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2017 Supreme(Del) 2289
IN THE HIGH COURT OF DELHI AT NEW DELHI
JAYANT NATH, J.
Delhi Development Authority - Petitioner
Versus
M/s. N.N. Buildcon Pvt. Ltd. - Respondent
O.M.P. (COMM.) 226 of 2017
Decided On : 17-07-2017
Advocate Appeared:
For the Petitioner: Mr. Rajiv Bansal, Ms. Kanika Singh, Ms. Shantala Sankrit, Ms. Juhi Souran
For the Respondent: Mr. V.K. Jhanji, Mr. Vineet Jhanji, Ms. Jyoti Mandiretta, Ms. Deeksha Ladi Kakkar, Mr. Imran Moulaey
Important Points
Subject
Arbitration Law - Contract Interpretation
Act Referred
CONTRACT ACT : S.23
LIMITATION ACT : S.5
Headnote
Limitation Act - Condonation of delay in re-filing objections under Section 34 of the Arbitration and Conciliation Act, 1996 - Section 5 of the Limitation Act, Arbitration and Conciliation Act, 1996 - Section 34
Fact of the Case:
The petitioner filed a petition seeking to set aside an arbitral award. The respondent claimed escalation of costs due to delays in handing over the construction site. The arbitrator awarded the respondent a sum under the escalation clause. The petitioner challenged the award.
Finding of the Court:
The court found that the respondent was entitled to escalation under the contract terms. The court upheld the arbitrator's interpretation of the contract and dismissed the petition.
Issues: The issues revolved around the interpretation of the escalation clause in the contract and whether the arbitrator exceeded jurisdiction in awarding escalation.
Ratio Decidendi: The court held that the arbitrator's interpretation of the contract terms is binding, and the court should not substitute its interpretation. The court also emphasized that the construction of contract terms is primarily for the arbitrator to decide.
Final Decision: The petition was dismissed as without merit.
Jayant Nath, J.
I.A. No. 5829/2017
1. This is an application filed under Section 5 of the Limitation Act seeking condonation of delay of 2 days in re-filing of the objections under Section 34 of the Arbitration and Conciliation Act, 1996. For the reasons stated in the application, the same is allowed. The delay of 2 days in re-filing the objections is condoned.
O.M.P. (COMM.) 226/2017
2. This is a petition filed under Section 34 of the Arbitration & Conciliation Act, 1996 seeking to set aside the arbitral award dated 02.02.2017.
3. The brief facts leading to filing of the present petition are that the petitioner floated a notice inviting tender on 29.12.2009 for the work of "Construction of 5080/4740 EWS Houses at Village Siraspur, Narela, Phase-III, Delhi. SH - Construction of 920 EWS Houses Group - IV at Siraspur including internal development and electrification. The respondent was the lowest bidder and was awarded the tender at a negotiated amount of Rs.40,12,33,062/-. The negotiated amount was arrived at pursuant to various post bid meetings.
4. It is the case of the petitioner that on 07.05.2010 the respondent was informed about the stay order pending regarding the land forming part of the site and existence of encroachments. It is urged that the respondent agreed to execute the work in such conditions where the work might even be reduced or delayed due to the said stay/encroachment.
5. On 11.06.2010 the petitioner issued a letter of award in favour of the respondent again reiterating that the land where these houses are proposed to be constructed is under court stay/encroachment and the site will be handed over in part as and when made available. An agreement was also executed between the parties. It is noteworthy that the stipulated date for starting of the work was 21.06.2010. A period of 30 months was given to the respondent to complete the work, i.e. by 20.12.2012. The work was actually completed on 15.11.2015.
6. It is the case of the respondent that lay out plan was provided to the respondent on 14.07.2010. However, some area was marked as under injunction order of the court and some area was marked as under encroachment. Further, it is the case of the respondent that in spite of complete mobilization, no work was allowed to be carried out by local residents on the plea that the land in question belongs to them. This problem of non-availability of workable site continued for a long time despite interventions and efforts of the police. The respondent claimed to have incurred financial losses on account of the idle tools and plant, machinery, staff, labour etc. Cost of material and labour went up. It is further stated by the respondent that after a long wait, part of the site was made available and EWS housing was approved by the screening committee of DDA. This was informed to the respondent by letter dated 26.08.2011 by the petitioner. The entire project had to be completed in 30 months. However, only a part of the site was made available on 26.08.2011 for construction of 520 EWS houses against the stipulated date of start, i.e. 21.06.2010. Further part site was handed over on 16.07.2012 for construction of another 240 EWS houses nearly 25 months after the stipulated date of start i.e. 21.06.2010 whereas the total time for completion of project was only 30 months. Hence, the respondent on 01.08.2012 wrote a letter that time of construction of these houses may be considered as additional 24 months and escalation be accordingly applied and paid in terms of the Clause 10(CC) of the agreement. On 06.10.2012, the petitioner wrote a communication that the matter for escalation under Clause 10(CC) payable for 240 houses is under consideration. Various other communications have been exchanged between the parties. The respondent on 19.11.2012 wrote to the petitioner that they are not able to continue with work on account of the abnormal rise in cost of men and materials beyond the stipulated period unless escalation is p
