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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
M/s SPML INFRA Limited – Petitioner
Versus
NTPC Limited and Another – Respondents
O.M.P. (COMM) No. 318 of 2020, I.A. No. 16126 of 2021
Decided On : 16-12-2021
Arbitration and Conciliation Act, 1996 - Section 34 - General Conditions of Contract - Infrastructure company - Contract - Tenders - Arbitral award - Whether impugned award is vitiated by patent illegality inasmuch as, the Arbitral Tribunal has found SIL’s Claims to be non-arbitrable - Arbitral Tribunal had struck in issue whether Claims are non-arbitrable - NTPC had contended that the said claims had not been raised before it and therefore, it had never refuted same - SIL claims that it is a leading infrastructure company and has executed several projects - Respondent (NTPC) is a Government of India enterprise and is, inter-alia, engaged in activity of generating electricity and managing sale. NTPC had issued a Notice Inviting Tenders (NIT) for inviting bids for work of Construction of the Main Plant Civil Works Package for Korba Super Thermal Power Project, Stage III (I x 500 MW) [‘Project’].
Finding of the Court:
Arbitral Tribunal held that “no proper and specific claim as required by law” had been made and denied and therefore “no arbitrable dispute had arisen between the parties in regard to claim No. 3 before the said claim was set up in these arbitration proceedings.” Accordingly, Arbitral Tribunal held that the said claim was not arbitrable. Similarly, in regard to Claim no. 3A, Arbitral Tribunal found that SIL had not put forward any claim in respect of bank charges for keeping the Bank Guarantee alive during the extended period and therefore, said dispute was not arbitrable - Findings of Arbitral Tribunal that the work of dewatering was covered within the scope of works under Contract and therefore, no additional amount was payable to SIL, cannot be faulted - Said decision is founded on the contractual provisions, which are unambiguous. In any view, said decision cannot be stated to be patently illegal and SIL’s contention that impugned award is vitiated by patent illegality, is without any merit. It is, accordingly, rejected - Impugned award, to the extent that the Arbitral Tribunal had rejected SIL’s Claim nos. 3, 3A and Claim no. 7 (for interest) is set aside. The impugned award to the extent that it holds that NTPC would be entitled to recover 50% mark up on the excessive use of steel is also set aside.
Result: Petition disposed of.
JUDGMENT :
VIBHU BAKHRU, J.
1. The petitioner (hereafter ‘SIL’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 impugning an arbitral award dated 02.03.2014 (hereafter the ‘impugned award’) delivered by the Arbitral Tribunal comprising of Justice (Retired) M.C. Agarwal as the Sole Arbitrator (hereafter the ‘Arbitral Tribunal’).
2. SIL claims that it is a leading infrastructure company and has executed several projects. The respondent (hereafter ‘NTPC’) is a Government of India enterprise and is, inter-alia, engaged in the activity of generating electricity and managing the sale. NTPC had issued a Notice Inviting Tenders (NIT) on 02.05.2006 for inviting bids for the work of ‘Construction of the Main Plant Civil Works Package for Korba Super Thermal Power Project, Stage III (I x 500 MW)’ (hereafter the ‘Project’).
3. On 12.06.2006, SIL submitted its bid pursuant to the aforesaid NIT. The same was found to be the lowest and after negotiation, NTPC issued a Letter of Award (hereafter ‘LOA’) dated 08.09.2006 whereby, the aforesaid contract was awarded to SIL. Thereafter, the parties entered into a contract bearing no. CS-2140-322-9-CS-COA-4740, in respect of the aforesaid Project on 28.02.2007 (hereafter ‘the Contract’).
4. The works were to be completed within a period of thirty-seven months from the date of the LOA (that is, on or before 07.10.2009). The value of the Contract was agreed at Rs. 67,59,66,972/- which was amended to Rs. 76,92,73,538.78/- (up to Amendment No. 6). SIL claimed that it had mobilised its resources immediately after issuance of the LOA. However, it claims that execution of the works was delayed on account of several reasons (hindrances) attributable to NTPC. SIL claimed that it had incurred huge losses on account of failure on the part of NTPC to perform its obligations under the Contract. It claimed that some of the delays were also occasioned on account of repeated change in the methodology of execution of the works as demanded by NTPC. SIL claimed that NTPC had issued the NIT, without the necessary ground work and without being fully ready for the execution of a contract of such nature.
5. In view of the above, SIL raised certain claims, which were denied by NTPC.
6. The LOA was amended on several occasions. The last amendment, prior to reference, being the sixth amendment was made on 01.09.2010.
7. In terms of Clause 10 of the Contract, it was open for the parties to seek recourse to arbitration in terms of Clause 56 and 57 of the General Conditions of Contract (hereafter ‘GCC’) as applicable to the Contract. In view of the disputes between the parties, SIL invoked the Arbitration Clause (Clause 56 of the GCC) by a notice dated 11.06.2010. Pursuant to the said request, the Arbitral Tribunal was constituted and the Sole Arbitrator was appointed to adjudicate the disputes between the parties.
8. On 10.11.2010, SIL filed its Statement of Claims before the Arbitral Tribunal claiming an aggregate amount of Rs. 44,52,90,985/- in addition to interest and costs. The summary of SIL’s claims is set out below:
| Claim No. 1 | Claim on account of extra works executed at the site amounting to Rs. 5,56,78,755/-. |
| (A) Additional expenses incurred for carrying continuous dewatering with specialized techniques Rs. 2,49,82,825.00 | |
| (B) Additional quantity of excavation carried out at site in excess of quantities mentioned in the drawings Rs. 58,40,443.70 | |
| (C) Additional expenses incurred for mobilizing additional piling rigs Rs. 56,87,925.00 | |
| (D) Extra work of breaking of underground RCC drain amounting to Rs. 2,23,20,543.00 | |
| Claim No. 2 | Claim on account of amounts withheld from various bills submitted by the petitioner amounting to Rs. 68,16,458/- |
| Claim No. 3 | Claim on account of compensation for overstay and idling at site durin |
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