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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
M/s National Highways Authority of India - Petitioner
Versus
M/s Afcons Infrastructure Ltd - Respondent
O.M.P. (COMM) 96 of 2016
Decided On : 23-03-2021
Arbitration and Conciliation Act, 1996 - Section 34 – Arbitral Award - Execution of the project - Disagreement on the rate – Fixation of rate by Engineer – Scope of interference by High Court
Finding of the Court:
There is no dispute as to the quantity of WMM work executed by Afcons. The Arbitral Tribunal had noted that Afcons had executed 2,65,229 cum of WMM, which included WMM executed under various Variation Order Nos. 5,6 & 7. In all 54,856 cum had been executed under Variation Order Nos. 5, 6 & 7. The rates in respect of the said quantities had been fixed and were also subject matter of disputes before another Arbitral Tribunal. Therefore, the said quantity was required to be excluded from the total quantity of WMM work executed by Afcons. The Tribunal found that after excluding the said quantity, Afcons had executed a total quantity of 2,46,068 cum of WMM which had exceeded the estimated Contract quantity by 54,856 cum. The increased quantity was more than 25% of the estimated quantity of WMM under the BOQ. There is also no dispute that the contract value of the additional quantity of WMM (BOQ Item No. 3.02) exceeded 5% of the contract value. Thus, undisputedly, Clause 52.2 of COPA was attracted - scope of interference in an Arbitral Award limited and this interpretation cannot by any stretch be held to be patently illegal or in violation of the fundamental policy of Indian law
Result: Appeal dismissed
JUDGMENT :
VTBHU BAKHRU, J.
1. The petitioner (hereinafter ‘NHAI’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the ‘A&C Act’), inter alia., impugning the Arbitral Award dated 30.08.2012 (hereinafter ‘the impugned award’) passed by the Arbitral Tribunal comprising of Mr. S.K. Jain (Presiding Arbitrator), Mr. Amar Singh Chauhan and Mr. P. Sridharan.
2. The impugned award was rendered in respect of disputes that had arisen between the parties in relation to a contract dated 22.05.2001 (hereinafter ‘the agreement’) entered into between the parties for execution of the project involving “Widening to 4-lanes and Rehabilitation of Existing 2 lane Carriageway of Poonamalle-Kanchipuram Road (NH-4), Package 1, from km 13.80 to km 70.20” (hereinafter ‘the Project”)
3. The respondent (hereinafter ‘Afcons’) submitted its bid on 22.02.2001, which was accepted by NHAI vide Letter of Acceptance dated 09.04.2001 and subsequently, an agreement dated 22.05.2001 was executed between the parties.
4. The parties had entered into the agreement for execution of the Project at a contract price of Rs.164,37,67,899/-. The Project was to be executed within a period of thirty months from 02.07.2001 with a completion date of 31.12.2003.
5. Disputes arose between NHAI and Afcons due to a disagreement on the rate of Item No. 3.02, Wet Mix Macadam (WMM) mentioned in the Bill of Quantity (BOQ). The BOQ indicated an estimated quantity of 1,91,212 cum. Afcons had quoted a rate of Rs.545 per cum for execution of WMM and the quoted amount for executing 1,91,212 cum was Rs.10,42,10,540/-. The total bid submitted by Afcons for executing the works was Rs.169,29,67,899/-. However, Afcons also gave a lumpsum rebate of Rs.4,92,00,000/- and revised its bid to Rs.164,37,67,899, which was accepted by NHAI. In view of the above rebate, the unit item of Rs.545 per cum for BOQ Item No. 3.02 - WMM stood reduced to Rs.529.16 per cum and the total amount accepted for executing 1,91,212 cum of the said works amounted to Rs.10,11,81,742. This constituted 6.15% of the Contract value after applying the necessary rebate.
6. Admittedly, the quantity of the said BOQ item No. 3.02 - WMM exceeded the estimated quantity beyond the limits as envisaged under Clause 52.2 of the Conditions of Particular Application (hereinafter ‘COPA’). In the circumstances, Afcons sent a letter dated 08.10.2007 to the Engineer submitting its analysis of the rates for determining a new rate for WMM. Afcons claimed a rate of Rs. 831/- per cum which was based on the Ministry of Road Transport and Highways (MoRTH) norms.
7. The Engineer accepted that there was a change in the quantity that had triggered Clause 52.2 of COPA. However, it did not accept the rate of Rs. 831/- per cum as submitted by Afcons and fixed a price of Rs. 591/-per cum. The same was not acceptable to NHAI. The disputes were escalated and the parties were referred to Arbitration.
8. In terms of Clause 67.1 of COPA, the disputes between NHAI and Afcons were required to be referred to the Engineer. If the decision of the Engineer was not accepted, the disputes were required to be settled by arbitration.
9. In terms of Clause 67.1 of COPA, Afcons sent a letter dated 22.04.2008 and referred the disputes to the Engineer. The Engineer rendered his decision on 15.07.2008 accepting the rate of Rs. 591 per cum for the construction of WMM. Afcons did not accept the said decision and notified its intention to refer the disputes to arbitration. Thereafter, it nominated an Arbitrator. NHAI also nominated an Arbitrator and both the nominated Arbitrators appointed a Presiding Arbitrator.
10. Afcons filed its Statement of Claims, claiming a new rate of Rs. 831 per cum along with price adjustment for the execution of BOQ Item no. 3.02 - WMM. It further claimed that the said rate would be applicable for the entire quantity of WMM executed. Afcons claimed a sum of Rs.8,18,89,761/-, as due on account of executi
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