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2017 Supreme(Del) 116
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
GOVERNMENT OF NCT OF DELHI PUBLIC WORKS DEPARTMENT - Petitioner
versus
M/S N N BUILDCON PVT LTD. – Respondent
O.M.P. (COMM) 14 of 2017
Decided On : 16-01-2017
For the Appellant :Ms Nandita Rao, ASC with Mr Sanjay Dewanand Ms Palak Rohmetra, Advocates.
For the Respondent:Mr V. K. Jhanji, Senior Advocate with Mr Vineet Jhanji, Ms Jyoti Mendiretta, Mr Imran Moulaey and Ms Deeksha Ladi Kakkar, Advocates.
The main legal point established in the judgment is that an arbitral award can only be set aside if it exceeds jurisdiction or conflicts with public policy. The court emphasized the importance of upholding the arbitrator's reasonable interpretation of contractual provisions.
Headnote:
Arbitration - Setting aside of arbitral award - Section 34 of the Arbitration and Conciliation Act, 1996 - Clause 10CC of General Conditions of Contract (GCC) - Clause 2A of GCC
Fact of the Case:
The Government of NCT of Delhi filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an arbitral award passed in favor of the respondent (NNBPL) in a dispute related to the execution of construction works. The petitioner challenged the award of escalation and bonus to the respondent.
Finding of the Court:
The court found that the arbitrator's decision on awarding escalation and bonus was reasonable and not opposed to public policy. The court emphasized that it does not act as an appellate court and cannot supplant its view over the view of the arbitrator. The court held that the arbitrator's interpretation of the contract clauses was plausible and reasonable.
Issues: The issues revolved around the interpretation of Clause 10CC and Clause 2A of the General Conditions of Contract (GCC) in the context of awarding escalation and bonus to the contractor.
Ratio Decidendi: The court's decision was based on the principle that an arbitral award can only be interfered with if it exceeds jurisdiction or conflicts with public policy. The court upheld the arbitrator's decision as reasonable and in line with the contractual provisions.
Final Decision: The court dismissed the petition to set aside the arbitral award, affirming the award of escalation and bonus to the respondent.
VIBHU BAKHRU, J
IA No.516/2017
1. For the reasons stated in the application, the delay in re-filing the petition is condoned.
2. The application stands disposed of.
IA No.515/2017
3. Allowed, subject to all just exceptions.
4. The application is disposed of.
CAV.40/2017
5. The learned counsel for the caveator/respondent has entered appearance. The caveat stands discharged.
6. The Government of NCT of Delhi (hereafter ‘GNCTD’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter ‘the Act’) for setting aside the arbitral award dated 31.08.2016 (hereafter ‘the impugned award’) passed by the sole arbitrator, Sh S.K. Singhal.
7. The impugned award was made in the context of disputes between GNCTD and the respondent (hereafter ‘NNBPL’) in connection with the execution of the works relating to the main building, principal’s residence, auditorium, girls hostel and staff quarters, including water supply, sanitary installation, drainage and internal electrical works of Shaheed Rajguru College of Applied Sciences for Women at Vasundhara Enclave, Delhi.
8. The contract for execution of the aforesaid works was awarded by GNCTD to NNBPL by its letter dated 13.03.2009. The estimated cost of the works was Rs.21,37,89,580/-and NNBPL had tendered to execute the same for a sum of Rs.27,70,17,042/-. The stipulated date for commencement of the works was 04.04.2009 and the works were to be completed within a period of 20 months, that is, on or before 03.12.2010. The execution of the works extended beyond the period of 20 months and the works were finally completed on 04.03.2011. The final bill dated 29.09.2012 for Rs.31,76,28,140/-was raised by NNBPL, however, certain claims made by NNBPL were not accepted. This led NNBPL to invoke the arbitration clause and the sole arbitrator was appointed to adjudicate the disputes between the parties.
9. The arbitrator considered the rival contentions and made the impugned award in favour of NNBPL. The claims awarded included claim on account of escalation to the extent of Rs.38,28,686/-against NNBPL's claim of Rs.1,54,79,043/-(Claim No.3); Rs.7,82,700/-on account of escalation pertaining to electrical works (included as a part of Claim No. 7); and claim for bonus in the sum of Rs.1,38,50,852/-(Claim No.5).
10. Ms Nandita Rao, appearing on behalf of GNCTD advanced contentions on two fronts. First, that the award of escalation under Clause 10CC of General Conditions of Contract (GCC) was perverse and contrary to the plain language of the said clause. She submitted that the said clause was amended by a circular dated 21.08.2013 in respect of Notice Inviting Tenders issued after 21.08.2013, but the arbitrator had erroneously applied the amended clause to the contract in question. She contended that the escalation was only limited to the prices/wages prevailing at the time of stipulated date of completion, that is, 03.12.2010, and the arbitrator could not have adjusted the said date by taking into consideration the time for extra items of work.
11. Second, that award of bonus -Claim No. 5 -is contrary to the express terms of Clause 2A of GCC. She submitted that in terms of the said clause, bonus was payable to a contractor at the rate of 1% of the tendered value per month (subject to the maximum limit of 5% of the tendered value) for completion of the contract ahead of the scheduled completion time. She stated that this was an incentive to the contractor for a timely completion of the works notwithstanding any hindrances that may be faced by the contractor. She submitted that the scheduled completion time was specified under the contract as 20 months from 04.04.2009. But, the arbitrator had also considered the delays on account of hindrances as well as further time for completion of additional work in computing the scheduled time for completion for the purposes of aw
