IN THE SUPREME COURT OF BANGLADESH

HIGH COURT DIVISION

(Civil Appellate Jurisdiction)

First Miscellaneous Appeal No. 116 of 2024

with

(Civil Rule No. 23 (FM) of 2024)

In the matter of:

Sinha  Power  Generation  Company  Limited, having  its  registered  office  at  Mohakhali Tower (13th Floor), 82 Mohakhali Commercial Area, Dhaka-1212 represented by its Managing Director, namely, Arifur Rahman Sinha.  

… Appellant-petitioner

             -Versus-

Bangladesh Power Development Board (BPDB) represented by its Chairman having office at Wapda  Building,  1st  Floor,  Motijheel  C/A, Dhaka-1000. 

…Respondent-opposite party

Mr. Fida M. Kamal, Senior Advocate with

         Mr. Md. Golam Ahmed and

Mr. Mahdin Choudhury, Advocates 

…For the appellant-petitioner Mr. Mohammad Imtiaz Farooq with

Mr. Farabi Tushib and

Mr. Drhobo Chakra Borty, Advocates

        ....For the respondent-opposite party

Heard  on  05.11.2024,   25.11.2024, 27.11.2024,  01.12.2024  and 02.12.2024.

Judgment on 18.12.2024

Present:

Mr. Justice Md. Mozibur Rahman Miah

And

Mr. Justice Md. Bashir Ullah

Md. Mozibur Rahman Miah, J.

Since the point of law and facts so figured in the appeal as well as rule are intertwined they have heard together and are being disposed of with this common judgment.

This  appeal  is  directed  against  the  judgment  and  order  dated 23.11.2023  passed  by  the  learned  Senior  District  Judge,  Dhaka  in Arbitration Miscellaneous Case No. 214 of 2021 allowing the case so filed  by  the  respondent,  as  petitioner  namely,  Bangladesh  Power Development Board (shortly, BPDB) under section 42 read with section 43 of Arbitration Act, 2001 for setting aside the Award dated 06.05.2021 passed by a three member Arbitral Tribunal.

The salient facts leading to preferring this appeal are:

The  present  appellant  as  claimant  filed  the  aforementioned Miscellaneous Case No. 214 of 2021 stating inter alia that, it is a private company limited by shares and incorporated under the Companies Act, 1994 while the respondent-opposite party, BPDB is a statutory body represented by its Chairman. The government decided to establish a 50MW rental power plant at Amnura, Chapai Nawabganj on rental basis and accordingly the appellant-petitioner submitted a proposal and after careful examination of the same submitted by the appellant-petitioner, the  respondent-opposite  party-BPDB  issued  a  Notification  of  Award (NOA) bearing No. 840 BPDB (Sectt.)/Dev/175/2009 dated 19.06.2010 in favour of the appellant-petitioner-company with certain terms and conditions.  After  issuance  of  notification  of  Award,  the  appellant- petitioner furnished performance security deposit in the form of bank guarantee  being  Bank  Guarantee  No.  OBL/PB/BG/095/2010  dated 22.06.2010 for an amount of USD 47,70,000 (US Dollar Forty-Seven Lac  and  Seventy  Thousand)  equivalent  to  taka  33,24,69,000/-  (taka Thirty-Three  Crore  Twenty-Four  Lac  Sixty-Nine  Thousand)  only  in favour of the respondent-opposite party, BPDB. After that the BPDB entered into a contract with the appellant-petitioner on 15.07.2010 for setting up 50MW Rental Power Plant for supplying electricity for 5(five) years.  As  per  sub-Article  96  of  Article  1  of  the  Contract  dated 15.07.2010, the ‘Required Commercial Operation Date (RCOD)’ was fixed at 270 days from the date of execution of the Contract while Article 8.1 provides, if the Commercial Operation Date (COD) has not been occurred in terms of RCOD, then such date will not be extended in accordance  with  the  Contract  and  as  a  consequence  of  any  Force Majeure  event,  and  the  delay  is  attributable  to  the  Rental  Power Company,  the  appellant-petitioner-company  shall  pay  BPDB  as liquidated damages for delays, a sum of USD 500 per MW per day or fraction thereof while as per Article 1(108), site is defined to mean 4 acres  of  land  at  Amnura,  Chapai  Nawabganj  to  be  allotted  to  the appellant-petitioner-company  by  the  respondent,  BPDB  in  “as  is” condition to construct the power plant and as per Article 23.1 of the Contract, BPDB shall provide a site for the project in “as is” condition with  30  days  from  the  date  of  execution  of  the  contract  that  is  by 14.08.2010. The respondent, BPDB accordingly fixed a site at Amnura, Chapai Nawabganj though the land actually belonged to Bangladesh Railway  and  Bangladesh  Railway  did  not  reveal  to  this  appellant- petitioner  that  the  site  was  leased  out  to  different  local  people  by

the layout plan but meantime, there arose an unavoidable situation as the lessees of the land (lease obtained from Bangladesh Railway) started to resist the appellant-petitioner from doing anything there and the project site went out of control on 17.08.2010. Finding no other alternative, the appellant-petitioner was compelled to withdraw its work forces from the project site and accordingly served a notice of “Force Majeure” to the BPDB stating overall situation vide its letter dated 18.08.2010. However, after receiving the notice of “Force Majeure”, the BPDB did not take any step to deliver uninterrupted physical possession of the land in favour of the  appellant-petitioner  rather  by  letter  dated  19.08.2010  denied  all dispute about the state of the land and requested the claimant to proceed with the works.

Thereafter, the appellant-petitioner by a letter dated 26.08.2010 requested  the  residential  engineer  of  BPDB,  Chapai  Nawabganj  for supplying the detailed particulars of the land yet BPDB failed to provide such information. Ultimately Bangladesh Railway cancelled the leases on 02.09.2010 and directed its concerned Surveyor to take possession of the land by 07.09.2010. On the other hand, the Chief Estate Officer (West),  Bangladesh  Railway,  Rajshahi  vide  Memo  dated  01.03.2011 directed its Divisional Estate Officer, Pakshi to execute an agreement for lease of land with BPDB and handover the site in its favour. Then the Railway  authority  executed  lease  agreement  in  favour  of  BPDB  in respect of the land of Power Plant Project only on 07.10.2012 and since then the appellant-petitioner came under the obligation for starting the construction of the plant and go into commercial operation of the project

by 270 days. It has further been stated that, BPDB failed to provide standby letter of credit to the claimant-appellant within 25 business days following signing of the contract and did not provide standby letter of credit in favour of the appellant-petitioner by 19.04.2011. In spite of not receiving the land of the project site duly, the appellant-petitioner took all necessary steps that is, import of heavy machineries for the power plant from South Korea which arrived at Mongla Port after a delay of 25 days.  However,  due  to dry  season,  the  navigability  of  river  Jamuna decreased  but  as  the  appellant-petitioner  was  under  pressure,  they informed the matter explaining the total situation in detail to BPDB vide its letter dated 07.03.2011 for rescheduleing the RCOD. The appellant- petitioner  sent  a  letter  of  force  majeure  vide  letter  No. SPGCL/2011/03/153 dated 21.03.2011 but BPDB without considering the issue of force majeure, rejected the request of the appellant-petitioner of rescheduling RCOD vide letter dated 27.03.2011 with a direction to achieve  COD  as  per  the  provisions  of  the  Contract.  However,  the respondent-opposite party, BPDB vide another letter dated 05.04.2011 refused to consider “Force Majeure” event and for that the appellant- petitioner sent another letter dated 07.04.2011 to reconsider the prevalent situation of “Force Majeure” and to resolve the matter under Article 19.2 of the Contract dated 15.07.2010. However, the appellant-petitioner all of  a  sudden,  received  a  copy  of  endorsement  of  a  Memo  dated 27.04.2011 from the respondent, BPDB, addressed to One Bank Limited asking for partial encashment of USD 3,75,000 (US Dollar Three Lac Seventy-Five  Thousand)  out  of  the  total  bank  guarantee  of  USD 47,70,000 (US Dollar Forty-Seven Lac and Seventy Thousand). After receiving the said letter dated 27.04.2011 from BPDB for encashment of the  bank  guarantee,  the  appellant-petitioner  vide  its  letter  dated 02.05.2011 reminded BPDB that it failed to perform its responsibilities under the contract and requested to cancel the operation of the letter dated 27.04.2011 but BPDB did not respond to it rather it continue its pressure upon One Bank Limited for encashment of bank guarantee vide another letter dated 02.05.2011 though it earlier issued letter for that purpose  on  27.04.2011.  In  the  aforesaid  situation,  the  appellant- petitioner filed an application under section 7Ka of the Arbitration Act, 2001 being Arbitration Application No. 11 of 2011 before the High Court Division and this court upon hearing the parties, passed an order of  interim  injunction  on  16.05.2011  restraining  the  operation  of encashment of the bank guarantee till disposal of the said Arbitration Application.  After  that,  the  appellant-petitioner  issued  a  letter  on 28.06.2011 proposing the BPDB for amicable settlement of the dispute with a condition that no “liquidated damages” would be deducted from the performance security deposit of the appellant-petitioner assurance given by the BPDB on 13.07.2011. After that, the appellant-petitioner did not proceed with the said Arbitration Application No. 11 of 2011 on the ground that the parties are trying to settle the dispute amicably out of court. However, BPDB without complying Article 19.2 of the Contract which provides for amicable settlement or arbitration, it on 04.09.2011 partially encashed the bank guarantee to the tune of USD 3,75,000. Then BPDB on 22.02.2012 sent a letter to the appellant-petitioner informing it

In the arbitration proceeding (initiated vide Arbitration Case No. 02 of 2014), the appellant-petitioner as claimant prayed for an award for a declaration to the effect that, it has not committed any breach of the contract  executed  on  15.07.2010  innot  commencing  commercial operation within the contracted period and as such the claim on account of liquidated damages claimed by the respondent is arbitrary and not binding  upon  it  and  also  for  a  declaration  that  the  Memo  dated 27.04.2011  issued  by  the  respondent-opposite  party,  BPDB  for encashment  of  USD  3,75,000  from  performance  security  deposit  is illegal, arbitrary and the BPDB is liable to refund the deducted sum of USD 3,75,000 equivalent to BDT 2,76,00,000/- with 20% interest to the claimant from the date of encashment dated 04.09.2011 till realization and further declaration that the appellant-petitioner is entitled to get total sum of BDT 69,91,30,743/80 from the respondent-opposite party with 20% interest per annum with effect from 01.03.2015 till realization.

The Arbitral Tribunal however after considering the “Statement of Claim” filed by the appellant and that of the “Statement of Defence” submitted by the respondent and the documents produced by both the parties passed the award on 06.05.2021 declaring that the claimant has not committed any breach of the Contract furnished on 15.07.2010 with regard to commencing Commercial Operation of the power plant nor it committed any delay in commissioning the power plant on 13.01.2012 under the Contract dated 15.07.2010 and the Memo dated 27.04.2011 issued by the respondent, BPDB for encashment of performance security deposit is illegal, arbitrary, unlawful and not binding upon the claimant-

appellant. The majority arbitrators of the Arbitral Tribunal also declared that the amount realized by encashing the performance guarantee by the respondent, BPDB amounting to USD 3,75,000 is not permissible and deduction from the monthly invoices amounting to USD 24,55,478.81 is unjustified and therefore, the respondent, BPDB is liable to refund the deducted sum of USD 3,75,000 equivalent to BDT 2,76,00,000/- to the claimant-appellant-petitioner  with  15%  interest  per  annum  from 04.09.2011 till realization to the claimant and the respondent, BPDB is also  liable  to  refund  USD  24,55,478.81  equivalent  to  BDT 20,62,60,220/04 along with 15% interest per annum thereon from the date of deductions till the realization to the claimant both within 60(sixty) days from the date of delivery of award. However, the Chairman of the Arbitral Tribunal though held the same view of the majority arbitrators about the above claims of the claimant, except for imposing interest on the claim amount and that of time limit for payment of the awarded amount and by waiving the interest he (the Chairman of the Arbitral Tribunal) asked to pay the awarded amount within one year from the date of delivery of the award.

Being aggrieved by and dissatisfied with the said Award dated 06.05.2021, the respondent, BPDB as petitioner then filed Arbitration Miscellaneous Case No. 214 of 2021 before the learned District Judge, Dhaka under section 42 read with section 43 of the Arbitration Act, 2001 for  setting  aside  the  Award.  The  appellant-petitioner  as  respondent contested  the  Arbitration  Miscellaneous  Case  by  filing  a  written statement  annexing  relevant  documents.  However,  after  hearing  the parties and perusing the materials on record, the learned Senior District Judge, Dhaka vide judgment and order dated 23.11.2023 passed the impugned  judgment  and  thereby  set  aside  the  Arbitral  Award  dated 06.05.2021 passed in Arbitration Tribunal Case No. 02 of 2014.

Feeling aggrieved with the said judgment, the respondent-opposite party to the said Miscellaneous Case as appellant then preferred this appeal.

After preferring the appeal, the appellant also filed an application for stay of the operation of the impugned judgment and also injunction and this court vide order dated 20.01.2021 issued rule and stayed the operation of the impugned judgment dated 23.11.2023 for 2(two) months which was extended till disposal of the rule on 31.03.2024 and that rule then gave rise to Civil Rule No. 23(FM) of 2024.

Mr. Fida M. Kamal, learned senior counsel together with Mr. Md. Golam  Ahmed  and  Mr.  Mahdin  Choudhury,  the  learned  counsels appearing for the appellant-petitioner upon taking us to the impugned judgment and all the documents annexed with the application filed for stay  and  injunction  vis-à-vis  relevant  provision  so  laid  down  in Arbitration  Act,  2001  at  the  very  outset  submits  that  the  Arbitral Tribunal’s findings were base on a fair and thorough evaluation of the contract and the evidence and there was no indication of illegality or violation of fundamental legal principles as the Arbitral Tribunal rightly determined that the respondent breached the contract by failing to fulfill its contractual obligations, which led to delays in achieving the RCOD, and that delays were not attributable to the claimant-appellant and the respondent misinterpreted the contractual terms by wrongly asserting that  it  was  the  claimant-appellant’s  responsibility  to  remove  the defective title of the respondent, BPDB, in the project site, based on the phrase “as is” in Article 23.1 of the Contract.

The learned counsel also contends that the Arbitral Tribunal did not exceed its authority, as claimed by the respondent, BPDB however, the  learned  Senior  District  Judge  overlooked  this  and  set  aside  the Arbitral  Award  dated  06.05.2021  by  its  judgment  and  order  dated 23.11.2023 citing in the finding that “…it appears that the site was made available in part and the claimant-appellant was aware at the time of discussion and as well as at the time of executing the contract between them  that  the  site  could  be  made  available  in  part…”  itself  is  an admission that possession was made in part whereas the BPDB claiming that full possession was delivered on 15.07.2010.

The  learned  counsel  further  submits  that  the  learned  Senior District Judge set aside the award on vague and unsubstantiated grounds, claiming  it  was  “opposed  to  public  policy”,  “in  conflict  with  basic morality and justice”, and “contrary to the law of the country” though the  assertions  lack  any  concrete  support  and  the  Arbitral  Tribunal’s findings were entirely consistent with the contract and the Arbitration Act,  2001  and  there  was  no  evidence  of  bias,  misconduct,  or  any disregard for the law through the respondent, BPDB did not claim so.

The learned counsel goes on to submit that the respondent, BPDB has argued that the co-arbitrators have prepared the Award without any deliberation  with  the  Chairman  of  the  Arbitral  Tribunal  and  merely shared it with him for his signature and also stated that the Chairman dissented on several points and hence such lack of deliberation among the arbitrators at the time of the passing the award which resulted in the Arbitral Tribunal’s failure to act ‘fairly and impartiality’ that constitutes a clear violation of section 23(3) of the Arbitration Act, 2001˗ which is not true as the Award is a unanimous Award and the Chairman delivered a brief judgment stating that “…I have gone through the award passed by the learned co-arbitrators and I intend to express different view with regard to the award in respect of imposing interest and time limitation for payment of the awarded amount only, stating some material facts, however, I agree with the other portion of the award.” And then the Chairman Justice Md. Awlad Ali went on to explain why the interest shall not be imposed on the respondent and respondent shall be given 1(one) year time from making payment to the claimant.

To  supplement  the  said  submission,  the  learned  counsel  then contends that a plain reading of the order sheet reveals that from the start of the arbitral proceedings, every decision was unanimous and obtained through deliberation among all the arbitrators and moreover, the order no. 28 dated 20.02.2018 in Arbitration Case No. 02 of 2014 stated, “The Arbitration  Tribunal  sat  today,  both  parties  appeared  before  the Arbitration Tribunal with their learned counsel. The hearing of the case No. 2 is concluded. The date of the award will be communicated to the parties  in  due  course.”  which  indicates  that  the  award  was  not immediately declared or the decision was not made rather the Arbitration Tribunal announced the date for the delivery of the award to 12.10.2019 by order no. 30 which was as follows:

“Order No. 30

09.10.2019

The Award is prepared on requisite stamp paper and it will be  delivered  on  12.10.2019  at  7.00  PM  at  69/1,  Outer Circular Road, Moghbazar, Dhaka-1217. The parties are directed to appear before the Tribunal on the said date to receive the copy of the Award.

Communicate the order to the parties…”  

In regard to the decision cited by the respondent in the case of Saudi Airlines-Vs-Saudi Services Co. reported in 15 BLC (AD) 2010 is completely delivered on different set of facts, as in that case, one of the three  arbitrators  was  not involved  in the  deliberation process before passing the Award as explained in paragraph no. 19 to the judgment and from the plain reading of the proceeding, it appears that one of the arbitrators was excused totally from the process of deliberation and was neither consulted not given any opportunity to express his vies by the two other member of the Arbitral Tribunal before making and signing the Award and hence the Appellate Division found that the High Court has property set aside the Award but in the instant case, it is clear from the order no. 30 dated 09.10.2019 that the Chairman and other two arbitrators  signed  the  order  and  no  one  raised  any  objection,  hence deliberation process was completed and thereby the Saudi Airlines case is not applicable at all in the instant case.

In regard to delivery of actual possession, the learned counsel then submits that the learned Senior District Judge in his judgment and order dated 23.11.2023 failed to consider the findings of the Arbitral Tribunal in Arbitration Case No. 02 of 2014 as the Arbitral Tribunal in its award dated  06.05.2021  referred  to  the  correspondence  made  between  the contract parties, the lease agreement signed between the respondent and Bangladesh Railways, letters of BPDB and Bangladesh Railways and the statements of the claimant and respondent’s witness to substantiate its conclusion  that  the  project  site  was  not  delivered  to  the  claimant- appellant within 30(thirty) days from the execution of the contract, as required under Article 23.1 of the Contract and such failure to hand over possession within the stipulated period constitutes a clear violation of the contract and is directly attributable to BPDB for failing to achieve the RCOD within 270 days from signing the contract and the Senior District Judge by overlooking these findings and the evidence presented, erred in law in setting aside the Arbitral Tribunal’s award.

In reference to the interpretation of Article 23.1 of the Contract, the learned counsel then submits that it is evident that the word ‘as is’ does not mean without having any title and exclusive possession over the site land by BPDB, the claimant will search for any dispute regarding the said  site  land  and  further  necessary  investigation  means  to  soil  test making boundary, or any other acts to be done for setting up power generation  plant  and  ever  the  lease  agreement  signed  between Bangladesh Railway and BPDB further supports this position, expressly states that BPDB would bear the compensation paid by the railway to the lessees which clearly indicates that lessees were in possession of the project site at the time of signing the contract (Annexure-‘C’ series to the supplementary-affidavit) as well as when the purported handover document  was  executed  and  therefore,  BPDB’s  failure  to  fulfill  its contractual duty to ensure the site free from such encumbrances directly contributed  delays  in  achieving  RCOD  and  breaches  of  contract followed.

The learned counsel further submits that the respondent, BPDB claimed that arbitral award is patently illegal as the Arbitral Tribunal misinterpreted Article 23.1 of the Contract as it did not mention that BPDB must have title over the land site while handing it over. But in this regard, the Arbitral Tribunal rightly interpreted that according to Article 23.1 the respondent could not have transferred the land site while it did not have title of the property as it would violate the common law rule “Nemo dat quod non habet” which means “no one can give what they do not have” and hence the Award is not at all patently illegal.

In regard to delay in issuing Standby Letter of Credit as enshrined in Article 13.2(f)(i) of the said Contract dated 15.07.2010 it is clear obligation on the respondent, BPDB to issue the Standby Letter of Credit to the claimant-appellant within 25 business days from the execution of the said Contract when R.W. 1 admitted that BPDB issued the Standby Letter of Credit after 253 days of the execution of the contract and the claimant-appellant  in  paragraph  no.  16  of  the  “Statement  of  Claim” dated 03.03.2015, mentioned the importance of the Standby Letter of Credit  for  obtaining  credit  facilities  from  financial  institutions  and performing allied works requiring significant monetary investment and also claimed that the absence of the Standby Letter of Credit hindered the claimant-appellant’s ability to achieve finance and caused delays in opening Letters of Credit (LC) which was necessary for importing plants and machinery from South Korea.

Insofar  as  regards  to  imposition  of  interest  rate,  the  learned counsel submits that the Arbitral Tribunal explicitly imposed an interest rate of 15% which falls within the Tribunal’s legal authority under the Arbitration Act and the learned Arbitrators are empowered to impose such penalty for default to ensure justice so demands and finally prays for allowing the appeal and making the rule absolute.

In contrast, Mr. Mohammad Imtiaz Farooq, the learned counsel appearing for the respondent-opposite party by filing a counter-affidavit and supplementary-affidavit and taking us through all the documents so appeared therewith and those of the documents annexed with the appeal vis-à-vis application for stay filed by the appellant at the very onset submits that section 43 of the Arbitration Act outlines the grounds for setting aside an arbitral award, empowering the court (District Judge) or the High Court Division to intervene if the award contradicts public policy and public policy, as defined by the Appellate Division in Saudi Arabian Airlines Corporation-Vs-Bangladesh Services Company Limited includes the principle of “patent illegality” and the concept of “public policy”  as  a  ground  for  setting  aside  arbitral  awards  has  also  been elaborated in several judgments includes Chittagong Port Authority-Vs- Ananda Shipyard and Slipways Ltd., where it was held that enforcement of an award can be denied if it contravenes the fundamental policy of Bangladeshi Law, the interests of Bangladesh, justice or morality, or if it is patently illegal where the court also emphasized that laws must align with  public  interest,  and  awards  that  exceed  contractual  terms  are patently illegal and similarly, in Saudi Arabian Airlines Corporation-Vs- Bangladesh Services Company Ltd. case, the Appellate Division defined “patent illegality” as blatant errors and on the face of the award that contravenes statutory laws vis-à-vis the contract terms.

The learned counsel by taking us to Article 1(108) of the Contract dated 15.07.2010 then submits that Article 1(108) defines ‘site’ as “site means 04 (four) acres of land at Amnura, Chapainababganj, Bangladesh to  be  allotted  to  the  Rental  Power  Company  by  BPDB  in  ‘as  is’ condition, on which the facility will be located.”  when Article 23.1 (Delivery of Site) states that “BPDB will provide the Site for the project in ‘as is’ condition no letter than 30 days from the execution of the contract, so the terms clearly state that the site shall be provided “as is” and  understood  the  Sinha  Power  just  like  any  other  Rental  Power Company is expected to be responsible and due diligent regarding all necessary investigation of the site and it was also apparent from the reading  of  the  contractual  terms  that  the  BPDB  will  hand  over  the possession of site “as is” Sinha Power shall be due diligent in examining the site along with making the site fit for its purpose.

The learned counsel to supplement the said submission further contends  that  the  learned  arbitrators  misconstrued  the  term  “as  is” condition,  failing  to  provide  a  reasonable  explanation  and  diverging from the contract terms by concluding that “it was the contractual duty of BPDB to handover vacant possession of the project site by evicting the lessees” and therefore, the arbitrators most unreasonably shifted the burden upon BPDB, completely misinterpreting the terms of the contract as  an  arbitral  award  must  align  with  the  contract  terms,  and  any interpretation  that  no  reasonable  person  could  constitutes  “patent illegality” violating Bangladesh’s public policy under section 43(b)(iii) of the Arbitration Act, 2001 and the learned District Judge, Dhaka has rightly  intervened,  holding  that  the  arbitrators’  findings  violated  the express stipulations of Article 23.1 and Article 1(108) of the Contract.

The  learned  counsel  then  submits  that  BPDB  through  a  letter dated 05.08.2010, shared the ‘Handover-Takeover’ document with Sinha Power which was signed by Sinha Power’s representative on 07.08.2010 including a handwritten admission confirming taking site possession as of 15.07.2010 and letters dated 31.07.2010 and 18.08.2010 along with the  Statement  of  Claim,  further  confirms  Sinha  Power’s acknowledgment of getting physical possession of the site and all these documents, submitted to the tribunal as Annexure-‘D(i)’, ‘D(ii)’ and ‘H’ of the Statement of Claim, show no objections raised by Sinha Power regarding  the  handwritten  admission  in  the  ‘Handover-Takeover’ document.

The learned counsel then adds that despite the availability of these records, the tribunal clearly disregarded them, stated that the possession recorded in Annexure-D(ii) was merely “symbolic” and in this regard, the learned counsel referred a decision in the case of Government of

Bangladesh and others-Vs-Aminul Haq reported in 72 DLR (AD) 246 where Appellate Division emphasized that arbitrators must consider the evidence submitted before them stating further that failing to do so, renders the award invalid and this principle also aligns with the Supreme Court of India’s landmark judgment in the case of Associate Builders- Vs-Delhi Development Authority, where patent illegality was defined as a clear and unambiguous error no reasonable person could make.

The learned counsel goes on to refer another decision in the case of Delhi Metro Rail Corporation Ltd.-Vs- Delhi Airport Metro Express Pvt. Ltd. where the court outlined that arbitral decisions must be fair, reasonable, and not perverse and an award is perverse if it disregards vital  evidence  relies  on  irrelevant  material  or  breaches  principles  of natural justice and these cases collectively highlight the necessity of evidence-based  reasoning  and  strict  adherence  to  contractual  and statutory boundaries in arbitral awards and therefore, the finding of the learned arbitrators award has been judiciously interfered by the learned District Judge, Dhaka stating that “any misinterpretation of a well settle principle of law or misreading and not consideration of evidence amount to an act against public policy”.

In  regard  to  not  entertaining  the  Force  Majeure,  the  learned counsel submits that Article 16.1(c)(i)(c) defines Force Majeure through Sinha Power argued that BPDB would be entitled to liquidated damages only  if  no  Force  Majeure  event  had  occurred  and  therefore,  Force Majeure was a critical issue that required adjudication, along with a reasoned determination of whether it was applicable in the present case and although the award acknowledges the existence of this vital clause, but it fails assess the applicability of Force Majeure and whether it impacted the enforceability of liquidated damages and the reasoning behind their determination, remains absent completely.

To supplement the said submission, the learned counsel then adds that  Sinha  Power  invoked  Force  Majeure  through  notices  to  BPDB requesting rescheduling of the RCOD and in its Statement of Claim, Sinha Power attributed delays to BPDB’s failure to acquire land timely and Force Majeure events, citing transportation issues, the dry season, and  hydraulic  failure  when  the  Statement of  Claim  explicitly  linked Sinha Power’s claim for non-deduction of liquidated damages to these delays  and  events.  However,  the  arbitrators  overlooked  the  Force Majeure provisions and the core issues, concluding erroneously that no delay or breach was attributable to Sinha Power in achieving RCOD or COD under the contract dated 15.07.2010.

The learned counsel next submits that the arbitral tribunal’s award is fundamentally flawed due to its failure to provide any reasoning on the application of the Force Majeure clause under Article 16.1(c)(i)(c), a key  issue  raised  by  Sinha  Power  and  despite  acknowledgement  the existence  of  this  clause,  the  Tribunal  neither  analyzed  whether  the conditions  for  invoking  Force  Majeure  were  met  nor  addressed  the claimant’s arguments that its contractual obligations were hindered by circumstances beyond its control. This omission violates the Tribunal’s duty  to  adjudicate  all  core  issues  and  provide  clear  reasoning,  a requirement enshrined in Section 38(3) of the Arbitration Act, 2001 and it also emphasized in the case M/S Dyna Technologies Pvt. Ltd.-Vs- M/S Crompton Greaves Ltd., where the Supreme Court of India held that a reasoned award must be proper, intelligible, and adequate. Neglecting to examine such a critical issue breaches the principles of natural justice, undermines transparency and fairness, and renders the award patently illegal and legally deficient.

The  learned  counsel  further  maintains  that,  as  per  Article 13.2(f)(i)(A) of the Contract, BPDB must issue a Standby Letter of Credit  (LC)  converting  two  months’  rental  payments,  payable  upon demand in case of BPDB’s non-payment when the bills fall due, which is  completely  unrelated  in  the  construction  phase  of  the  project. However, despite this clear provision, the arbitrators wrongly concluded that the delay in achieving COD was caused by BPDB’s failure to open the Standby LC, which is patently illegal, as it contravenes the contract’s explicit terms and fails to provide reasons, violating Section 38(3) of the Arbitration Act.

The learned counsel also contends that the Tribunal also failed to address the applicability of Section 73 of the Contract Act, 1872 which stipulates, those damages for a breach of contract are recoverable only if they  arise  naturally  from  the  breach  or  were  in  the  reasonable contemplation of both parties at the time of contract formation and if no causal link is established between the breach and the alleged damages, the claimant cannot recover such damages and the learned District Judge, Dhaka has thus lawfully intervened the award for being “contrary and inconsistent with the terms of the agreement between the parties and opposed to the law of the contrary.”

In regard to non-deliberation amongst the Arbitrators, the learned counsel then contends that the dissenting view of the Chairman of the Tribunal clearly substantiates that the other learned two Co-arbitrators prepared the award without any deliberation with the Chairman and merely shared it with him for this signature and this lack of deliberation among the arbitrators during the passing of the award resulted in the tribunal  failing  to  act  “fairly  and  impartially”  constituting  a  clear violation of Section 23(3) of the Act, 2001.

The  learned  counsel  in  that  regard  supplement  his  submission asserting that by order no. 28 dated 20.02.2018 it noted that, the hearing of Case No. 2 (the instant matter) was concluded and surprisingly order no. 30 dated 09.10.2019 states that “The Award is prepared on requisite stamp paper,” which clearly manifests a lack of deliberation among the arbitrators before passing the award which goes on to prove the absence of deliberation during the decision-making process and consequently, the award  dated  06.05.2021  was  issued  in  contravention  of  the  law, rendering it patently illegal.

Giving  reference  to  the  decision  in  Saudi  Arabian  Airlines Corporation-Vs-Saudi Bangladesh Services Company Limited reported in  15  BLC  (AD)  186  where  the  Appellate  Division  emphasizes  that courts  must  uphold  justice,  as  public  policy  demands  fairness  in arbitration proceedings and an arbitral award can be challenged if it is found to be “obnoxious to the sense of justice” based on established legal principles, whether due to the conduct of the arbitrators or the nature of the award itself when justice must be the ultimate goal, and any departure from fairness or transparency undermines the legitimacy of the award.

In that decision, it was further held that “it was incumbent upon the arbitrators to make it manifest that there was discussion between the arbitrators before the award was made…” but in the instant case, it becomes  apparent  that  no  deliberations  took  place  amongst  the arbitrators and exclusion of any arbitrator from the deliberative process violates  the  fundamental  requirement  of  collective  decision-making rendering the award contrary to “public policy” which is patently illegal.

With  those  submissions,  the  learned  counsel  finally  prays  for dismissing the appeal and discharging the rule.

Be  that  as  it  may,  we  have  considered  the  submission  of  the learned  senior  counsel  for  the  appellant-petitioner  and  those  of  the learned  counsels  for  the  respondent-opposite  party,  perused  the memorandum of appeal and the impugned judgment and order annexed therewith. Together, we have also very meticulously gone through the application for stay and the documents appended therewith filed by the appellant  vis-à-vis  the  counter-affidavit,  supplementary-affidavit  and those of the documents of the respondent.

At the very outset, it is worthwhile to mention here that we are going to dispose of this appeal that has been preferred under section 48(ka) of the Arbitration Act, 2001 challenging the judgment and order passed by the learned District Judge, Dhaka who set aside the award dated 06.05.2021 exercising authority bestowed upon him in section 43 of the said Act as well.

In section 43 of the Act, there have been set out two sets of grounds basing on which a District Judge has been empowered to set aside  an  award.  In  clause  (ka)  to  section  43,  there  provides  certain grounds through which an aggrieved party can resort to the provision of sections 42 and 43 of the Act to set aside an award but he/she has to present proof (fËj¡e EfÙÛ¡fe) in support of assertion on which the court may  set  aside  an  award  while  section  43(kha)  refers  to  certain satisfactions of the court enabling it to set aside an award as well. From the  submission  placed  at  the  bar,  we  don’t  find  any  dispute  about eligibility of the respondent in placing the application for setting aside the award basing the grounds that comes within the ambit of section 43(ka) of the Act. On the other hand, in section 43(kha) there have been four counts of satisfaction relying on which the court can set aside an Award. In view of the submission placed by the learned counsel for the respondent, it turns out that the learned District Judge has exercised his jurisdiction having been satisfied that Award is prima facie opposed to the law in force in Bangladesh and with the public policy as laid out in clause (B) and (C) of section 43(kha) of the Act. At this, we feel it expedient to reproduce those very two clauses here:

“43(খ) আদালত িকংবা œjত, হাইেকাট  িবভাগ এই মেম  স  হয়  য-

(আ) সািলসী  রােয়দাদ দশ তঃ বাংলােদেশ  চিলত  কান আইেনর পিরপ ী;

(ই) সািলসী  রােয়দাদ বাংলােদেশর জননীিতর পিরপ ী”.

For that obvious reason, in adjudicating the instant appeal, we would  like  to  embark  on  the  discussion  and  observation  keeping ourselves within the ambit of those two provisions and then examine whether the learned District Judge took resort to the said provision while set aside the Award. In such a legal panorama, we only take into account of the core submissions of the learned counsels that aligns with those two legal provisions. Because, though we are disposing of the appeal but in doing so, we can only examine whether the learned District Judge has committed  any  illegality  exercising  his  satisfaction  on  taking  into account of clause (B) and (C) of section 43(kha) of the Act. It is now a settled  proposition  that,  while  setting  aside  an  Award,  under  the provision of Arbitration Act, a District Judge cannot act as an appellate authority rather his/her authority is very limited as outlined above having no scope to take any factual aspect for arriving at a decision so do this court.

The learned senior counsel for the appellant literally encompasses his  submission  basing  on  certain  clauses  of  Contract  penned  on 15.07.2010 especially Article 23.1 of the Contract which speaks about the delivery of possession of the project site and since the respondent (herein referred as BPDB) failed to act on its part, the appellant then rightly issued a notice of Force Majeure to the respondent as outlined in clause 16.1 of the Contract and therefore, the respondent is not entitled to any liquidated damages for not meeting the Commercial Operation Date (COD) by the Required Commercial Operation Date (RCOD) as provided in clause 8.1 of the Contract. But that very assertion of the appellant  has  been  robustly  assailed  by  the  learned  counsel  for  the respondent  by  taking  us  through  Article  1(108),  Article  23.1  of  the Contract and the letter dated 07.08.2010 jointly signed by the appellant and respondent (Annexure-8 to the counter-affidavit) and then maintains that since in view of those two clauses of the contract, the appellant took possession of the project site by signing the document on 07.08.2010 that is, within 21 days of the Contract dated 15.07.2010, there happened no Force Majeure for the appellant that entitled it to any refund as prayed in the prayers made in its Statement of Claim (Annexure- 17 to the counter-affidavit).

However,  this  core  point  has  to  be  addressed  because  if  the appellant has been able to prove its case of Force Majeure, then the respondent will not be entitled to any liquidated damage let alone to deduct it from the performance bank guarantee vis-à-vis monthly bill invoices.

From  the  submission  placed  by  the  learned  counsel  for  the appellant, we don’t find any contrary view with regard to taking over possession of the project site on 07.08.2010 endorsing the conditions as provided in Articles 1(108), 23.1 of the Contract. So it is unbelievable that, the appellant got formal possession only on 07.10.2012 and then go into commercial operation of the project by 270 days therefrom. So under no circumstances, can the respondent take into account of Force Majeure  and  thereby  rightly  refused  to  consider  the  case  of  Force Majeure by its letter dated 05.04.2011 vis-à-vis reschedule RCOD vide letter  dated  27.03.2011  and  thus  perfectly  invoked  the  condition  as enunciated in Article 8 of the Contract by issuing letter dated 27.04.2011 for  encashing  performance  security  and  partial  encashment  of  the performance guarantee to the tune of USD 3,75,000 and deducted from monthly bill invoice amounting to USD 24,55,478.81 on account of delay in achieving COD.

In this regard, we have gone through the impugned judgment and find that the learned District Judge has rightly addressed that core issue and negated the alleged assertion of the appellant when the Arbitral Tribunal has utterly failed to adjudicate the issue of ‘Force Majeure’ in the light of the evidence and materials on record placed before it. Simply put, if the appellant cannot prove the case of Force Majeure and fails to achieve COD and as the appellant cannot get RCOD rescheduled, then definitely the respondent will claim liquidated damage as per Article 8.1 of the Contract to be recoverable either from the bank guarantee or from the monthly bill invoices. So we don’t find any illegality in claiming liquidated  damage  and  if  there  occurs  no  illegality  on  the  part  of respondent, then the appellant cannot get refund of the deducted sum let alone claim interest thereon as sought in prayer nos. III and IV of the statement  of  claim  when  admittedly  it  caused  delay  of  276  days  in achieving COD as on 13.01.2012.

Aside from that, now let us examine as to whether the Award passed in favour of the appellant is opposed to the law being in force in Bangladesh  as  enshrined  in  section  43(kha)(B)  of  the  Act,  and  the learned District Judge has at all adjudicated the said legal issue. On going through the Award (appeared at page 126 of the application for stay), we find the majority arbitrators amongst others, made the said Award in following term:

“and therefore, the respondent, BPDB is liable to be refunded $ 3,75,000 equivalent to BDT 2,76,00,000/- (Taka Two Crore Seventy Six Lac only) along with 15%  interest  per  annum  from  04.09.2011  to  till realization  to  the  Claimant  and  the  respondent, BPDB is also liable to be refunded $ 24,55,478.81 equivalent  to  BDT  20,62,60,220/04  (Taka  Twenty Crore Sixty-Two Lac Sixty Thousand Two Hundred Twenty only) along with  15% interest per annum thereon from the date of deductions to till realization to the Claimant, within 60(sixty) days from the date of the delivery of Award.” 

On  going  through  the  impugned  judgment  (page  105  of  the memorandum of appeal), we further find that the learned District Judge has  in  clear  term  asserted  that  “The  impugned  Award  is  passed  in contravention and opposed to section 38(6)(kha) of the Arbitration Act, 2001 and with non-application of mind and is ex facie contrary to the provisions of law and documents produce before the tribunal as well as evidence led by both the parties.” 

Now let us peruse to what has been laid out in section 38(6)(kha) of the Act which is as follows:

“38(৬) প গেণর  ারা অন ভােব সাব  না হইেল-

(খ)  রােয়দােদ  অন ভােব  আেদশ  দ   না  হইেল,  রােয়দাদ  দ   হওয়ার  তািরখ  হইেত  অথ  পিরেশােধর তািরখ পয  সময়কােলর জন  সািলসী  রােয়দাদ  ারা  য অথ  পিরেশােধর  জন   আেদশ  দান  করা  হইেব  উ  অেথ র সিহত  চিলত  ব াংক  হার  অেপ া  ২%  অিধক বাৎসিরক হাের সুদ  েদয় হইেব।

ব াখ া।-  এই  উপ-ধারার  "ব াংক  হার"  অেথ  বাংলােদশ ব াংক কত কসময় সময় িনধ া িরতসুেদর হারেক বুঝাইেব।”

On going through the prayer so made in the statement of claim by the  appellant  (page  193  of  the  counter-affidavit),  we  find  that  the appellant  claimed  taka  2,76,00,000/-  with  20%  interest  while  the Arbitrators granted 15% of the refunded amount of taka 20,62,60,220/04 to be realized by 60 days which we find to be totally perverse one as nothing has been assigned about the basis of such imposition of interest when section 38(6)(kha) clearly stipulates to impose interest 2% above the Bank rate and what would be the bank rate has also been explained in the “explanation” to that clause (kha). So what was the ‘bank rate’ at the prevailing time of passing the Award has not been there in the Award which manifests sheer whim of the Arbitrator over logic while imposing interest. Further, on the face of such abrupt imposition of interest, it alternatively proves that it has aimed to please the appellant though we clearly find the claim made by the appellant bears no basis as discussed and observed above. Further, there has been no legal sanction even to fix the time limit to pay the awarded amount as if, the Tribunal is acting as a court even then the Arbitral Tribunal has whimsically set 60 days for making such payment which is also opposed to the law as perfectly found by the learned District Judge.

Now let us examine as to whether the Arbitral Award is in conflict with the “public policy” of Bangladesh as envisages in clause (C) of section 43(kha) of the Act and how far the respondent became successful in providing the said legal proposition and the learned District Judge could address the issue finding the Award contrary to the public policy of Bangladesh.

In  that  case,  Mr.  Imtiaz  Farooq,  the  learned  counsel  for  the respondent has placed his reliance in the decision in the case of Saudi Arabian Airlines Corporation-Vs-Bangladesh Services Company Limited reported in 73 DLR (AD) 277=15 BLC (AD) 186 and takes us through paragraph no. 19 thereof where it has been held by their Lordship that:

“In  the  present  case  the  arbitral  tribunal  was compose of three arbitrators and it was incumbent upon the arbitrators to make it manifest that there was  discussion  between  the  arbitrators  before  the award was made but from the plain reading of the proceedings  it  appears  that one  of  the  arbitrators was excluded totally from the process of deliberation

before the award was made.”

The learned counsel on that point of violating public policy by the Arbitral  Tribunal  also  refers  to  another  decision  on  the  case  of Chittagong  Port  Authority-Vs-Ananda  Shipyard  and  Slipways  Ltd. reported in 63 DLR (AD) 226 and referred paragraphs 37 and 38 thereof where it was also held that:

“37.  Public  Policy  of  Bangladesh  means  the principles and standard regarded by legislature or by Court as being of fundamental concern to the state and whole of the society. Thus an award to be refused, as being contrary to public interest if it is contrary to-

1.                Fundamental policy of Bangladesh Law
2.             Interest of Bangladesh
3.          Justice or morality
4.           In addition, if it is patently illegal

38.  In the instant appeal it appears that the 2nd party

Chittagong Port Authority floated the tender for consideration and delivery of 2(two) fast patrol boats in terms of tender document. 6(six) bidders including the first party participated in the bid. First party’s offer became responsive. Contract agreement and work order was issued in favour of 1st  party.  Pursuant  to  contract  agreement  first party submitted the performance bond, thereafter 1st party took 50% advance of the contract price 2nd party CPA is an autonomous statutory body which operates Chittagong sea port of the country. CPA floated tender for construction and delivery of 2(two) Nos. of fast patrol boats for Bangladesh Coast Guard for security and patrolling the see area of Bangladesh from its own found i.e. from public found. Since question of financial interest of state of seriously involved in the instant case, thus  2nd  party  in  the  policy  making  and functioning transparency is desired. Thus, the 2nd party must be in favour of public policy.

In Halsbury’s laws of India Vol. 21 P-302 it has been  stated  about  the  consideration  of  public interest. “It is a basic legal policy that the law should be interpreted in consonance with public interest. While reading the statute as a whole, the Courts  should  strive  to  avoid  adopting construction which goes against the public as well as all enactments are presumed to for the public benefit”.

It  has  stated  by  Bennion  in  his  statutory interpretation 5th ed. p-792 that it implies first that a person shall not be allowed to benefit from his own wrong and secondly, that where a grant is in general terms there always an implied provision that its not include anything which is unlawful or immoral.”

Basing on those two decisions, the learned counsel then contends that an Award can be denied if it runs counter to the fundamental policy of Bangladesh, the interest of Bangladesh, justice or morality are found to have violated.

However, Mr. Fida M. Kamal, the learned senior counsel for the appellant on that count contends that the decision reported in 15 BLC (AD) 186 has completely delivered on different set  of facts and by referring to the order no. 30 dated 09.10.2019, the learned counsel rather submits that the Chairman and other two arbitrators while signed the order, no one raised any objection which revealed that “deliberation” process was rightly completed and the decision cited by the respondent is thus not applicable in the case.

But we are not in agreement with the assertion of the learned senior counsel for the appellant, on the face of the Award itself. Firstly, the Arbitral Tribunal vide order no. 28 dated 20.02.2018 (in Arbitration Case No. 02 of 2014) passed following order:

“Order No. 28

20.02.2018

The Arbitration Tribunal sat today, both parties appeared before the Arbitration Tribunal with their learned counsel. The hearing of the case No. 2 is concluded. The date of the award will be communicated to the parties in due course.” when in order no. 30 dated 09.10.2019 (i.e. after more than 1 year and 8 month of earlier order), it passed following order:

“Order No. 30

09.10.2019

The Award is prepared on requisite stamp paper and it will be  delivered  on  12.10.2019  at  7.00  PM  at  69/1,  Outer Circular Road, Moghbazar, Dhaka-1217. The parties are directed to appear before the Tribunal on the said date to receive the copy of the Award.

Communicate the order to the parties…”  

On top of that, the Chairman started in his dissenting view by initiating the sentence “I have gone through the award passed by the learned Co-arbitrators and I intend to express different view with regard to the award in respect of imposing interest and time limitation for payment  of  the  awarded  amount  only,  stating  some  material  facts, however I agree with the other portion of the award.”

All those factum clearly indicates that no deliberation had at all been occurred among the arbitrators before passing the Award. Further, had there been any deliberation among them, the Chairman would not have disagreed on the imposition of interest on the refunded amount of the appellant and that of the time limit of passing awarded amount which is also clear proof of not having any deliberation before pronouncing the Award and thus such act of non-deliberation is clear testament that the Award  declared  is  completely  opposed  to  the  public  policy  and  the decision referred to that effect reported in 15 BLC (AD) 156 and 63 DLR (AD) 226 is completely applicable in the facts and circumstance of the instant case.

Then again, the Award so passed by the Arbitral Tribunal is also contrary to the express provision of section 23(3) of the Act which speaks that “২৩। (৩) সািলসী  াইবু নাল সািলসী কায ধার াপিরচালনার ে , কায িবিধ

ও  সা   িবষেয়  িস া   হেণ  এবং  উহার  উপর  অিপ ত অন   সকল  মতা  েয়ােগ

ন ায়সংগত, প পাতহীনভােব দািয়  পালন কিরেব।”

If we take into account of that express provision, we explicitly find that the impugned Award was not passed by the Arbitral Tribunal fairly and impractically in exercising powers conferred upon them and the learned District Judge in the impugned judgment has rightly found so who  also  held  that  “Records  also  reveal  that  the  learned  Arbitral Tribunal acted beyond its jurisdiction in traveling beyond the terms of contract as well as law of the country which were fundamental in any claim based on it. Here it may be noted that opposed to public policy includes any decision by the learned Arbitral Tribunal without following the existing law of the country or traveling beyond the terms of the contract.”

Even though the learned counsel referred a slew of decisions in support of his assertion but since those are not found to be compatible with the provision of section 43(kha) of the Act, we are thus refrained from discussing so in the judgment. In any view of the matter, we don’t find any cogent ground advanced by he learned senior counsel for the appellant calling for set aside the impugned judgment.

Regard  being  had  to  the  above  discussion,  observation  and reasoning set forth above, we don’t find any illegality in the impugned judgment that warrants any interference.

Resultantly, the appeal is dismissed however without any order as to costs. Consequently, the judgment and order passed by the learned District Judge in Arbitration Miscellaneous Case No. 214 of 2021 is thus affirmed.

Since the appeal is dismissed, the connected rule being Civil Rule No. 23(FM) of 2024 is hereby discharged.

The order of stay granted at the time of issuance of the rule stands recalled and vacated.

 Let  a  copy  of  this  judgment  be  communicated  to  the  court concerned forthwith. 

Md. Bashir Ullah, J.   

 I agree.

Abdul Kuddus/B.O.