The court emphasized the importance of justifying demands for price escalation or reduction and upheld the entitlement to incentive for early completion of work.

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 17.10.2014 passed by the Sole Arbitrator adjudicating the disputes that have arisen between the parties in relation to the award of work of upgradation, renovation and new construction for CWG Games 2010 in JLN Stadium sports complex, New Delhi (SH. C/o Sub-Station building I, III, IV and underground water tanks and pump rooms under Agreement No. 03/EE/CWG-D-VII/2008-09) by the petitioner to the respondent.

2. The stipulated date of start of work was 01.02.2009 and the stipulated date of completion was 28.09.2009. The tendered amount was Rs. 7,41,02,300/-. During the course of the execution of the Contract, not only certain additional work was given to the respondent, but also the petitioner added two more Sub-Stations No. II and No. V to the scope of work.

3. Claim No. 1 was for claim of balance amount of Final Bill dated 30.11.2010 submitted by the respondent to the petitioner. The Arbitrator has awarded the said claim in favour of the respondent primarily relying upon the fact that the petitioner had reduced the contractual rates without issuing notice under Clause 12.3 of the Agreement to the respondent.

4. Learned counsel for the petitioner submits that in terms of Clause 12.2 of the Agreement, the respondent is only entitled to the market rate for the deviated items. For determination of such market rates, the petitioner had called upon the respondent to submit invoices and other supporting materials to justify the rates. As the respondent failed to do so, the amount was rightly deducted from the Final Bill raised by the respondent.

5. I find no merit in the objection raised by the petitioner. Clauses 12.2 and 12.3 of the Agreement, have relevance and are reproduced herein-below:

"Deviation, Extra Items and Pricing

12.2 In the case of extra items, the contractor may within fifteen days of receipt of order or occurrence of the items claim rates, supported by proper analysis, for the work and the engineer-in-charge shall within one month of the receipt of the claims supported by analysis, after giving consideration to the analysis of the rates submitted by the contractor, determine the rates on the basis of the market rates and the contractor shall be paid in accordance with the rates so determined.

In the case of substituted items, the rate for the agreement item (to be substituted) and substituted item shall also be determined in the manner as mentioned in the aforesaid para.

Deviation, Substituted Items, Pricing

(a) If the market rate for the substituted item so determined is more than the market rate of the agreement item (to be substituted); the rate payable to the contractor for the substituted item shall be the rate for the agreement item (to be substituted) so increased to the extent of the difference between the market rates of substituted item and the agreement item (to be substituted).

(b) If the market rate for the substituted item so determined is less than the market rate of the agreement item (to be substituted), the rate payable to the contractor for the substituted item shall be the rate for the agreement item (to be substituted) so decreased to the extent of the difference between the market rates of substituted item and the agreement item (to be substituted).

Deviation, Deviated Quantities, Pricing

In the case of contract items, substituted items, contract cum substituted items, which exceed the limits laid down in schedule F, the contractor may within fifteen days of receipt of order or occurrence of the excess, claim revision of the rates, supported by proper analysis for the work in excess of the above mentioned limits, provided that if the rates so claimed are in excess of the rates specified in the schedule of quantities, the Engineer-in-Charge shall within one month of receipt of the claims supported