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2018 Supreme(Del) 1317
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
NATIONAL HIGHWAYS AUTHORITY OF INDIA - Petitioner
Versus
PATEL – KNR (JV) - Respondent
O.M.P. (COMM) 201 of 2018 & IA No. 6331 of 2018
Decided On : 14-05-2018
For the Petitioner: Ms. Pinky Anand, ASG with Dr. Maurya Vinay Chandra, Mr. Sumit Tekriwal and Ms. Manisha Samanta.
For the Respondent: Dr. Amit George, Mr. Rishabh Dheer and Mr. Swaroop George.
The main legal point established in the judgment is the court's authority to review and uphold arbitral awards based on the evidence and submissions provided by the parties during the arbitration proceedings.
Headnote:
NHAI - Arbitration and Conciliation Act, 1996 - Section 34 - 4, 8, 9, 12, 14 - The court discussed the claims awarded in favor of Patel, including the release of payments against certification of the Engineer, idling of plant and machinery, overhead expenses during the extended period of the contract, escalation for mild steel, and interest. The court upheld the award for the balance amount due against Final Statement-I certified by the Engineer, the award for idling of plant and machinery, the award for escalation for mild steel, and the levy of pre-award interest at the rate of 12% per annum.
Fact of the Case:
NHAI filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, contesting the arbitral award rendered in the context of disputes that had arisen between NHAI and Patel with respect to a Contract Agreement dated 17.10.2001 for the widening and rehabilitation of National Highway-46. The Arbitral Tribunal awarded an aggregate sum of Rs.24,49,55,742/- in favor of Patel, comprising of various claims including balance payment, painting of antiglare coating, idling of plant and machinery, overhead expenses, escalation for mild steel, and interest.
Finding of the Court:
The court analyzed the claims awarded in favor of Patel and upheld the award for the balance amount due against Final Statement-I certified by the Engineer, the award for idling of plant and machinery, the award for escalation for mild steel, and the levy of pre-award interest at the rate of 12% per annum.
Issues: The issues included the release of payments against certification of the Engineer, idling of plant and machinery, overhead expenses during the extended period of the contract, escalation for mild steel, and interest.
Ratio Decidendi: The court's decision was influenced by the provisions of the Contract Agreement, General Conditions of Contract, and Special Conditions of Contract, as well as the evidence and submissions provided by both parties during the arbitration proceedings.
Final Decision: The petition filed by NHAI was dismissed, and the pending application was disposed of.
VIBHU BAKHRU, J.
1. The petitioner (NHAI) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act'), inter alia, impugning the arbitral award dated 27.12.2017 (hereafter 'the impugned award') to the extent that the respondent's claims have been sustained (except an award of Rs. 5,05,465/- made against a claim of painting of antiglare and pedestrian guard railing).
2. The impugned award was rendered in the context of disputes that had arisen between the parties with respect to the 'Contract Agreement' dated 17.10.2001 (hereafter 'the Agreement') and was delivered by the Arbitral Tribunal comprising of three arbitrators, namely, Sh. S.C. Sharma (Presiding), Sh. M.K. Aggarwal and Sh. P.V. Rama Raju (hereafter 'the Arbitral Tribunal').
3. The Arbitral Tribunal has awarded an aggregate sum of Rs.24,49,55,742/- in favour of the respondent (hereafter 'Patel'). The said amount comprises of (i) Rs.4,98,54,212/- on account of the balance payment due as per the certification of the Engineer (Claim No.1); (ii) Rs.5,05,465/- on account of payment due for painting of antiglare coating on pedestrian guard railing (Claim No.3); (iii) Rs.4,11,45,930/- for payment on account of the idling of plant and machinery (Claim No.8); (iv) Rs.1,57,59,300/- on account of overhead expenses during the extended period of the contract (Claim No.9); (v) Rs.92,25,364/- as escalation for mild steel (Claim No.12); and (vi) Rs.12,84,65,471/- as interest for the period 18.10.2008 to the date of the award computed at the rate of 12% per annum and future interest at the rate of 10% per annum (Claim No. 14). NHAI has contested the awards made against each claim other than the award of Rs.5,05,465/- against Claim No.3.
4. Briefly stated, the relevant facts necessary to address the controversy are as under :-
4.1 NHAI is a statutory body constituted under Section 3 of the National Highways Authority of India Act, 1988. Patel is a Joint Venture formed between M/s Patel Engineering Ltd and M/s KNR Constructions Ltd by Joint Venture Agreement dated 12.06.2001.
4.2 On 17.10.2001, NHAI invited bids for the work of widening to four lanes and rehabilitation of existing two lane carriageway of Krishnagiri – Vaniyambadi Section of National Highway-46 (NH-46) from km 0.00 to km 49.00 (hereafter 'the works').
4.3 On 18.06.2001, Patel submitted its bids pursuant to the aforesaid invitation. Thereafter, on 20.09.2001, NHAI awarded the contract and issued a Letter of Acceptance (LOA) accepting the bid at the contract price of Rs.163,49,53,505/- (after deducting a rebate of 16.70% offered by the respondent).
4.4 On 17.10.2001, NHAI and Patel entered into a Contract Agreement ('the Agreement') for execution of the works. The period stipulated for completion of the works was thirty months from commencement of the works – that is, thirty months from 21.11.2001 – and the works were to be completed by 20.05.2004.
4.5 The execution of the works was delayed and was finally completed by 31.03.2005. In the meantime, NHAI extended the time for completion of the works till 31.03.2005 pursuant to a letter dated 30.03.2004 sent by Patel. Thereafter, on 24.06.2005, the Engineer issued the 'Taking-Over Certificate'.
4.6 On completion of the works, Patel – by a letter dated 23.06.2008 – submitted its final statement for an amount of Rs.185,60,78,542/-.
4.7 On 21.06.2008 and 23.06.2008, meetings were held and the Engineer certified the final statement in two parts: Final Statement I for an amount of Rs. 6,01,08,801/- for all the works by letter dated 10.07.2008 and Final Statement II for an amount of Rs. 41,82,67,054/- which contained disputed items. On 23.07.2008, the said disputed items were referred to the Engineer in terms of Clause 67.1 of GCC and by letter dated 17.10.2008, the claims against the said items were rejected.
4.8 On 18.10
