MahaOnline Limited v. Aksentt Tech Services Limited
Interpretation of Contract Clauses in Arbitration; Modification of Award for Computational Error; Deduction of Commission; Award of Costs.
Court: Bombay High Court
Citation: 2025:BHC-OS:23593
Decision Date: 05-12-2025
List of Laws
The Arbitration and Conciliation Act, 1996; Section 34 of the Arbitration and Conciliation Act, 1996
Case Brief
- Facts: MahaOnline Limited (Petitioner), a joint venture between the Government of Maharashtra and Tata Consultancy Services, appointed Aksentt Tech Services Limited (Respondent) as a business associate for implementing e-governance projects. Disputes arose regarding non-payment of dues to the Respondent. The Respondent initiated arbitration, claiming unpaid amounts, interest, and costs. The Arbitral Tribunal partly allowed the claim, awarding Rs. 25,27,78,775/- with interest and costs to the Respondent. The Petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that payments to the Respondent were contingent upon releases from the Rural Development Department (RDD) and that the Arbitral Tribunal failed to consider this condition.
- Procedural Posture: The Petitioner, MahaOnline Limited, filed a Commercial Arbitration Petition in the High Court of Judicature at Bombay under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the award passed by the learned sole Arbitrator.
- Issue: (1) Did the Arbitral Tribunal err in holding the Petitioner liable for payments to the Respondent, despite a contractual clause stipulating payment only after release of funds by the RDD? (2) Did the Arbitral Tribunal commit an error by awarding the full claim amount without deducting the Petitioner's commission, especially given admissions by both parties regarding the commission? (3) Was the award of costs justified given that the Respondent only partially succeeded in its claim?
- Holding: The High Court partly allowed the petition, modifying the award to reflect the deduction of the Petitioner's commission and setting aside the award of costs.
- Reasoning: The Court held that the Arbitral Tribunal correctly interpreted the contract, finding that Clause 28(b) merely outlined the payment mechanism and did not absolve the Petitioner of its payment obligation. The Court emphasized that there was no privity of contract between the Respondent and RDD. However, the Court found that the Arbitral Tribunal erred in not deducting the Petitioner's commission from the awarded amount, as both parties admitted to the commission arrangement. Citing Gayatri Balasamy vs. ISG Novasoft Technologies Limited, the Court exercised its power to modify the award to correct this computational error. The Court also set aside the award of costs, considering that the Respondent only partially succeeded and that the Petitioner is partly a government venture.