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HIGH COURT OF DELHI
S. MURALIDHAR, J
National Highways Authority of India
Versus
ITD Cementation India Ltd.
O.M.P. No. 27 of 2010
Decided On: 13-12-2012
Arbitration & Conciliation Act - Challenge to Arbitral Award - Section 34 - NHAI v. ITD Cementation India Ltd. - Act Section List: Arbitration & Conciliation Act, 1996 - Summary: The court dismissed the petition challenging an arbitral award related to a contract between NHAI and ITD Cementation India Ltd. for widening and rehabilitation of a road. The court analyzed issues of limitation, DEB eligibility, excise duty, and certification of funding, and found in favor of ITD Cementation India Ltd. The court also rejected the application of Order II Rule 2 CPC and upheld the AT's direction for the appointment of auditors. The court upheld the AT's decision on the award of interest.
Fact of the Case:
The petition under Section 34 of the Arbitration & Conciliation Act, 1996 challenged an arbitral award related to a contract between NHAI and ITD Cementation India Ltd. for road widening and rehabilitation. The contract was executed in 2001, and disputes arose regarding various claims filed by ITD Cementation India Ltd.
Finding of the Court:
The court found in favor of ITD Cementation India Ltd. on issues of limitation, DEB eligibility, excise duty, and certification of funding. The court rejected the application of Order II Rule 2 CPC and upheld the AT's direction for the appointment of auditors. The court upheld the AT's decision on the award of interest.
Issues: The issues included limitation, DEB eligibility, excise duty, certification of funding, application of Order II Rule 2 CPC, and the appointment of auditors.
Ratio Decidendi: The court's decision was influenced by the interpretation of contract clauses, relevant legal provisions, and the application of legal principles to the specific facts of the case.
Final Decision: The petition was dismissed, with no order as to costs.
Based on the provided legal document, there is no indication of patent illegality in the arbitral award or the contractual provisions discussed. The court examined various issues related to the interpretation of contract clauses, the applicability of legal provisions, and procedural considerations. It found that the arbitral tribunal's decisions, including the directions for appointment of auditors, the assessment of claims, and the interest awarded, were within the bounds of legal and contractual principles (!) (!) .
Furthermore, the court observed that the claims were properly verified, and the procedures followed by the arbitral tribunal did not result in any manifest illegality or procedural unfairness that would amount to patent illegality (!) (!) . The court also noted that the claims were not barred by principles of Order II Rule 2 CPC, and the legal interpretations of the relevant clauses were plausible and consistent with the contractual and legal framework (!) (!) .
Therefore, the court dismissed the challenge to the arbitral award, concluding that there was no patent illegality in the award or the manner in which the tribunal conducted the proceedings (!) (!) .
1. The challenge in this petition under Section 34 of the Arbitration & Conciliation Act, 1996 (‘Act’) by the Petitioner, National Highways Authority of India (‘NHAI’) is to an Award dated 22nd April 2009 as modified on 21st August 2009 passed by the arbitral Tribunal (‘AT’) in the disputes between NHAI and the Respondent, ITD Cementation India Ltd. [earlier known as Skanska Cementation India Ltd. (‘SCIL’)] arising out of the award of the work of widening of four lanes and rehabilitation of existing carriageway of Pune – Satara Road (NH-4) from (Km 725.00 to Km 760.00) Package-1.
Background Facts
2. The contract was executed on 10th May 2001 between NHAI and SCIL Subsequently, on 26th May 2005, the name of the Contractor was changed to that of the Respondent. The letter of acceptance (‘LoA’) was issued on 12th April 2001; however, the work started on 1st July 2001. Although the scheduled date of completion was 31st December 2003, the actual date of completion was 30th March 2004.
3. The claims filed by the Respondent were as under:
“Claim No. 2.1 2.2 2.3 2.4 Description Adjustment to Contract Price on account of increased tax in Maharashtra Interest @ 12% per annum, compounded monthly Adjustment to Contract price consequent to withdrawal of Deemed Export Benefits for Road Projects Interest @ 12% per annum, compounded monthly Additional costs of Well Steining shuttering due to changed design Interest @ 12% per annum, compounded monthly Compensation for Prolongation & Acceleration Costs incurred for completion of Works Interest @ 12% per annum, compounded Monthly Total Amount in Rs. As per Statement of Claim (SOC) Revised Claim Amount (as per written synopsis) Rs.1,17,04,358 Rs. 1,29,54,237 Rs.9,28,05,395 Rs. 6,96,98,190 Rs. 50,27,703 Rs. 13,11,947 Rs. 13,11,947 Rs. 5,20,806 Rs. 27,09,89,951 Rs.25,13,74,552 Rs. 5,23,13,294 Rs. 39,62,86,928”
The impugned Award
4. By the impugned Award, the AT partly allowed the above claims as under:
Claim
Amount Brief Description (Revised) Claimed
No. Awarded Rs.
(Rs.)
2.1 Adjustment on account of increased tax 1,29,54,237 1,29,54,237
2.2 Withdrawal of deemed export 6,96,98,190 5,29,24,725
2.3 Additional cost of well steining, 13,11,947 10,00,000
shuttering
2.4 Compensation for prolongation 25,13,74,552 6,21,76,153
and acceleration costs incurred for
completions of works.
Total Claim 2.1 to 2.4 33,53,38,926 12,90,55,115”
5. In addition, the AT directed NHAI to pay the Respondent interest as under:
(i) Interest for pre-reference period on Claim No.2.1 to 2.3 from the due date, to be verified by the Engineer, to date of invocation of 12% p.a. Compounded Monthly Arbitration viz. 31st May, 2005
(ii) Pendente lite interest on amount of award from 1st June, 2005 to the 12% p.a. Compounded date of publishing of Award viz. Monthly 22nd April, 2009
(iii) Future interest – Claim Nos.2.1 to 2.4
If payments of awarded amount was delayed beyond 21st July 2009, post-Award interest @ 12% p.a. was payable on the amount of the Award including Claim No.2.4 with effect from 23rd April, 2009 till date of payment.”
6. When the present petition was listed before this Court on 22nd January 2010, it was dismissed as regards the challenge to Claim Nos.1, 4 and 2.5. Notice was issued in the petition limited to the finding on Claim No.2.2, i.e., withdrawal of deemed export benefits (‘DEB’). It may be mentioned here that to the extent of rejection of its challenge to the remaining claims, NHAI filed FAO(OS) No.217 of 2010 which was disposed of by the Division Bench (‘DB’) on 10th August 2010 in view of the settlement arrived at between the parties. Consequently, the scope of the present petition is confined to Claim 2.2.
7. This Court has heard the submissions of Mr. Vikas Goel, learned counsel for the NHAI and that of Mr. Amit George, learned counsel for the Respondent.
Limitation
8. The first submission of the NHAI is that the Respondent’s
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