Himachal Pradesh High Court Upholds Arbitral Tribunal's Award on Customs Duty Reimbursement
The court affirms the employer's obligation to reimburse customs duties paid by the contractor due to delayed exemption certificates.
In a significant ruling, the Himachal Pradesh High Court upheld the Arbitral Tribunal's decision in favor of M/s Orange Business Service India Technology Pvt. Ltd., mandating the Himachal Pradesh Power Corporation Ltd. (HPPCL) to reimburse customs duties paid by the contractor. The Division Bench, comprising Chief Justice Mr. G.S. Sandhawalia and Justice Ranjan Sharma, dismissed the appeal by HPPCL challenging the Single Judge's decision, which had affirmed the Tribunal's award.
The dispute originated from a contract between HPPCL and Orange Business Service for installing IT infrastructure, including a Data Centre and Disaster Recovery Centre. The issue arose when HPPCL failed to provide timely customs duty exemption certificates, forcing the contractor to pay customs duties. The Arbitral Tribunal had directed HPPCL to reimburse Rs. 1,00,30,984 along with interest and costs, a decision contested by the power corporation.
The court observed that the employer, HPPCL, was contractually obligated to bear customs duties under contract clauses 14.2 and 21.4. The Tribunal's majority view, supported by the Single Judge, found no patent illegality in the award. The court emphasized the limited scope of judicial interference under the Arbitration and Conciliation Act, 1996, particularly under Sections 34 and 37, which restricts re-appreciation of evidence or interference unless there is a significant legal error or violation of public policy.
The judgment highlighted the importance of adhering to contractual obligations and the necessity for employers to provide requisite documents promptly to avoid unnecessary financial burdens on contractors. The court noted that HPPCL's delay in providing exemption certificates led to the rejection of the contractor's refund claim by customs authorities, thereby justifying the Tribunal's award for reimbursement.
The ruling reinforces the principle that arbitration awards, when free from illegality, should be respected and not overturned casually. It serves as a reminder of the judiciary's role in upholding fair arbitration practices and ensuring compliance with contractual terms.
Bottom Line:
Arbitration - Reimbursement of customs duty - Employer's failure to provide exemption certificate on time - Contractor paid customs duty and sought reimbursement - Majority view of Arbitral Tribunal upheld by Single Judge, emphasizing employer's liability under the contract terms.
Statutory provision(s): Arbitration and Conciliation Act, 1996 - Sections 34 and 37; Customs Act, 1962 - Section 149.
