Dismissed¶¶63

Gmtd BSNL Hisar Haryana v. Suresh Kumar Security Agency

Delhi HC2 May 2025FAO (COMM)/106/2025

Case brief

AI extract

What is this about?

Section 34; Section 37; Arbitration and Conciliation Act 1996; limited scope of judicial review of arbitral awards; appellate court restraint under Section 37; arbitrator final judge on contract interpretation; interest on delayed payments at 12% p.a.; DGR Guidelines Clause 16(c); security services contract; BSNL principal employer delay; OMP (COMM) 52/2023; FAO (COMM) 106/2025; Larsen Air Conditioning (2023) 15 SCC 472; Delhi High Court.

What did the court decide?

The power of the Court under Section 34 of the Act is confined to the circumstances mentioned in that provision. ¶¶55

Gmtd BSNL Hisar Haryana Vs Suresh Kumar Security Agency — Arbitration | Delhi HC (2025)

What the court decided

AI extract

Outcome

Dismissed

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Issue for consideration

Whether, given the appellant's contention that the respondent's invoices did not adhere to the prescribed format and were not accompanied by the relevant documents (causing delay in processing and payment), the learned Arbitral Tribunal erred in awarding interest for the delayed payments. +2 more

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Court's answer

The dispute raised by the appellant was duly considered by the learned Arbitral Tribunal, as evident from the extracts of the Award quoted in the judgment.

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Ratio / Principle

The power of the Court under Section 34 of the Act is confined to the circumstances mentioned in that provision.

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Key takeaways

The Court does not act as an Appellate Court against the arbitral award and cannot enter into questions of merit, evidence, or disputed questions of facts to arrive at its own findings.ratio¶¶55
The Arbitral Tribunal is the final judge on the interpretation to be placed on the agreement.ratio¶¶59
A similar restriction on power, if not more, is placed on the appellate court exercising jurisdiction under Section 37 of the Act.

Detailed headnote1 paragraphs

Delhi High Court (Navin Chawla & Renu Bhatnagar JJ.) dismisses FAO (COMM) 106/2025 filed under Section 37(1) of the Arbitration and Conciliation Act, 1996 by GMTD BSNL, Hisar, challenging the Order dated 19.11.2024 of the District Judge (Commercial Court-01, South District, Saket Courts) dismissing its Section 34 petition against the arbitral Award dated 30.05.2023. The Award had granted the respondent security agency Rs. 18,04,621/- as interest at 12% per annum on delayed payments, plus Rs. 82,500/- as costs, on findings based on Clause 16(c) of the DGR Guidelines and Para 13 of the agreements that the fault for delayed payment lay with BSNL. Holding that the power under Section 34 is confined to the grounds in the provision, that the Court is not an appellate forum over an award, that the Arbitral Tribunal is the final judge on interpretation of the agreement, and that a similar (if not greater) restraint applies to a Section 37 appeal (relying on Larsen Air Conditioning and Refrigeration Company v. Union of India & Ors., (2023) 15 SCC 472), the Court found the appellant had neither shown that any invoice deficiency was ever communicated to the respondent nor disclosed any basis for the plea that the Tribunal had rewritten the agreement.

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$~29

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* IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 02.05.2025

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- FAO (COMM) 106/2025 GMTD BSNL HISAR HARYANA .....Appellant

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Through: Ms. Sangeeta Sondhi, Mr. Daksh Jain and Mr. Amit Patra, Advs.

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versus

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SURESH KUMAR SECURITY AGENCY .....Respondent Through: Mr. Dhaval Mehrotra and Ms. Aditi Desai, Advocates.

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CORAM:

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HON'BLE MR. JUSTICE NAVIN CHAWLA HON’BLE MS. JUSTICE RENU BHATNAGAR

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NAVIN CHAWLA, J. (Oral)

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CM APPL. 26658/2025(Exemption)

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Allowed, subject to all just exceptions.

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CM APPL. 26656/2025 (Delay of 63 days)

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For the reasons stated in the application, the delay of 63 days in filing the appeal is condoned.

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The application stands disposed of.

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FAO (COMM) 106/2025 & CM APPL. 26657/2025

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This appeal has been filed under Section 37(1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’), challenging the Order dated 19.11.2024 (hereinafter referred to as ‘Impugned Order’) passed by the learned District Judge Commercial Court-01, South District, Saket Courts in OMP (COMM)

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Signature Not Verified

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Signed By:VIJAYA FAO (COMM) 106/2025 LAKSHMI DOBHAL Signing Da te:0 9.05.2025 16:59:32

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Page 1 of 8

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No. 52/2023 titled as GMTD BSNL, Hisar Haryana Vs. Suresh Kumar Security Agency , dismissing the said OMP, that is, the petition under Section 34 of the Act filed by the appellant herein.

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5. To give a brief background of the facts of the present appeal, the respondent, by way of two separate agreements dated 21.05.2018, was appointed to provide security services to the appellant in its telecom installations, stores, and cash counters of Hisar, Sirsa, and Fatehabad. The said contracts were terminated by the appellant vide letter dated 05.11.2018. The respondent invoked the arbitration proceedings, alleging therein that the dues of monthly payments were not cleared in time by the appellant and were finally paid in instalments running up till 2022. The respondent, therefore, claimed inter alia interest for the delayed payments.

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6. The learned Arbitral Tribunal, vide its Award dated 30.05.2023, allowed the claim of the respondent, inter alia observing as under:-

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“ 11. From the statement of RW1 and RW2 it is admitted fact that the DGR. Guidelines are the part of the binding agreement between the parties. The Clause 16 (c) of DGR Guidelines is reproduced as under: -

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"16. Wages

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(c) Principal-employer will pay wages to the security agency by 1^st of every month. Payment to security guards/supervisors will be done by ECS/Cheque by the security agency by 7^th of each month. In case the salary is not paid by ECS/Cheque due to compelling reasons, DGR will be intimated accordingly."

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The para 13 of the agreements reads as under:

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"13. Guidelines of DGR as amended from

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Signature Not Verified

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Signed By:VIJAYA FAO (COMM) 106/2025 LAKSHMI DOBHAL Signing Da te:0 9.05.2025 16:59:32

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time to time will be applicable."

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According to the above guidelines which were the part of binding agreements of the parties, the principal employer was bound to pay the wages due to the security agency by the 1^st date of every month. Thereafter, the security agency was duty bound to pay the wages to the security guards/supervisors by ECS/Cheque by 7^th date of every month. In case due to compelling reasons salary is not paid to security guards/supervisor then DGR was to be informed It is not the case of the respondent that DGR was informed. Even, the security agency does not claim that it has informed the DGR. It shows that the issue of non-payment of salary to the security guards was not taken as a serious issue in-fact by the respondent. But it was made a good excuse for nonpayment of wages to the security agency. It is crystal clear that the respondent has not complied with the DGR guidelines particularly according clause 16 (c) and para 13 of the agreements Ex. C-1 and C-2. Evidently the respondent had been impressing upon the claimant to make the payment to the security guards at first by claimant by 7^th of each month and thereafter, after verifying the bills it will make the payment on the 1^st day of subsequent month i.e. from beginning of the 3^rd month from the date of deployment of security guards. Once the respondent had not made the payment of bills, how could respondent ask the claimant to pay first to the guards without making payment even after taking services? It makes clear that according to arguments advanced on behalf of the respondent, after serving of security guards for one month, on the 1^st day of the next month the security agency had to make the payment to the security guards from its own funds then raise the bill complying the guidelines of BSNL. Then, the BSNL shall check and verify the details of bills and if satisfied it will approve

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Signature Not Verified

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Signed By:VIJAYA FAO (COMM) 106/2025 LAKSHMI DOBHAL Signing Da te:0 9.05.2025 16:59:32

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for its payment which will be paid by BSNL after the end of 2^nd month, on the 1^st of third month of deployment of the security guards. It could not be the sprit and intention of the guidelines that respondent will start paying for security agency only after taking service of two months from security guards/agency in the biggening. It is clear contravention of the agreed terms and conditions of the agreements. There is neither such terms or conditions in agreements between the parties nor this fact has been proved by any cogent evident on behalf of the respondent. However, the respondent by its own interpretation has taken it that the security agency shall first pay the guards for the first month by the 7^th of the month then raised the bill then the respondent shall pay in the next month by first of the month if bills found in order otherwise the payment could be delayed for the reason that security agency has not raised the bills properly. It is not acceptable in view of the express DGR guidelines.

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12. The dispute between the parties' rests on the two points. First, the claimant alleged at the payments have been delayed without any reason and fault on the part of security agency. Second, the respondent alleged that the bills of security agency were not paid by the respondent as security agency did not pay salary to the security guards by the 7^th of each month and also did not submit bills on time after making statutory payments of ESI, EPF and GST. In this deal by agreements, the security agency was to perform its part by deploying the required security guards/supervisors which was performed by the security agency at first by deploying tis security guards/supervisors by the 01.06.2018 onwards. Thereafter, it was the respondent to perform its part by paying for security services on 01.07.2018 when the salary of security guards became due to be paid. When

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Signature Not Verified

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Signed By:VIJAYA FAO (COMM) 106/2025 LAKSHMI DOBHAL Signing Da te:0 9.05.2025 16:59:32

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respondent had failed to make the payment for the service rendered for the month of June, 2018 to the security agency where from the finance for the payment of guards to the security agency would flow for the payment of wages on 07.07.2018. This is logical and in accordance with the para16 (c) of DGR guidelines that for the first month i.e. of June, 2018, the security agency was to raise its bill by 30.06.2018 after statutory payments and the payment of wages must have been made by the respondent to the security agency by 01.07.2018 subject to verification of payment of salary to the security guards by 07.07.2018 without any delay. The bills of next month i.e. of July, 2018 could be cleared after verification of the payments of salary to the guards for the month of June, 2018 i.e. previous month and statutory payments for the month of July, 2018 so that the payment to the guards could be made by 07.08.2018 without any delay, and so on. But it was BSNL instrumental of delay of payments to the security guards and subsequently started taking advantage of its own inaction and noncompliance of the terms and conditions of the agreements, that too without intimating any defect to the claimant to take step immediately to remove the defect, if any required. Over and above when it came to the knowledge of the respondent that claimant had not paid salary to the security guards/supervisors for any particular month, as per the guidelines and terms of agreements, it was the duty of Respondent being Principal Employer, to make payments of wages to the security guards and intimate this fact to Security Agency and DGR. But this is not the case of respondent that it made any payment of salary directly to the security guards or took any other step so that security guards could be paid with their salary. But surprising no payment was made by respondent up to October, 2018 except a

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Signature Not Verified

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Signed By:VIJAYA FAO (COMM) 106/2025 LAKSHMI DOBHAL Signing Da te:0 9.05.2025 16:59:32

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payment of Rs.12,13,167/- only on 18.10.2018 against huge outstanding of Rs.48,22,194/- as on 05.09.2018. The RW1 in response to Q. No.16 admitted in his cross-examination that BSNL did not make payments due to nonavailability of funds after referring the para no.14 of SOD. It has also come in his statement that BSNL system did not accept the bills older than 60 days. Thus, there was the trouble with respondent only in not making payments as there was non- availability of funds and their system was another hurdle in delaying the payments of bills. The Respondent never bothered to intimate the claimant about any issue with bills, at once. It has come in evidence that the bills were duly raised in time after making statutory deposits, formalities and payments of salary of the security guards. It has come in evidence of the claimant that he made the payment to the security guards by borrowing money and from personal funds of proprietor.

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13. The above discussion of the facts, evidence oral and documentary and circumstances of the case goes to indicate that the fault was on the part of the respondent in delay of payment to the security guards as respondent failed to make any payment on time of outstanding amount and no fault on the part of the claimant.”

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The learned Arbitral Tribunal directed the appellant to pay to the respondent a sum of Rs. 18,04,621/- on account of interest on delayed payments, calculated at the rate of 12% per annum. The learned Arbitral Tribunal also awarded the cost of the proceedings amounting to Rs. 82,500/- in favour of the respondent.

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Aggrieved by the Award, the appellant challenged the same by way of an application under Section 34 of the Act, which has been

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Signature Not Verified

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Signed By:VIJAYA FAO (COMM) 106/2025 LAKSHMI DOBHAL Signing Da te:0 9.05.2025 16:59:32

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dismissed by the learned District Judge by way of the Impugned Order.

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The learned counsel for the appellant submits that the learned Tribunal and the learned District Judge have failed to appreciate that in terms of the agreement between the parties, as also the DGR guidelines that were admittedly applicable to the contract, the respondent was to raise monthly bill along with proof of payments of statutory dues to the workers, that too in a prescribed proforma along with name of location, number of security personnel and duty period duly verified by the Officer in charge of the sector, etc. He submits that in the present case, the invoices that were raised by the respondent, did not adhere to the prescribed format and were not accompanied by the relevant documents, and therefore, there was a delay in processing the same and making payments to the respondent. He submits that, therefore, the respondent was not entitled to any claim of interest for the alleged delay payments. The learned counsel for the appellant further submits that the learned Arbitral Tribunal has attempted to re-write the agreement between the parties.

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We are unable to accept the above submissions of the learned counsel for the appellant.

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It needs no reiteration that the power of the Court under Section 34 of the Act is confined to the circumstances that have been mentioned in the said provision. The Court does not act as an Appellate Court against the arbitral award and, therefore, cannot enter into the questions of merit, evidence, or disputed questions of facts to

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Signature Not Verified

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Signed By:VIJAYA FAO (COMM) 106/2025 LAKSHMI DOBHAL Signing Da te:0 9.05.2025 16:59:32

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Page 7 of 8

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arrive at its findings. The Arbitral Tribunal is also the final judge on the interpretation to be placed on the agreement. A similar restriction on power, if not more, is placed on the Appellate Court exercising jurisdiction under Section 37 of the Act. Reference in this regard is placed on Larsen Air Conditioning and Refrigeration Company v. Union of India & Ors. , (2023) 15 SCC 472.

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The dispute raised by the appellant has been duly considered by the learned Arbitral Tribunal, as would be evident from the extracts of the Award quoted herein above.

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The learned counsel for the appellant, even otherwise, has not been unable to show to us that, at the relevant time, the respondent was ever informed of any deficiency in the invoices raised by the respondent.

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Apart from contending that the learned Arbitral Tribunal has rewritten the agreements between the parties, no basis for the submission has been shown to us.

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