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2020 Supreme(Del) 711
IN THE HIGH COURT OF DELHI AT NEW DELHI
Jyoti Singh, J.
National Highways Authority Of India - Appellant
Versus
Hindustan Construction Co. Ltd. - Respondent
Original Miscellaneous Petition (Comm) No. 101 of 2016
Decided On : 27-05-2020
Saumya Priyadarshinee, Advocate, Shreya Sethi, Advocate, Dayan Krishnan, Advocate, Rishi Agrawala, Advocate, Sukrit Seth, Advocate, Aakashi Lodha, Advocate, Ankit Banati, Advocate, Shruti Arora, Advocate
Headnote:
Arbitral Award - Challenge - Public Policy of India - Contractual Provisions - Interpretation - Scope of Judicial Review - Extension of Time - Bonus for Early Completion.
Fact of the Case:
Petitioner, a Statutory body constituted under Section 3 of NHAI Act, 1988, entered into a Contract with Respondent for execution of work of "4-laning from km 135.00 to Km 164.00 of Ayodhya to Gorakhpur Section of NH-28 in UP-Contract Pkg. LMNHP EW-ii (WB-4)". Disputes arose between the parties and Respondent filed Statement of Claim raising 5 Claims. Arbitral Tribunal allowed all the Claims. Petitioner challenged the Award.
Finding of the Court:
1. Interpretation of Contractual Clauses is the domain of Arbitrator and interference is not permissible unless it is found that there exists any bar on the face of the award. 2. Method of measurement for the fly ash embankment was to be as per Clause 305.8 of MoRT&H Specifications which meant that the embankment with soil under Item No. 2.02 and the embankment with fly ash under Item No. 2.08 were to be measured in the same manner. 3. Tribunal has given a reasonable and plausible interpretation to the Clauses and the same calls for no interference by the Court. 4. Engineer cannot decrease the determined EOT during the Final Review. 5. Tribunal has rightly interpreted the various Clauses of the Contract under the present Claim. Clause 44.3 of CoPA can be only read to mean that no final review by the Engineer can result in decrease of any Extension of Time, already granted.
Issues: 1. Whether the Impugned Award is against the Public Policy of India and in contravention of the provisions of the Contract governing the parties and is thus liable to be set aside? 2. Whether the Tribunal has erred in rendering a finding that the method of measurement for the fly ash embankment was to be as per Clause 305.8 of MoRT&H Specifications which meant that the embankment with soil under Item No. 2.02 and the embankment with fly ash under Item No. 2.08 were to be measured in the same manner? 3. Whether the Tribunal has erred in distinguishing the judgment of this Court in NHAI v. HCC (supra) dated 08.11.2012, relied upon by the Petitioner to argue that the cross sections of fly ash embankment have to be measured and paid separately for soil and fly ash portions? 4. Whether the Tribunal has erred in holding that the Engineer is not contractually authorized to decrease the determined interim EOT during the final review/determination? 5. Whether the Tribunal has erred in holding that the pre-conditions for payment of Bonus were met by the Respondent and allowed the Claim of Rs. 16.48 crores in favour of the Respondent?
Ratio Decidendi: 1. Interpretation of the Contract and its terms is the domain of the Arbitrator. 2. Scope of interference in an Arbitral Award by the Court under Section 34 of the Act is extremely narrow. 3. An application under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit. 4. If there are two possible interpretations of the terms of the contract, the arbitrator's interpretation has to be accepted and the court under Section 34 cannot substitute its opinion over the arbitrator's view.
Final Decision: Petition dismissed.
JUDGMENT
Jyoti Singh, J. - By way of the present petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act"), Petitioner assails the Arbitral Award dated 30.05.2015 whereby the Arbitral Tribunal has allowed all the Claims of the Respondent herein, being Claim Nos. 1 to 5. Respondent herein was the Claimant before the Tribunal and the Petitioner herein was the Respondent.
2. The facts which need narration to decide the present petition are that the Petitioner is a Statutory body constituted under Section 3 of NHAI Act, 1988 and the functions assigned to the Petitioner under Section 16 of the 1988 Act, amongst others, are to develop, maintain and manage the National Highways entrusted to it by the Central Government. Respondent is a Limited Company.
3. Petitioner and the Respondent entered into a Contract on 21.10.2005 (hereinafter referred to as the "Contract") for a Contract Price of Rs. 2,55,20,86,851/- for executing the work of "4-laning from km 135.00 to Km 164.00 of Ayodhya to Gorakhpur Section of NH-28 in UP-Contract Pkg. LMNHP EW-ii (WB-4)". The accepted amount of the Bid for the said work in consideration of the execution, completion and maintenance of the works by Contractor/Respondent as prescribed by the Contract and in the conditions of Contract called the Contract Price was Rs. 2,55,20,86,851/-, excluding provisional sum. The duration of the Contract for completion of the work was 36 months from the date of Notice to Proceed.
4. During the currency of the Contract the following disputes arose between the parties:-
"Claim No.1: Payment for the construction of embankment with fly ash as per additional technical specification Clause A-8 (Item No.2.08 of BOQ).
Claim No.2: Approval of the revised rate for the increased quantum of reinforcement complying with Clause 52.2 of conditions of particular applications.
Claim No.3: Withholding of part of payment due towards price adjustment on foreign currency portion from interim payment certificate.
Claim No.4: Reimbursement of additional cost incurred by the contractor on account of implementation of the provisions of Cess Act by levying cess @ 1% of the project cost in the State of UP w.e.f. 04.02.2009 - Subsequent Legislation.
Claim No.5: Reduction in determined Extension of Time for completion of whole of the works in contravention to Clause 44.3 of Conditions of Contract and non admission of the Contractor''s entitlement to Bonus for early completion."
5. In terms of Clause 67 of the Contract, the disputes were referred to the Dispute Review Board (hereinafter referred to as "DRB") for its recommendation. The DRB gave its recommendations on Dispute Nos.1, 2, 3 & 4, but did not give any recommendation with respect to Dispute No. 5. Respondent being dissatisfied with the decision of the DRB qua dispute Nos. 2 & 3 and the Petitioner being dissatisfied with respect to the decision on Dispute Nos. 1, 2 & 4 notified their intention to commence Arbitration. Finally, the Arbitral Tribunal was constituted and it entered upon reference on 07.01.2013 with respect to all the above mentioned disputes.
6. Respondent filed Statement of Claim raising the following Claims:-
| Dispute No. | Description | Amount claimed in SOC |
| 1. | Payment for the construction of embankment with fly ash as per additional technical specification Clause A-8 (Item No.2.08 of BOQ) | Rs.6,75,47,806/- and Euro 1,39,278/- |
| 2. | Approval of the revised rate for the increased quantum of reinforcement complying with Clause 52.2 of conditions of particular applications. | Rs.12,63,79,011/- and Interest @ 12% compounded monthly. |
| 3. | Withholding of part of payment due towards price adjustment on for | |
