The court affirmed the arbitral tribunal's decision that the contractor is entitled to payment for completed work and price variation, rejecting claims of unjust enrichment by the Railways.

SOMASEKHAR SUNDARESAN, J.

Context and Factual Background:

1. This is a Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) challenging an arbitral award dated May 31, 2023 (“Impugned Award”) in connection with disputes and differences relating to an agreement dated September 24, 2018 (“Agreement”). The Agreement relates to work connected with the railway line between Wardha and Nanded and related to embankment, cutting including bridge approaches, trolley refuges, construction of side drains, minor bridges etc.

2. The Agreement was preceded by a tender notice dated October 25, 2017, issued by the Petitioners (collectively, “Railways”). The offer made by the Respondent, a joint venture (“Contractor”) had been accepted by a letter of acceptance dated May 24, 2018, indicating the approximate value of contract at Rs. 124.96 crores. The completion deadline was 24 months from the date of the letter of acceptance i.e. May 23, 2020. The Agreement entailed submission of a performance bank guarantee by the Contractor in the sum of Rs. 6.24 crores to be kept valid until July 23, 2020 – two months after the deadline. The Contractor also had to provide a security deposit of Rs. 6.24 crores.

3. Running Account Bills (“RA Bills”) were to be raised by the Contractor from time to time. The Contractor completed works as assigned from time to time by the Railways officials to the extent of Rs. 108.73 crores which was covered by the RA Bills up to the sixth RA Bill. Until this point, all bills were cleared by the Railways.

4. On April 29, 2020, the Contractor sought extension of time. The delay was attributed to the failure of the Railways to acquire forest land, revenue land and farmer land, and restrictions arising out of the lockdown imposed on account of the Covid-19 Pandemic. The request for such extension was made under Clause 17-A(ii) and Clause 17-A(iii) of the General Conditions of Contract (“GCC”) governing the Agreement. The former sub-clause applies where the extension is sought citing reasons for delay that are not attributable to either party, while the latter applies where the reasons for delay are attributable to the Railways. An application for a second extension was made on May 8, 2020, asking for the deadline to be shifted to January 17, 2021. The reasons set out were the same – again under Clause 17-A(ii) and Clause 17-A(iii) of the GCC and the Covid-19 lockdown, and there was no quarrel on the reasons attributed.

5. The Railways did not object to the reasoning, and by a letter dated June 29, 2020, granted extension until December 31, 2020, without imposing any penalty and accepting price variation arising due to the delay.

6. The Contractor continued to work under the extended time. A joint measurement of further work was effected on June 22, 2020, and the seventh RA Bill was prepared on July 13, 2020, based on such measurement. The cumulative value of the work done by this RA Bill stood at Rs. 138.78 crores. However, despite joint measurement, the Railways did not pay this bill on the premise that the excess work carried out by the Contractor fell within the ambit of restricted quantities.

7. Joint measurement was then carried out on March 16, 2021, for preparation of the eighth RA Bill, and the work that would be covered by this bill was to be valued at Rs. 8.22 crores. The eighth RA Bill was neither prepared nor approved by the