upon discovering the fraud
and misrepresentation the Petitioner
terminated the Contract after giving
notice to the Respondent as per the
Tender.
Para 47 – it is clear from the
communications from the Petitioner
that the misrepresentation was only
discovered in 2018 which was
produced by the Respondent itself.
Despite this the arbitrator has imputed
malafides to the Petitioner and found
that they had engineered the plea,
despite evidence to the contrary.
Para 48 – as per the Tender itself, the
petitioner could not be held responsible
for the failure of Respondent to submit
necessary documents in the required
format, leading to disqualification of
bidder.
Para 49 – The arbitrator has arrived at
an incorrect conclusion ignoring all
evidence on record and has dismissed
the counterclaims of the Petitioner in
limine. Every award must be
substantiated with reasons as per
Section 31(3) of Arbitration Act. The
award does not comply with Section
31(3) hence liable to be set aside.
Para 50 – the arbitrator has dismissed
the counterclaim as “belated”, despite
Section 23(3) that partied may
supplement their claims at any stage
during the course of proceedings. The
arbitrator permitted to file to
counterclaim and permitted to further
evidence in respect of counterclaim,
ought not to have said that the
counterclaim was belated.
Para 51 - The arbitrator lost sight of
the fact that CPC does not apply to
arbitral proceedings. Hence the strict
rigour of CPC and the provisions of
counter claim are not applicable.
Ignoring provisions of Section 19 and
23 of Arbitration Act amounts to
violation of Section 34 (2)(a)(v) of the
Act. Hence liable to be set aside.
Para 52 - Section 34 (2)(a)(v) has three
parts.
The sole arbitrator has awarded the Para 53-63 denied as being untenable
entire number of damages claimed by and baseless. The damages awarded
the Respondent without considering and allowing prayer of specific
the objections raised by the petitioner. performance is just and proper.
The awarded damages of 16Lakhs in
lieu of salary, wages, etc for the period
2018-2020. There is no causation for
this. Without evidence.
These expenses would have been
accrued whether or not the Petitioner
has completed the civil works.
This award for expenses incurred is
without causation and is against the
public policy. It ignores binding
precedents.
When claim is made for mental
 hardship, it must be substantiated with
evidence. But no evidence was
adduced.
The Respondent claimed Rs. 54,44,685
and later reduced it to Rs. 24,00,000 on
basis of some calculations.
There were no documents to
substantiate the same and was agreed
by PW 1 in cross that it was based on
assumption that the theatre would run
in full capacity.
This non application of mind the
Impugned Award is liable to set aside.

Research Areas
Fraud, misrepresentation and suppression of material facts to gain advantage in
the bidding process.
Causation for the damages awarded for expenses.
As is where is basis
Not giving reasons in the award