Delhi Skills Mission Society v. Samuel Foundation Charitable India Trust

Case: Delhi Skills Mission Society v. Samuel Foundation Charitable India Trust

Court : Delhi High Court

Date of Judgment : 30.07.2024

By : Adv. Saksham Mathur

Facts

• The Delhi Skills Mission Society, a state-level society registered under Societies Registration Act,1860 and operating under the Directorate of Training and Technical Education (DTTE), Government of NCT of Delhi, entered into an Agreement on 01.2016 with Samuel Foundation Charitable India Trust.
• The respondent is appointed as a Vocational Training Partner (VTP) responsible for providing training under the Skill Development Initiative Scheme (SDIS). The SDIS is a government-funded program aimed at equipping individuals with vocational skills, entirely funded by the Directorate General of Training, Ministry of Skill Development and Entrepreneurship, Government of
• As per the terms of the Agreement, the Appellant was obligated  to reimburse the Respondent for training, boarding,  and  lodging  fees  upon the submission and verification of claims. These claims were subject to the guidelines set forth by the Directorate General of Employment & Training (DGE&T).
• A critical requirement under the agreement was the maintenance of biometric attendance records for both trainers and This mandate aimed to ensure accurate tracking of participation in the training program. However, the agreement stipulated a temporary provision allowing for manual attendance tracking until the DGE&T fully implemented its biometric system, which the Respondent had duly established.
• The respondent submitted claims for training costs associated with its However, the appellant disputed these claims due to identified irregularities in the Respondent’s submitted biometric attendance records.

The Appellant specifically cited the absence of data for a certain duration within the training period.

• Due to the appellant’s refusal to pay, the respondent by invoking clause 5 of the agreement initiated the arbitration proceedings. The court under section 11 of the Arbitration & Conciliation Act, 1996 appointed a sole arbitrator to resolve the
• The Arbitral Tribunal on 11.2021 ruled in favor of the respondent. The Tribunal found that while biometric attendance was mandatory, the respondent had made efforts to implement the system. Moreover, the respondent provided manual attendance records as backup for instances when the biometric system malfunctioned. The Tribunal awarded an amount of Rs 15,50,200/- with interest at rate of 7.5% per annum from the date of 11.09.2019 till date of payment.
• The Appellant, dissatisfied with the Arbitral Tribunal award, filed an appeal to the The appellant’s main arguments were that the respondent had breached the agreement by not adhering to the biometric attendance requirement, and that the Tribunal overstepped its authority by considering manual records. Therefore, the appeal was dismissed, and the Respondent was granted the right to receive the training costs as awarded by the Arbitral Tribunal

Issues:

1. Whether the respondent’s failure to provide complete biometric attendance data, specifically the absence of information for a portion of the training period, constitute a material breach of the Agreement, justifying the Appellant’s refusal to reimburse the full training costs?
2. Whether the Arbitral Tribunal exceed its authority or commit legal error by accepting the respondent’s manual attendance records as supplementary evidence to substantiate its claim for training costs despite the Agreement’s emphasis on a biometric system?
3. Whether the Arbitral Tribunal act within its jurisdiction by ruling that the

Appellant’s pro-rata  offer  contingent  on  the  respondent  forfeiting  the

remainder of its claim was unfair, and did this reasoning influence the outcome in favour of the Respondent?

Legal Analysis

• Breach of Contract and Materiality: The appellant argued that the respondent breached the contract due to the incomplete biometric data. However, for a breach to justify non-payment, it must be deemed “material.” This means the breach must be so significant that it undermines the fundamental purpose of the Agreement. In this case, the Agreement’s core purpose was the provision of quality training by the Respondent, as evidenced by the trainees’ success in independent
• Biometric Attendance as a Condition Precedent: The agreement mandated biometric attendance but also permitted manual attendance until the DGE&T system was operational. The respondent experienced technical difficulties with the biometric system, specifically the absences of data for a training Importantly, this issue arose from problems with the system itself, not from the respondent’s negligence or intentional act.
• Manual Attendance as Supplementary Evidence: While the agreement emphasized biometric attendance, it did not explicitly prohibit other forms of record-keeping. The Arbitral Tribunal accepted the respondent’s manual attendance records as supplementary evidence aligns with the principle of contractual interpretation that seeks  to  uphold  the  intent  of  the  In this situation, the intent was clearly to ensure accurate attendance records, whether through biometric data or, in the event of system issues, manual documentation.
• Reasonableness and Fairness: The Arbitral Tribunal’s consideration  of the appellant conditional pro-rata offer as unfair aligns with the legal principle of good faith and fair dealing  inherent  in  contractual The appellant’s insistence on the Respondent relinquishing

a portion of its potentially legitimate claim as a condition for receiving payment for the undisputed portion could be viewed as an attempt to leverage the technical issue to its advantage.

• Authority and Jurisdiction of the Arbitral Tribunal: The  Arbitral Tribunal operates within the scope of authority granted to it by the parties through their    Contractual  interpretation  and  the determination of breach are typically within the purview of the arbitrator. Courts are generally reluctant to overturn arbitral decisions on  these matters unless there is a clear demonstration of exceeding authority or a violation of public policy.

Conclusion

The Arbitral Tribunal’s decision to uphold the respondent’s claim  for training costs is legally sound and within its authority for the following reasons:

• The respondent’s inability to provide complete biometric data does not constitute a material breach of the The respondent demonstrated good faith efforts to comply with the agreement’s attendance requirements by implementing the  system  and  maintaining  manual records as backup during periods of technical issues.
• The Arbitral Tribunal’s acceptance of manual attendance records as supplementary evidence, coupled with the trainees’ successful completion of independent assessments, supports the conclusion that the training was effectively rendered as
• The appellant’s conditional pro-rata offers, requiring the respondent to waive potentially valid claims, could be perceived as  unfair  and inconsistent with principles of good  faith  in  contractual   Therefore, the court allowed the  Arbitral  Tribunal’s  award.  The Respondent is entitled to the awarded training costs.