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IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J.
Mapex Infrastructure Pvt. Ltd. - Petitioner
Versus
National Highways Authority of India - Respondent
OMP 384, 391 of 2015
Decided On : 08-01-2018
Arbitration and Conciliation Act - Challenge to Arbitral Award - Sections 34, 73 of the Contract Act - MAPEX Infrastructure Pvt. Ltd. v. National Highways Authority of India - Section 34 of the Arbitration and Conciliation Act, 1996 - Summary of Acts and Sections: Arbitration and Conciliation Act, 1996 - Section 34, Section 73 of the Contract Act - The judgment discusses the challenge to an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, and the application of Section 73 of the Contract Act in relation to claims raised by MAPEX Infrastructure Pvt. Ltd. against the National Highways Authority of India. The court analyzed the provisions of the Concession Agreement, the role of the Independent Engineer, and the entitlement of MAPEX to claim damages for delay and additional costs arising from change in law. The judgment also addressed the grant of interest on the awarded amounts and the challenge raised by NHAI. The court dismissed the petitions, finding no merit in the challenges raised.
Fact of the Case:
The disputes between the parties arose in relation to a contract for Four Laning including Strengthening of Existing Two Lane Pavement of National Highway No.2 from Panagarh to Palsit Section in the State of West Bengal. MAPEX Infrastructure Pvt. Ltd. (MAPEX) alleged various defaults on the part of NHAI and raised claims, leading to the constitution of an Arbitral Tribunal. The majority of the delays were attributed to NHAI, and the Independent Engineer verified the claims raised by MAPEX. NHAI challenged the award, disputing the grant of claims and interest by the Arbitral Tribunal.
Finding of the Court:
The court found no merit in the challenges raised by MAPEX and NHAI. It held that the delay attributable to NHAI entitled MAPEX to claim damages under Section 73 of the Contract Act. The court also upheld the grant of interest on the awarded amounts. The challenges to the grant of claims and interest were dismissed, and the petitions were dismissed with no order as to costs.
Issues: The main issues revolved around the entitlement of MAPEX to claim damages for delay and additional costs, the role of the Independent Engineer in verifying the claims, and the grant of interest on the awarded amounts. NHAI challenged the grant of claims and interest by disputing the basis and quantum of the claims and interest awarded by the Arbitral Tribunal.
Ratio Decidendi: The court held that the delay attributable to NHAI entitled MAPEX to claim damages under Section 73 of the Contract Act. It also upheld the grant of interest on the awarded amounts, finding no merit in the challenges raised by MAPEX and NHAI. The court dismissed the petitions, with no order as to costs.
Final Decision: The court dismissed the petitions, finding no merit in the challenges raised by MAPEX and NHAI. It upheld the grant of claims and interest by the Arbitral Tribunal, and no order as to costs was made.
1. The above petitions have been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) challenging the award dated 17th March, 2015 passed by the Arbitral Tribunal consisting of three Arbitrators.
2. MAPEX Infrastructure Pvt. Ltd. will be referred to as ‘MAPEX’ while National Highways Authority of India will be referred to as ‘NHAI’ in the present judgment.
3. The disputes between the parties are in relation to the contract for Four Laning including Strengthening of Existing Two Lane Pavement of National Highway No.2 from Panagarh (Km 517) to Palsit (Km 581.457) Section in the State of West Bengal which was awarded by the NHAI vide Letter of Acceptance No. NHAI/12018/3/2000/GM(E-III) Tech dated 26 September 2001 issued to the Consortium of M/s Gamuda-WCT Joint Venture.
4. MAPEX was incorporated as a Special Purpose Vehicle to implement the project and accordingly, a Concession Agreement was entered into between NHAI and MAPEX on 21st November, 2001.
5. The project was awarded on Build, Operate and Transfer (BOT) basis on annuity approach and the concession was granted for a period of 17 years and 6 months commencing from Commencement Date specified as 21st June, 2002 and ending on 20th December, 2019 (The Concession Period).
6. The Concessionaire was required to commence the construction works on or after the Commencement Date i.e. 21st June, 2002 and achieve the Commercial Operation Date (COD) on or before the Scheduled Project Completion Date (SPCD) specified as 20th December, 2004. The project was completed, as certified by the Independent Engineer (hereinafter referred as ‘IE’) appointed by NHAI in accordance with Article 4 of the agreement, achieving COD on 9th June, 2005, 171 days after the SPCD.
7. MAPEX, alleging various defaults on part of NHAI, raised claims on NHAI vide its letter dated 28th December, 2006. The Project Director of NHAI by a letter dated 3rd January, 2007 requested the IE to submit his detailed observations on the said claims, which were duly submitted by the IE vide its letter dated 8th June, 2007.
8. As no action was taken by NHAI on the said recommendations, the Arbitral Tribunal was constituted to adjudicate the claims of MAPEX, which resulted in the impugned award dated 17th March, 2015.
9. A bird’s eye view of the award and the challenge thereto can be gathered from the table given below:-
Cl. No.
Particulars: Claims of the concessionaire/MAPEX Infrastructure Pvt Ltd
Amounts Awarded by majority Arbitrators
Amounts Awarded by the minority Arbitrator
Objections to the Award filed by NHAI ( OMP No. 391 of 2015)
Objections to the Award filed by Concessionaire/ (OMP No. 391 of 2015)
1.
Bonus for Early Completion: Rs. 403,916,667/-
Nil
Nii
Not challenged
Not challenged
2.
EPC Contractor’s Time-related (Prolongation) Cost: Rs. 379,281,932/-
Nil
Rs. 19,52,35,431/-
Not challenged
challenged
3.
Concessionaire’s Time- related (Prolongation) Costs: Rs. 84,698,894/-
Rs. 4,79,54,645/-
Unanimous Award
challenged
Not challenged
4.
Delay & Disruption Costs: Rs. 214,542,785/-
Nil
Nil
Not challenged
Not challenged
5.
Mitigation Costs for Late Delivery of Shaktigarh Bypass: Rs. 122,634,977/-
Nil
Nil
Not challenged
Not challenged
6.
Additional Cost arising from Change in Law: Rs. 211,378,926/-, revised calculation Rs. 215,326,348/-
Rs. 4,81,06,147/-
Rs. 21,13,78,926/-
Challenged to the amount awarded by majority Arbitrators
Partly challenged to the amount not considered by majority Arbitrators for its EPC Contractor viz-a-viz to amount awarded by the minority Arbitrator.
7.
Financing Cost: Rs. 305,954,444/- revised calculation Rs. 722,371,218/- as updated to 9.11.2008
Interest @ 12
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