Back
2014 Supreme(Del) 2268
High Court of Delhi
RAJIV SHAKDHER, J.
National Highways Authority of India
Versus
M/S. Pcl Suncon (Jv)
OMP. No. 48 of 2013
Decided On: 14-10-2014
For the Petitioner:Meenakshi Sood, Mukesh Kumar, Advocates.
For the Respondent:Amit George, Advocate.
The main legal point established is that the terms of the contract and relevant specifications determine the obligations of the parties, and the arbitral tribunal has the authority to award additional costs and interest based on the contract terms and applicable law.
Headnote:
CRMB - Contract Dispute - Arbitration and Conciliation Act, 1996, Section 34 - 1, 2, 3, 5, 6, 8, 9, 10
Fact of the Case:
The petitioner sought to enforce the sourcing of Crushed Rubber Modified Bitumen (CRMB) from a refinery, despite the contract not specifying the source. The respondent claimed additional costs for sourcing CRMB from a refinery and transportation, as well as overhead expenses, profit, and interest.
Finding of the Court:
The court found that the contract did not obligate the respondent to source CRMB from a refinery and that the respondent was within its rights to blend the bitumen at the site. The court upheld the arbitral tribunal's award of additional costs and interest, rejecting the petitioner's arguments.
Issues: The core issue was whether the petitioner could insist on sourcing CRMB from a refinery despite the contract not specifying the source. Other issues included the validity of the variation order and the award of overhead expenses and interest.
Ratio Decidendi: The court held that the contract did not require the respondent to source CRMB from a refinery and upheld the arbitral tribunal's award of additional costs and interest. The court also found that the variation order was valid and rejected the petitioner's arguments regarding overhead expenses and interest.
Final Decision: The court dismissed the petition, upholding the arbitral tribunal's award in favor of the respondent.
Rajiv Shakdher, J.
1. Shorn of verbiage and technical claptrap; much of which has been examined closely by a three member arbitral tribunal by an unanimous award, the core issue, which has been raised before me is, as follows :-
1.1 Whether (notwithstanding the fact that the contract obtaining between the parties did not provide for the source from which Crushed Rubber Modified Bitumen (in short CRMB) had to be obtained to execute the work entrusted to the respondent), the petitioner could insist that CRMB had to be sourced from a refinery?
1.2. The aforesaid issue (which has been answered by the arbitral tribunal in favour of the respondent), has led to the following claims being awarded in favour of the respondent :
(i). The difference in costs between CRMB of Grade 60/70, being blended at site; and that, which was sourced from the refinery.
(ii). The transportation cost in ferrying the CRMB from the refinery to the site.
(iii). Overhead expenses and profit.
(iv). Interest for the periods : between the date when the cause of action arose and the date of institution of the claim, pendente lite, and for the period post the award till the date of payment.
Qua interest for the post award period, a leeway of 90 days was incorporated.
2. In order to adjudicate upon the petition, filed under Section 34 of the Arbitration and Conciliation Act, 1996 (in short the Act), in my view, the following broad facts need to be noticed :-
2.1 The petitioner, issued tenders in February, 2001 for the following work : "Four Laning and Strengthening of the Existing Two Lanes Highway Section from km 320.00 and Km 398.75 on NH-2 (Construction Package V-C) (hereinafter referred to as the work in issue).
2.2 This work had to be executed in the State of Jharkhand (T&HP-8).
2.3 The respondent, which is the original claimant submitted its bid on 14.05.2001, for a sum of Rs.2,99,71,11,101.78. The respondent, was declared successful and its bid was accepted for the aforementioned amount, excluding the sum of Rs.0.78 paisa. A letter of intent was issued on 31.07.2001, followed by execution of a formal contract dated 20.09.2001.
2.4 The contract, was apparently, divided into three sections. Each of these section had a common commencement date, i.e., 20.09.2001. The stipulated completion period qua each of the sections was different. Section I, was required to be completed by 19.03.2004. Section II, was to be completed by 19.09.2004, and Section III, was to be completed by 19.03.2005.
2.5 Admittedly, in so far as the physical progress of the work in issue is concerned, it stood completed on 26.07.2010. Extensions for completion of work vis-a-vis Section I and II were granted by the Engineer upto 30.04.2007 and 23.10.2008, which are the actual dates of completion qua these two Sections. In so far as Section III was concerned, extension was granted by the Engineer, till 31.03.2009. The respondent's request for extension till 26.07.2010, was pending, it appears, when the matter was being deliberated by the arbitral tribunal.
2.6 The balance of quantities (BOQ) incorporated in the contract provides for use of CRMB in Dense Bitumen Macadam (DBM) and Bituminous Concrete (BC). As per BOQ Item 4.03, the respondent was to provide DBM for service roads and internal roads, in rest areas, as per technical specifications provided in clause 5.7. Similarly, as per BOQ Item 4.04, the respondent was to provide and lay BC wearing course, as per technical specification clause 5.12 excluding tack coat. The quantities were prescribed in the BOQs. Admittedly, CRMB was to be used in the aforesaid works as indicated above. Importantly, "Most" specifications which were applicable to the contract, provided in clause 101 that those IRCs specifications would apply, which are latest and standard till 30 days before the final date of submission of the tender.
2.7 In this context, it would have to be borne in mind that at the time of bidding, the latest edition of IRC specificatio
