The judgment emphasizes the limited grounds for interference in arbitral awards and the importance of upholding contractual provisions and AT's decisions.

SANJEEV NARULA, J.

1. National Highways Authority of India (hereinafter referred to as “NHAI”) has filed the present petition under Section 34 of the Arbitration and Conciliation Act (hereinafter referred to as ‘the Act), assailing the award dated 22nd November 2018 passed by the Arbitral Tribunal comprising of three Arbitrators (hereinafter referred to as ‘the AT’).

2. The impugned award has been rendered in respect of the disputes raised between Gayatri-ECI (Joint Venture) (hereinafter referred to as GEJV, a Joint Venture association between M/s Gayatri Projects Limited and Engineering and Construction Limited Company (ECI)) in relation to Contract Agreement dated 7th April 2006 (hereinafter referred to as “the Agreement”) for the works of four-laning of National Highway from Km 40.000 to Km 60.00 of Maibong to Lumding Section of NH-54 in Assam. Contract No: EW-II (AS-27) on the East West Corridor under Phase-II programme of NHDP. (hereinafter “the works”).

BRIEF FACTS

3. Nhai invited tenders for the works and GEJV participated in the tender process and its bid was accepted by the Respondent. Petitioner issued the Letter of Acceptance dated 31st January 2006 and in pursuance thereto the Agreement was executed between the parties.

4. The Agreement stipulated a Contract term of 30 months. Date of commencement was notified as 15th October 2006 and the scheduled date of completion was fixed as 14th April 2009. Disputes arose between the parties, inter alia relating to: a) Reimbursement of enhanced Value Added Tax (hereinafter referred to as VAT) under Sub-Clause 70.6 of Conditions of Particular Application (hereinafter referred to as ‘COPA’) of the Agreement on account of increase in the rate of Value Added Tax. [The rate of VAT under the Composition Scheme- Assam VAT Act in the State of Assam was increased from 4% to 5% by virtue of Assam Gazette Notification (hereinafter ‘the Notification’) dated 31.03.2012]; and b) Price Adjustments on components such as Cements, Steel, Plant and Machinery and other materials based on indices as per new series 2004-05 = 100 published by Government of India.

5. Gejv referred the claims to Dispute Resolution Board (DRB) in accordance with procedures prescribed under Clause 63.7 of the Agreement. After considering the pleadings, documents and submissions, DRB gave its recommendations on 9th June 2014. It recommended claims for reimbursement of enhanced VAT in favour of the Petitioner. However, as regards the claim for price adjustment, the recommendations of the DRB were against the Petitioner. Petitioner communicated its dissatisfaction against the recommendations on the claim for price adjustments and likewise Respondent expressed dissatisfaction vis-a-vis the claim for reimbursement of enhanced VAT. Both parties invoked Arbitration Clause 67 of the Agreement with intention to refer the disputes to Arbitration.

6. Gejv submitted the following claims before the AT :-

Claim No.1: Claim for Reimbursement of enhanced VAT under Subsequent Legislation Clause No. 70.6 of the Agreement: Rs.2,86,58,050/- [Rs 1,94,65,294/-(Principle)+ Rs 91,92,756 (Interest)] along with interest @ 18% p.a. from date of recovery till the actual date of payment; declaration for reimbursement of additional 1 % of gross bill amount deducted towards VAT from future bills.

Claim No.2: Claim for price adjustment on components such as Cement, Steel, Plant and Machinery and Other Materials using the indices as per new series 2004-05=100 published by Govt. of India. Rs.4,56,07,893/- [Rs 1,96,88,103 (Principle) + Rs 2,59,19,789/- (Interest)] for the period from October, 2006 to September, 2010 and Rs. 12,45,24,96/- [Rs.7,87,39,536/- (Principle) + Rs 4,57,85,4331-(Interest)]for the period from October, 2010 till date with interest @ 18% from due date of payment till date of payment.

7. After examining the relevant facts and circumstances and considering the contentions raised by the parties, the AT allowed both the claims as under