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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
National Highways Authority Of India – Appellant
Versus
KMC Construction Ltd – Respondent
O.M.P. (COMM.) 461 of 2020, I.A. NOS. 7760, 2327 of 2021
Decided on : 23-12-2021
Arbitration and Conciliation Act, 1996 – Sections 31(7), 33, 34 and 37(1)(b) - Contract and Agreement - Project - Arbitration Agreement - Arbitral Award - NHAI challenges impugned award to limited extent that it allows KMC’s claims for certain extra items forming part of Claim No. 1 and to extent that it allows KMC’s Claims - Whether decision of Arbitral Tribunal in allowing KMC’s Claim no. 1 for additional amounts in respect of certain items of work directed to be executed by Engineer in addition to Bill of Quantity (BOQ) items, is patently illegal - KMC’s case that NHAI had failed to handover the site to it and had provided an incorrect Detailed Project Report (DPR) - Despite this, KMC completed project two months prior to stipulated date of completion - It is KMC’s case that Engineer did not process payments due to it and extended defect liability period - Finally, Engineer issued Defect Liability Certificate - Engineer issued a Statement at Completion proposing a recovery of amount against Final Bill of amount - Further, Engineer did not give its decision on other sums payable to KMC.
Finding of the Court :
Arbitral Tribunal’s view that KMC was entitled to compensation for idling of men and machinery warrants no interference - Decision of Arbitral Tribunal that events such as transporters’ strike and instructions issued by Mining Department fall within scope of Clause 20.4 of COPA warrants no interference as the said view is a plausible one and construction of contract is within the jurisdiction of Arbitral Tribunal - KMC has contested contention. According to KMC, its claim was not barred by limitation - Defect liability period had expired in 2006. NHAI had rejected its claims finally in June 2007. KMC had countered NHAI’s submissions that its claims were barred by limitation - However, said issue was not decided - This Court is of view that NHAI’s contention that petitioner’s claims were barred by limitation is not sustainable - Section 34 jurisdiction calls for judicial restraint and an awareness that process is removed from appellate review Clearly, view of Arbitral Tribunal is a plausible one and it is not permissible for this Court to interfere with same - Court had considered a case relating to a contract that spanned several seasons and breach of obligations to provide site in one season crystallised cause of action - This is not so in this case - Indisputably, contractor could raise its claims if same were not considered at time of Final Bill.
Result: Petition dismissed.
JUDGMENT :
VIBHU BAKHRU, J
1. The petitioner (hereafter ‘NHAI’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter ‘the A&C Act’) impugning an Arbitral Award dated 24.09.2019 (hereafter ‘the impugned award’) rendered by an Arbitral Tribunal constituted by three members (hereafter ‘the Arbitral Tribunal’).
2. NHAI challenges the impugned award to the limited extent that it allows KMC’s claims for certain extra items (E-2, E-4, E-12, E-16, R2-05, CD-02 & 03) forming part of Claim No. 1 and to the extent that it allows KMC’s Claim Nos. 12, 14 and 22.
3. Briefly stated the facts that are necessary to address the controversy are stated hereunder. 3.1 NHAI, by a Letter of Acceptance (LoA) dated 22.08.2001, awarded a contract for the work of ‘Widening to four lanes and strengthening of the existing two lane carriageway between Km 278/000 to Km 340/000 of Udaipur-Ratanpur-Gandhinagar Section of NH-8 in Rajasthan, package no. UG-1’(hereafter ‘the Project’) to KMC. Subsequently, the parties entered into an agreement dated 05.10.2001 (hereafter ‘the Agreement’). In terms of the Agreement, KMC agreed to execute the works at a Contract Price of Rs.164,75,76,353/-. The works for the Project were to commence on 30.10.2001 and completed by 30.04.2004.
3.2 It is KMC’s case that NHAI had failed to handover the site to it and had provided an incorrect Detailed Project Report (DPR). Despite this, KMC completed the project two months prior to the stipulated date of completion. The works were completed on 28.02.2004 at a Contract Price of Rs.248,00,00,000/- against the original Contract Price of Rs.164,75,76,353/-. KMC submitted its completion statement on 08.05.2004. It is KMC’s case that the Engineer did not process the payments due to it and extended the defect liability period. Finally, the Engineer issued the Defect Liability Certificate on 24.05.2006. The Engineer issued a Statement at Completion proposing a recovery of Rs.18,16,34,122/- against the Final Bill of Rs.70,51,84,650/-. Further, the Engineer did not give its decision on the other sums payable to KMC.
3.3 NHAI invoked the Performance Bank Guarantee furnished by KMC in the sum of Rs.16,47,57,636/-.
3.4 In view of the disputes, KMC invoked the Arbitration Agreement by a letter dated 16.09.2006 and nominated Sh. P.V. Rama Raju as an Arbitrator. NHAI nominated Sh. V.S. Dixit as its nominee Arbitrator. Both nominated Arbitrators appointed Sh. Prafulla Kumar as the Presiding Arbitrator and the Arbitral Tribunal was constituted on 12.11.2006.
3.5 In the meanwhile, KMC also filed a Writ Petition (bearing W.P. No. 18269/2006) before the High Court of Andhra Pradesh seeking interdiction of the invocation of the Bank Guarantee. By an order dated 29.11.2006, that High Court restrained NHAI from encashing the aforesaid Bank Guarantee. NHAI appealed against the aforesaid order before the Division Bench of the High Court of Andhra Pradesh and the Court ordered KMC to keep the Bank Guarantee alive during the course of the arbitration proceedings.
3.6 Before the Arbitral Tribunal, KMC raised twenty-two claims aggregating to Rs.135,96,28,549/-. NHAI filed its Statement of Defence and also raised counter-claims.
3.7 By a letter dated 11.10.2013 addressed to the Arbitral Tribunal, both parties requested the Arbitral Tribunal to keep the arbitral proceedings in abeyance, to enable them to amicably resolve the disputes by Conciliation before the three CGM Committee and the Independent Settlement Advisory Committee (ISAC). However, the Conciliation was not successful and by a letter dated 23.06.2015, KMC requested the Arbitral Tribunal to resume the arbitral proceedings. Mr VS Dixit recused from the Arbitral Tribunal and Mr Ninan Koshi was appointed by NHAI in place of him. Mr Ninan Koshi and KMC’s Arbitrator jointly appointed Mr SC Sharma as the Presiding Arbit
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