Point of Law: Execution of the works was delayed and the respondent sought Extension of Time for completion of the works on successive occasions, which were approved by NHAI.

JUDGMENT :

VIBHU BAKHRU, J

1. The National Highway Authority of India (hereinafter ‘NHAI’) 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 01.09.2020 (hereinafter ‘the impugned award’) passed by an Arbitral Tribunal comprising of three members [Justice (Retd.) Iqbal Ahmed Ansari, Shri A.B. Desai, Chief Engineer and Justice (Retd.) C.K. Thakkar as the Presiding Arbitrator].

2. The impugned award was rendered in the context of disputes that had arisen between the parties in connection with the Agreement dated 16.01.2002. The principal dispute between the parties was regarding the respondent’s claim for payment of a sum of Rs.4,95,02,980/- for the works executed by it and certified by the Engineer appointed by NHAI. The majority of the Arbitrators [Shri A.B. Desai and Justice (Retd.) C.K. Thakkar] allowed the aforesaid claim, in favour of the respondent. The said learned Arbitrators also awarded interest in favour of the petitioner; however, there is a difference of opinion as to the date from which the said interest would run. Justice (Retd.) Iqbal Ahmed Ansari entered a dissenting opinion.

3. NHAI has assailed the impugned award (by majority) on the ground that it is vitiated by patent illegality on the face of the award. According to NHAI, the claims raised by the respondent were barred by limitation. Thus, neither the principal claim for payment of the work done nor the claim for interest on the said amount, could be entertained.

4. Briefly stated, the facts necessary to address the aforesaid controversy, are as under:-

4.1 On 18.09.2001, NHAI had invited tenders for execution of the work relating to “Western Transport Corridor, Tumkur- Haveri Section of NH4 - Rehabilitation and upgrading of Sira-Chitrdurga Section (Km. 122.3 to Km. 189) in the State of Karnataka – Package 2” (hereinafter ‘the Project’), on the terms and conditions stipulated thereon.

4.2 The respondent had submitted its bid and the contract for executing the Project works for a consideration of Rs.253,24,41,361/- was awarded to the respondent in terms of the Letter of Acceptance dated 28.11.2001 (hereinafter the ‘LoA’). Thereafter, on 16.01.2002, the parties entered into a formal agreement (hereinafter ‘the Contract’).

4.3 In terms of the Contract, the execution of the works was to commence on or before 01.03.2002 and completed within a period of thirty months from the commencement date. Thus, the entire works were required to be completed on or before 31.08.2004. The execution of the works was delayed and the respondent sought Extension of Time (hereinafter ‘EOT’) for completion of the works on successive occasions, which were approved by NHAI.

4.4 There is some controversy regarding the approvals of the EOT. According to NHAI, it had agreed to EOT on four occasions (that is, till the 4th EOT) but had not approved the subsequent three requests for EOT (that are, requests for the 5th, 6th and 7th EOT).

4.5 NHAI claims that the said works could not be completed within the stipulated period of time due to delay on the part of the respondent; the said works were completed by 26.03.2008. Thereafter, the Engineer (appointed by NHAI) issued the Taking Over Certificate (hereinafter ‘TOC’). And, on 11.01.2011, the Engineer issued the Defect Liability Certificate (hereinafter ‘DLC’) with effect from 31.01.2010.

4.6 Pursuant to the issuance of the DLC, on 22.04.2011, the respondent submitted a Draft Final Statement, in accordance with Clause 60.11 of the Conditions of Particular Application (hereinafter the ‘COPA’). The Engineer certified an aggregate payment of Rs.4,95,02,980/- for the work done against certain items but rejected the Draft Final Statement in regard to the other payments. The respondent submitted further information to the Engineer in support of its cl