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2017 Supreme(Del) 288
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. MURALIDHAR, J.
NATIONAL HIGHWAYS AUTHORITY OF INDIA – Petitioner
Versus
M/S PCL-STICCO (JV) – Respondent
O.M.P. 382 of 2011
Decided On : 30-01-2017
For the Petitioner:Mr. Abhishek Kumar with Ms. Arushi Gupta, Advocates
For the Respondent:Dr. Amit George, Advocate
The interpretation of contract terms, the applicability of the limitation period, and the determination of varied rates for additional work are crucial in construction disputes under the Arbitration and Conciliation Act, 1996.
Headnote:
Arbitration - Construction Dispute - Arbitration and Conciliation Act, 1996 - Section 34 - Table 400.1.A, Clause 401, BOQ Item 3.01 - The court discussed the interpretation of the contract terms, the necessity for a drainage layer, and the applicability of the limitation period in the context of the construction dispute.
Fact of the Case:
The National Highways Authority of India (NHAI) filed a petition challenging an Arbitral Tribunal's majority Award regarding a construction dispute with M/s. PCL-STICCO (JV) over the construction of a granular sub-base (GSB) for a highway widening project.
Finding of the Court:
The majority of the Arbitral Tribunal held that the Respondent's claim for a varied rate for the construction of a drainage layer as a new item of work was not barred by limitation and awarded the Respondent the varied rate. The dissenting Award held that the Respondent was not justified in demanding a higher rate for the varied item under Table 400.1.A.
Issues: The issues included the interpretation of the contract terms, the applicability of the limitation period, and the determination of the varied rate for the construction of a drainage layer.
Ratio Decidendi: The majority of the Arbitral Tribunal found that the claim for a varied rate was not barred by limitation and that the construction of the drainage layer was a varied item of work not provided for in the original contract terms.
Final Decision: The Court found no grounds for interference with the majority Award and dismissed the petition.
1. This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Act’) filed by the National Highways Authority of India (‘NHAI’) challenging a majority Award dated 7th January 2011 passed by the Arbitral Tribunal (‘AT’) in the disputes between the Petitioner and Respondent M/s. PCL-STICCO (JV) arising out of a Contract Agreement dated 28th August 2001 whereby the Respondent undertook to execute and complete the work of widening of 4/6-lanes and strengthening of existing 2-lane carriageway of NH-5 in the State of Orissa from Km.284.000 to 338.000 (Ganjam-Sunakhala) (NH-5 Package).
2. The dispute in the present petition concerns the construction of a granular sub-base (‘GSB’) as described in bill of quantities (‘BOQ’) 3.01. The said BOQ item reads as under:
“Constructing Granular Sub-base (GSB) using crushed stone aggregate only conforming to Grading 1 of Table 400-1 complete as per Drawing and Technical Specifications Clause 401.”
3. The bid tendered by the Respondent consisted of technical specifications (‘TS’) as well as supplementary TS. TS 401 referred to in the above BOQ reads as under:
“The material to be used for the work shall be crushed stone, aggregate, natural sand, gravel or combination thereof depending upon the grading required. Use of Moorum for GSB either alone or in combination shall NOT be allowed. The material shall be free from organic or other deleterious constituents and conform to the Grading1 given in Table 400-1.”
Add the following as the third paragraph of clause 401.2.1.
Where the layer is intended to serve as a drainage layer in addition to being a part of the structural pavement the material must satisfy drainage criteria. For such requirement, material passing sieve 2.36 mm and down should be as per Table 400.1.A.”
4. Table 400.1.A sets out the specifications for the drainage layer of the GSB.
5. In addition to the above, the general conditions of contract (‘GCC’) and special conditions of contract (‘SCC’) and the Conditions of Particular Application (‘COPA’) also formed part of the CA.
6. Clause 1.1.4 of the preamble of the TS states: "should there be any detail of construction or materials which has not been referred to in the Specifications or the Bill of Quantities and Drawings but the necessity for which may be implied or inferred therefrom or which is usual or essential to the completion of the work in the trades then the same shall be deemed to be included in the rates and prices entered by the Contractor in the BOQ."
7. The contract was a unit rate contract and the rates against each item were to be filled by the supplier/contractor.
8. During the execution of contract on 1st April 2002, the Respondent sought clarification of the Engineer in relation to the TS of the new carriageway to be executed. By a letter dated 12th April 2002 the Engineer instructed the Respondent to do the work of 150mm thick lower layer of GSB to be provided as drainage layer as per Table 400.1. A and as per BOQ Item 3.01. By its letter dated 20th April 2002, Respondent disagreed with the above direction of the Engineer. On 15th May 2002 while reiterating the direction, the Engineer clarified that the gradation requirement of Table 400.1.A. of the supplementary TS “is deemed to be covered under BOQ Item No. 3.01" and that the said decision “remains unchanged”.
9. Admittedly, the work continued even thereafter. NHAI states that the Respondent did not raise any dispute and submitted the interim payment certificate (‘IPC’) at the rate agreed upon between the parties. It is stated that no claim for the varied rate was made immediately thereafter.
10. It is then stated that the Respondent by a letter dated 18th November 2005 claimed the varied rate under Clause 52.2 of the GCC. This was refuted by the Engineer by a letter dated 18th March 2006. The resultant dispute was taken by the Respondent first before the Dispute Review Board (‘DRB’). However, with the DRB not giving its decision within the stipulat
