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2018 Supreme(Del) 811
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
L&T-SUCG JV CC27 DELHI - Petitioner
Versus
DELHI METRO RAIL CORPORATION LIMITED - Respondent
O.M.P. (COMM) 121 of 2018
Decided On : 20-03-2018
For the Petitioner:Mr Dayan Krishnan, Sr. Advocate with Ms Megha Mehta Agrawal, Ms Aakashi Lodha and Mr Samith Sagaranahalli.
For the Respondent: Mr Tarun Johri, Mr Ankit Saini and Mr Ankur Gupta.
The contract terms govern the entitlement to claim reimbursement for additional taxes or duties, and delay in performance must be attributable to the party seeking compensation.
Headnote:
Arbitration - Contract Agreement - Arbitration and Conciliation Act, 1996 - Section 34 - Clause 11.1.1(ii) of GCC, SCC Clause 22; 11.1.1 (a); SCC Clause 23; and Clause 11.1.3(v)
Fact of the Case:
The petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award rejecting the petitioner's claim for reimbursement of Countervailing Duty (CVD) and Special Additional Duty (SAD) imposed on Tunnel Boring Machines (TBMs) imported by the petitioner for a project with DMRC.
Finding of the Court:
The court found that the petitioner's claim for reimbursement of CVD and SAD was not maintainable as the contract did not entitle the petitioner to claim any additional reimbursement for the levy of additional taxes or duties. The court also rejected the petitioner's contention of delay in importing the TBMs, stating that the delay was not attributable to DMRC.
Issues: The issues involved the petitioner's entitlement to reimbursement of CVD and SAD and the alleged delay in importing the TBMs.
Ratio Decidendi: The court held that the contract did not entitle the petitioner to claim any additional reimbursement for the levy of additional taxes or duties. The court also found that the delay in importing the TBMs was not attributable to DMRC.
Final Decision: The petition was dismissed, and the parties were left to bear their own costs.
VIBHU BAKHRU, J.
Introduction
1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter “the Act”) impugning the arbitral award dated 17.11.2017 (hereafter “the impugned award”) passed by the Arbitral Tribunal in the context of the disputes relating to the “Contract Agreement” dated 22.01.2013 (hereafter “the Agreement”). The controversy involved in the present petition relates to the petitioner’s claim for reimbursement of Countervailing Duty (CVD) and Special Additional Duty (SAD)imposed on the Tunnel Boring Machines (TBMs) imported by the petitioner. By the impugned award, the Arbitral Tribunal had rejected the petitioner’s claim for reimbursement of CVD and SAD on the TBMs imported by the petitioner. The Arbitral Tribunal found the petitioner’s contention that there was no restrictive covenant proscribing the petitioner from raising such claim as “not maintainable”. The Arbitral Tribunal held that in terms of Clause 11.1.1(ii) of the General Conditions of Contract (GCC) nothing extra was payable to the petitioner over and above the quoted rates. In addition, the Arbitral Tribunal has also found that the procurement of the TBMs was delayed.
2. Briefly stated, the controversy involved in the present petition arise in the following context:-
2.1 The petitioner is a joint venture entity constituted by Larsen & Toubro Limited (L&T) and Shanghai Urban Construction Group Corporation (SUCGC). The respondent (hereafter “DMRC”) is a Public Sector company incorporated under the Companies Act, 1956.
2.2 DMRC issued a Notice Inviting Tender (NIT) on 04.04.2012 for inviting bids from eligible bidders for execution of the works entailing “Design and Construction of Tunnel from end of underground ramp (near Shankar Vihar Metro Station) to Hauz Khas Metro Station and Underground ramp near Shankar Vihar Metro Station and underground metro stations at Vasant Vihar, Munirka, R. K. Puram, IIT and Hauz Khas on the Janakpuri West-Botanical Garden Corridor of Delhi MRTS Project of Phase-III” (hereafter referred to as “the project”).
2.3 The estimated cost for the project was Rs.1435 cores and the same was to be completed within a period of 42 months.
2.4 In response to the aforesaid NIT, the petitioner submitted its bid. The bid was opened by the DMRC on 01.10.2012 and the petitioner was declared to be the successful bidder. Thereafter, on 01.11.2012, the DMRC issued a Letter of Acceptance (LoA), which also constituted “Notice to Proceed”.
2.5 Thereafter, on 03.01.2013, the petitioner placed a Purchase Order for import of two TBMs (TBM THI-01 and TBM THI-02).
2.6 On 22.01.2013, the parties executed the Agreement for execution of the project at a lumpsum price of Rs.1012,53,04,600/- (Rupees One Thousand and Twelve Crores Fifty Three Lakhs Four Thousand and Six Hundred Only) plus US$ 4,34,59,599.48 (US Dollar Four Crores Thirty Four Lakhs Five Hundred Ninety Nine and Forty Eight Cents).
2.7 One of the TBMs (TBM THI-01) was imported from China and arrived in India by the end of the year 2013. It is stated that at the material time, the import was exempt from levy of CVD.
2.8 By a notification dated 03.02.2014 (notification no.4/2014-Cus.) the exemption from levy of CVD on import of TBMs was withdrawn.
Thus, with effect from 17.02.2014, the import of TBMs and its accessories were subject to levy of CVD at the rate of 10% and SAD at the rate of 4%.
2.9 TBM (THI-02) – the Purchase Order of which was placed on 03.01.2018 – arrived at the Indian Port on 03.03.2014 and, therefore, was subject to levy of CVD and SAD. On 12.03.2014, the petitioner made a payment of Rs.4,91,53,394/- on account of CVD and SAD imposed on import of the said TBM.
2.10 The petitioner made a request for reimbursement of the duties (CVD and SAD) levied on the import of TBM THI-02 on 11.07.2014, which was denied by DMRC on 02.08.2014.
2.11 On 02.02.2015, the petitioner also obtained a clarification from the Economic Advise
