Point of Law: Arbitration - Application for setting aside of arbitral Award - Award of interest at rate of 18% per annum from date of award is not in consonance with observations made by Arbitral Tribunal, which recognized that interest rate had fallen considerably during second decade of this century.

JUDGMENT :

VIBHU BAKHRU, J

1. National Projects Construction Corporation Limited (hereinafter ‘NPCC’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the ‘A&C Act’) impugning an arbitral award dated 28.10.2020 (hereafter ‘the impugned award’) rendered by the Arbitral Tribunal comprising of Justice (Retired) R.C. Jain, as the Sole Arbitrator.

2. The impugned award was rendered in the context of disputes that had arisen between the parties in connection with the two separate Work Orders: (i) Work Order No. 917344/838 dated 19.06.1984 in respect of the work “excavation of foundation package work-II 3 x 500 MW of National Thermal Power Corporation Limited, Ramagundam Super Thermal Power Project, Ramagundam”; and (ii) Work Order No. 917344/2382 in respect of “Foundation package work etc. Ramagundam”. NPCC was engaged by National Power Thermal Corporation (NTPC) for execution of certain works. NPCC, in turn, had entered into the contract with the respondent for completion of the said works in terms of the aforementioned Work Orders. The works contracted to the respondent in terms of the Work Orders was completed in the year 1987. NPCC paid the respondent for the work done after withholding certain sums on account of recoveries. The respondent disputed the said recoveries. In addition, the respondent also raised certain claims but they were not accepted by NPCC. It was stated that recommendations were made by certain officers of NPCC in respect of certain claims made by the respondent. However, NPCC asserts that the said recommendations were not accepted by its superior officers.

3. The respondent invoked the Arbitration Clause by a notice dated 17.05.1993. However, NPCC did not take immediate steps for the appointment of an arbitrator. Finally, by a communication dated 07.10.1997, the then Chairman and Managing Director of NPCC appointed Sh. Shivo Moy Ghosh, Additional General Manager, NPCC as a Sole Arbitrator to adjudicate the subject disputes. Thereafter, on 20.01.1998, the respondent filed its Statement of Claims before the learned Arbitrator claiming an aggregate amount of Rs.4,46,29,404/- along with pendente lite and future interest at the rate of 24% per annum. The disputes remained pending with the learned Arbitrator for a considerable period of time. The averments made in the petition indicate that certain directions had been passed by the learned Arbitrator. The respondent being aggrieved by the said directions, had filed a petition under Section 14 of the A&C Act (being OMP 214/2002), inter alia, praying that the mandate of the learned Arbitrator be terminated and an independent arbitrator be appointed in his place.

4. By an order dated 11.10.2004, this Court terminated the mandate of Sh. Shiva Moy Ghosh and appointed Sh. A.S. Chandhiok, Senior Advocate as the Sole Arbitrator. NPCC challenged the said order before the Division Bench of this Court [FAO (OS) 241/2004]. The said appeal was disposed of by an order dated 02.02.2005 and the Division Bench of this Court, appointed Sh. L.R. Gupta, former Director General of CPWD as the Sole Arbitrator in place of Sh. A.S. Chandhiok.

5. Shri L.R. Gupta, entered upon reference on 26.01.2006. At that stage, NPCC filed its reply to the Statement of Claims before the Arbitral Tribunal. NPCC also moved an application dated 23.02.2007 seeking to challenge the authority of Sh. Jagdish Raj Yadav to file the Statement of Claims on behalf of the respondent. The learned Arbitrator dismissed the said application by an order dated 03.08.2007. NPCC challenged the said order by filing a petition under Section 34 of the A&C Act (being OMP No. 537/2007). While the said petition was pending, Sh. L.R. Gupta resigned as the Arbitrator on 23.06.2008. It is stated in the petition that he expired in the year 2013.

6. The petition filed by NPCC – OM