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2019 Supreme(Del) 181

IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J.
Union of India - Petitioner
Versus
Mago Construction Pvt. Ltd. - Respondents
O.M.P. (COMM) 467 of 2018 & IAs 15773, 15775, 15776 of 2018
Decided On : 10-01-2019

Advocates Appeared:
For the Petitioner: Mr. Jaswinder Singh, Mr. Ruchir Mishra, Advs.
For the Respondent:Mr. Rakesh Saini, Adv. along with Mr. Ravi Tej Singh Maggo, Authorized signatory of respondent company

The Arbitrator's interpretation of the Agreement and the maintainability of claims under different conditions of the contract were central to the judgment.

Headnote:

Arbitration - Construction Contract - Arbitral Award - Arbitration and Conciliation Act, 1996 - Section 34 - Contract Agreement No.CEDZ/40 OF 2009-10: Construction of Building for PLI (OPS) at Delhi Cantt - Conditions 7, 9, and 11 of the General Conditions of Contract (GCC) - Interpretation of Agreement - Grant of extensions of time - Compensation for delays - Claim for escalation - Maintainability of claims under different conditions

Fact of the Case:

The petitioner filed a petition challenging the Arbitral Award passed by the Sole Arbitrator adjudicating disputes arising from a construction contract. The Arbitrator awarded claims of the respondent on account of delay in completion of work attributable to the petitioner.

Finding of the Court:

The Court found that the Arbitrator's interpretation of the Agreement, specifically the grant of extensions of time and compensation for delays, was reasonable and not open for interference under Section 34 of the Act. The Court dismissed the petition.

Issues: Interpretation of Conditions 7, 9, and 11 of the GCC - Applicability of different conditions for grant of extensions of time and compensation for delays - Maintainability of claims for escalation under the Agreement

Ratio Decidendi: The Arbitrator's interpretation of the Agreement, including the grant of extensions of time and compensation for delays under Conditions 7 and 9, was found to be reasonable and within jurisdiction. The Court held that the claims for escalation were maintainable under Section 73 of the Indian Contract Act, 1872.

Final Decision: The petition challenging the Arbitral Award was dismissed by the Court.

JUDGMENT :

NAVIN CHAWLA, J.

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Act”) has been filed by the petitioner challenging the Arbitral Award dated 12.05.2018 passed by the Sole Arbitrator adjudicating the disputes that have arisen between the parties in relation to the Contract Agreement No.CEDZ/40 OF 2009-10: Construction of Building for PLI (OPS) at Delhi Cantt.

2. The Arbitrator has carved out the basic facts in relation to the Contract in paragraph 15 of the Award, which is reproduced hereunder:

“15. BRIEF PARTICULARS OF THE CASE.

a. CA No and Name of Work

CEDZ/40 of 2009-10 CONSTRUCTION OF BUILDING FOR PLI (OPS) AT DELHI CANTT. DELHI

b. Date of tender Receipt

20th Nov 2009

c. Date of Acceptance

16th Dec 2009

d. Amount of Contract

: 5,88,99,749.95

e. Date of Commencement

01st Jan 2010

f. Date of Stipulated Completion

31st March 2011

g. First Extension of time

30th Dec 2011, Granted on : 30th Apr 2011

h. Second Extension of time

30th June 2012 (Provisional) Granted on : 19th Mar 2012

i. Third Extension of time

31st Oct 2012 (Provisional) Granted on : 03rd Aug 2012

j. Fourth Extension of time

28th Feb 2013 Granted on : 10th Dec 2012

k. Fifth Extension of time

30th May 2013 Granted on : 21st May 2013

l. Sixth Extension of time

30th Sept 2013 Granted on : 31st Oct 2013

m. Actual date of completion

30th Sept 2013.”

3. The Arbitrator, by the Impugned Award has awarded the claims of the respondent inter alia on account of the delay in completion of the work attributable to the petitioner.

4. Counsel for the petitioner, relying upon Condition 11 of the General Conditions of Contract (GCC), submits that in terms of Condition 11(D) of the GCC, no claim in respect of compensation or otherwise for idle labour and/or idle machinery, etc. and/or business loss or any other loss arising out of extensions of time granted under Condition 11 (A) and/or (B) of the GCC were maintainable. He submits that the extensions of time granted by the petitioner were under Condition 11 (A)(vii) of the GCC and clearly recorded that no claim in respect of compensation or otherwise as a result of this extension shall be admitted. He submits that the respondent never protested against such extensions and therefore, was not entitled to maintain the claim. He submits that the Arbitrator, therefore, could not have granted a claim which is otherwise prohibited under Condition 11(D) of the GCC. For this, he places reliance on the judgments of the Supreme Court in Ramnath International Construction (P) Ltd. vs. Union of India (2007) 2 SCC 453; and Union of India vs. M/s Varindera Constructions Ltd. 2018 (6) SCALE 359.

5. On the other hand, counsel for the respondent submits that the Arbitrator, after appreciating the reasons for the grant of such extension of time, has held such extension of time to be relatable to Conditions 7 and 9 of the GCC and not to Condition 11 (A) or (B) and, therefore, the bar contained in Condition 11 (D) of the GCC would not operate in the facts of the present case. He submits that the Arbitrator having appreciated the facts and interpreted the Agreement, it is not open for this Court to interfere with such findings in exercise of its powers under Section 34 of the Act. He places reliance on the judgment of the Supreme Court in Asian Techs Ltd. vs. Union of India & Ors. 2009 (4) Arb. LR 89 (SC); judgment dated 11.05.2015 passed by this Court in Union of India vs. Ktech Engineers Builders Pvt. Ltd. & Anr. in OMP No.331/2014; Union of India vs. Moti Enterprises & Anr. 2003 (2) Arb. LR 229 (Bombay); and Associate Builders vs. Delhi Development Authority, (2015)


























































































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