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2020 Supreme(Del) 681

IN THE HIGH COURT OF DELHI AT NEW DELHI
Jyoti Singh, J.
NTPC Limited - Appellant
Versus
Sri Avantika Contractors (i) Limited - Respondent
Original Miscellaneous Petition (Comm) No. 370 of 2017; Interlocutory Application No. 11989 of 2017, 15164 of 2017, 3984 of 2018, 4012 of 2018
Decided On : 08-06-2020

Advocates Appeared:
Vikas Singh, Advocate, Puneet Taneja, Advocate, Mrityunjai Singh, Advocate, Sachin Datta, Advocate, Pallav Palit, Advocate, Lalitendra Gulani, Advocate, Amit Mahajan, Advocate, Sankalp Brahma, Advocate

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Award challenged regarding Claims awarded to Respondent and rejection of Counter-Claims by Petitioner - The Petitioner awarded works on 27.02.2012 for a project, completion date due on 26.08.2014; contract termination occurred on 24.03.2014. Issues of delays in mobilization and site handover between parties scrutinized, with the Tribunal emphasizing that the Petitioner bore responsibility for delays. The Tribunal's conclusions were found to have contractual legitimacy, particularly concerning the lack of timely site handover and the lawful nature of the contract termination. The Tribunal's decision awarding amounts for completed work and overheads but denying profit loss was framed alongside respective claims being either upheld or revised by the court. (Paras 1, 4, 162-163, 209-210, 294-304).

Findings of Court:
The Tribunal found the Petitioner liable for delays impacting contract performance, determining the extension owed to Respondent to be approximately 13.5 months.

Issues: primary questions included the context of delays, the contract's termination legality, and the justifications for claims versus counterclaims.

Ratio Decidendi: Tribunal ruled that time was not of the essence based on contract clauses allowing for scheduled extensions, and upheld the Claimant's right to compensation for work done despite termination.

Result: Tribunal's award partially upheld but loss of profit claim was set aside.

Table of Content
1. background of the arbitration contract and disputes. (Para 1 , 2 , 3 , 4 , 5)
2. parties’ arguments regarding responsibility for delays. (Para 6 , 7 , 8 , 9 , 10 , 11)
3. analysis and interpretation of contract clauses. (Para 12 , 13)
4. legal conclusions on the unlawful termination of the contract. (Para 14 , 15)
5. final judgment on claims including overheads and profit. (Para 16 , 17 , 18 , 19 , 20)

JUDGMENT

Jyoti Singh, J. - Present petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") challenging the Award dated 07.07.2017 passed by the Arbitral Tribunal to the extent it has allowed some of the Claims of the Respondent and has rejected the Counter-Claims of the Petitioner herein. Respondent herein was the Claimant before the Arbitrator and the Petitioner was the Respondent.

2. It is the case of the Petitioner that vide letter dated 27.02.2012, NTPC awarded the work of "Site Leveling and Infrastructure Works Package'' for its Kudgi Super Thermal Power Project Stage-I (3x800 MW), Karnataka to the Respondent. Contract Agreement was executed on 02.04.2012 with the value of the work being Rs. 1,54,34,54,426/-. The scheduled period for completion was 30 months with the start date as 27.02.2012 and completion date 26.08.2014.

3. Respondent agreed that it shall provide adequate manpower and equipment at the site and would carry out mobilization of resources within one month of the Letter of Award i.e., by the end of March, 2012. Thereafter, the work of site clearance and leveling in the main plant area was to be started. The reciprocal obligation of the Petitioner to handover the land for construction work was to start after expiry of 30 days from the date of Letter of Award as per Clause 6.0.0 of the Agreement.

4. Respondent committed breach in failing to mobilize its resources within one month and deployed only one official, while the Petitioner handed over approx. 175 acres of land in respect of Block Nos. 1 & 2 and progressively handed over land from April, 2012 onwards which was recorded in the Joint Survey records.

5. Scope of civil work to be executed by the Respondent, included site leveling for the plant; construction of phase roads and drains in plant area; sewerage in plant area; diversion of existing drains; raw water reservoirs; plant boundary wall; watch towers and approach road from State Highway. Subsequently, two Amendments were carried out and the scope of work increased and consequently, the value of work. Petitioner extended the original time period by a further six months i.e., till February, 2015. On 24.03.2014, Petitioner terminated the Contract.

6. Disputes having arisen between the parties, the same were referred to Dispute Resolution Board (DRB), but the decision was not acceptable to both the parties. Respondent, therefore, invoked the Arbitration Agreement on 30.11.2015 and the Arbitral Tribunal, entered upon reference on 23.01.2016. Respondent filed its Statement of Claim raising 36 claims, while the Petitioner filed its Statement of Defence and also raised 16 counterclaims. Respective claims and counter claims are as under:-

    "(A) Claims by the Claimant:

    Description of Claims

    Amount in Rs.

    Claim-1: Termination of contract with risk and costs is illegal and arbitrary.

    Claim-2: Refund of Performance Bank Guarantee amount illegally encashed by the Respondent.

    3,08,69,089

    Claim-3: Refund of Mobilisation Advance Bank Guarantee amount illegally encashed by the Respondent.

    4,50,00,000

    Claim-4: Refund of retention money withheld at 10% of the gross RA bills

    5,94,98,878

    Claim-5: Refund of Mobilisation Advance recovered from RA Bill

    1,08,74,198

    Claim-6: Payment of total work done bills

    57,01,01,

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