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2024 Supreme(Cal) 1113
IN THE HIGH COURT AT CALCUTTA
KRISHNA RAO, J.
J.G. Engineers Private Limited – Petitioner
Versus
M/s. National Building Construction Corporation Ltd. – Respondent
AP-COM 486 of 2024 (Old No. AP 443 of 2014) AND AP-COM 485 of 2024 (Old No. AP 489 of 2014)
Decided On : 01-07-2024
For the N.B.C.C. : Mr. Devajyoti Barman, Ms. Sanjukta Basu Mallick.
For the J.G. Engineers Pvt. Ltd. : Mr. Surajit Nath Mitra, Sr. Adv., Mr. Suman Dutt, Mr. U.S. Menon, Ms. Sananda Mukhopadhyay, Mr. Abhirup Chakraborty.
The court ruled that termination of a construction contract was unlawful due to failure in timely approvals by the other party, impacting liability for project delays.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Applications challenging the arbitration award dated 17th December, 2013 - Contractor held partially responsible for project delay - Termination of contract deemed unlawful by the court - Counterclaims by the respondent set aside. (Paras 3, 46, 63, 64)
(B) Legal Principles - The arbitrator's findings on delay must consider both parties' contributions - Arbitrators cannot award counterclaims if the initial contract termination basis is found unlawful. (Paras 46, 63)
(C)
Facts of the case:
Contractor challenged the arbitration award which attributed project delays and termination inconsistently; it was determined that essential design approvals from the respondent were delayed, impacting completion timelines. (Paras 3, 46)
Findings of Court:
Court upheld the contractor's claims while nullifying the respondent's counterclaims due to the conclusion that the contract termination was unlawful. (Paras 46, 63)
Issues: Attributed delays for project completion and legality of contract termination were the central issues. (Paras 3, 46)
Ratio Decidendi: The court emphasized that lack of mutual accountability for delays led to reversal of counterclaims, furthering clarity on responsibilities under contract law. (Paras 46, 63)
Result: Applications allowed for the contractor, counterclaims dismissed.
| Table of Content |
|---|
| 1. applications under section 34 of the arbitration act (Para 1 , 2) |
| 2. factual background of contract and delays (Para 3) |
| 3. contractor's arguments on delay and responsibility (Para 4 , 5 , 6 , 7 , 8) |
| 4. approval of drawings and contractor's obligations (Para 9 , 10) |
| 5. arbitrator's considerations and responsibilities (Para 11 , 12 , 13 , 14) |
| 6. nbcc's arguments on termination and breaches (Para 15 , 17 , 18 , 20 , 21 , 22 , 23) |
| 7. judicial references by nbcc's counsel (Para 24 , 25) |
| 8. court's review of damages and contract clauses (Para 26 , 27 , 28 , 29 , 30) |
| 9. expertise on buildings and delays (Para 31 , 32) |
| 10. conditions leading to termination (Para 33 , 34) |
| 11. reasons for delay attributed by the court (Para 35 , 36 , 37 , 38) |
| 12. court's findings on arbitrator's conclusions (Para 39 , 40) |
| 13. arbitration award details and findings on delays. (Para 41) |
| 14. court's decision on termination legality (Para 42 , 43 , 44 , 45) |
| 15. termination was deemed unlawful. (Para 46) |
| 16. counterclaims and their legal standing (Para 49 , 52 , 56 , 63) |
| 17. final conclusion and judgement outcome (Para 60 , 62 , 64 , 65) |
JUDGMENT :
(Krishna Rao, J.) :
1. Both parties have preferred an application under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the award passed by the Sole Arbitrator dated 17th December, 2013. The Contractor namely; J.G. Engineers Private Limited had preferred the application under Section 34 of the Arbitration and Conciliation Act, 1996, being AP-COM 486 of 2024 (Old No. A.P. 443 of 2014) praying for the following relief(s):
a) The award dated December 17, 2013 passed by Mr. S. C. Vasudeva, Learned Sole Arbitrator in the matter of arbitration between M/s J.G. Engineers (Pvt.) Ltd. and M/s. National Buildings Construction Corporation Limited in so far as the same held that the petitioner was primarily responsible for the delay in completion of the contract beyond March 25, 1995 and rejected and/or reduced the claims of the petitioner and allowed various counter claims of the respondent be set aside;
b) Ad-interim order in terms of prayer above;
c) Costs of this application be directed to be paid by the respondent;
d) Such further or other order or orders be made and/or direction or directions be given as to this Hon’ble Court may seem fit and proper.”
2. The M/s. National Building Construction Corporation Limited (hereinafter referred to as “NBCC”) has also preferred an application under Section 34 of the Arbitration and Conciliation Act, 1996 against the award dated 17th December, 2013, being AP-COM 485 of 2024 (Old No. A.P. 489 of 2014) praying for the following relief(s):-
(a) Condone the delay of about 7 days which have occurred in filling this application;
(b) Upon condonation of such delay an Order any be passed that Issue No. (i) & (ii) as decided in Award dated 17.12.2013 in Annexure “A” to the petition be set aside by this Hon’ble Court to the extent mentioned in the grounds of the instant application;
(c) That Claim No. 5, 6, 7(c), 14 & 15 in Award dated 17.12.2013 in Annexure “a” to the petition be set aside by this Hon’ble Court to the extent mentioned in the grounds of the instant application;
(d) The respondent/ claimant be restrained from giving any or any further effect to the said Award dated 17.12.2013;
(e) Ad-interim order in terms of prayer (b) (c) and (d) above;
(f) The respondent/ claimant be directed to pay the cost of and incidental to this application;
(g) That Counter Claim no. 1 & 7 of the petitioner may be allowed as specified to the extent mentioned in the grounds of the instant application;
(h) That restricting the entire amount awarded against counter claims no. 1, 7, 8, 10, 11, 12, 13, 15, 17 to Rs. 65.00 lacs as per award dated 17.12.2013 be set aside and that the same may be allowed to the full extent as specified in the grounds of the instant application;
(i) That pendente lite interest @ 9% per annum on counter claim no. 2, 3, 4, 5, 6, 9 & 18 from date of award i.e.
