Back
2022 Supreme(Del) 701
IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
M/s Sarada Construction - Petitioner
Vs.
M/s National Highway Authority Of India - Respondent
O.M.P. (COMM.) 133 of 2021
Decided On : 28-03-2022
Advocate Appeared:
For the Petitioner: Mr. Rajat Arora, Ms. Renu Bhandari & Mr. Ekansh Bansal, Advs.
For the Respondent: Mr. Alok Kumar Jain, Adv.
Point of Law: During the course of the Contract as well as the Defect Liability Period, it had to “execute numerous extra works due to improper planning of the employer in connection with sub grade failure as well as execution in peak rainy season’
Headnote:
Arbitration and Conciliation Act, 1996 - Section 34 - Indian Contract Act, 1872 - Section 17 - Recovery of amount – Encashment of the Bank Guarantee - Repair & Maintenance work of remaining stretches of NH - Award - Petitioner has filed present petition under Section 34 of the Arbitration and Conciliation Act, 1996 impugning an Arbitral Award - Petitioner was awarded aforesaid contract at a value parties had entered into an agreement Contract - Contract commencement of work - Same was required to be completed within - Defect Liability Period was stipulated as twenty-four months from date of completion of works –
Finding of the Court:
Arbitral Tribunal also noted that extra works claimed to have been executed by petitioner were during Defect Liability Period and petitioner was not entitled to any payment for work done during this period - It is important to note that Contract in question was for repair of the Highway - Petitioner’s contention that the afore-mentioned clauses only covered repair work and did not cover ‘extra work’ required to maintain Highway, is unpersuasive question as to interpretation of an agreement is one that falls squarely within the jurisdiction of Arbitral Tribunal - Arbitral Tribunal’s decision to hold that the petitioner was not entitled for any payment for carrying out any work during Defect Liability Period cannot by any stretch be held to be perverse or one that no reasonable person could accept –
Result: Petition dismissed
JUDGMENT :
Vibhu Bakhru, J.
1. The petitioner 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 17.12.2020 (hereafter ‘the impugned Award’) rendered by an Arbitral Tribunal comprising of three members (hereafter ‘the Arbitral Tribunal’).
2. The petitioner assails the impugned award to the limited extent that its claim for extra work done quantified at Rs.3,66,44,746/- and the cost of arbitral proceedings quantified at Rs.9,68,000/-, has been denied.
3. The respondent (hereafter ‘NHAI’) had issued an invitation to tender for work of “Repair & Maintenance work of remaining stretches of NH 34 from Km 51 to Km 115 by BM, SDBC and Mastic Asphalt in the State of West Bengal (Contract Pkg-Maintenance worklPkg1/2016)”
4. The petitioner had submitted its bid pursuant to the aforesaid invitation to tender and by a Letter of Acceptance dated 27.05.2016, the petitioner was awarded the aforesaid contract at a value of Rs.5,78,87,054.25/- (Rupees Five Crores Seventy Eight Lakhs Eighty Seven Thousand Fifty Four and Twenty Five paise). Thereafter, on 20.06.2016, the parties had entered into an agreement (the Contract). In terms of the Contract, the date of commencement of work was 20.06.2016 and the same was required to be completed within a period of three months; that is, on or before 19.09.2016. The Defect Liability Period was stipulated as twenty-four months from the date of the completion of the works. The works were completed on 11.10.2016, therefore, the Defect Liability Period would expire on 10.10.2018.
5. The Arbitral Tribunal accepted NHAI’s contention that it had pre-closed the Contract in respect of the stretch of the highway from KM 51.00 to KM 52.400 with effect from 14.03.2017 and had informed the petitioner regarding the same on 04.01.2018. Similarly, the Contract in respect of some stretches of the highway were pre-closed with effect from 27.07.2018 and some were pre-closed with effect from 14.10.2018. However, the petitioner disputes that the Defect Liability Period was foreclosed and claims that the Defect Liability Period Certificate dated 22.10.2018, issued by the Engineer does not mention any pre-closure.
6. NHAI, by a letter dated 16.01.2019, informed the petitioner that the Bank Guarantee furnished by the petitioner for a sum of Rs.57,88,710/- was encashed. NHAI appropriated a sum of Rs.47,07,951/- and deposited the balance amount of Rs.10,80,759/- recovered by encashment of the Bank Guarantee in the petitioner’s bank account. The sum of Rs.47,07,951/- retained/appropriated by NHAI comprised of Rs.71,191/- as penalty for pre-closure of the Defect Liability Period and Rs.46,36,760 as amount paid for execution of the balance works at the risk and cost of the petitioner. NHAI claims that it had engaged the Public Works Department for executing the repair work, which the petitioner had failed to do during the Defect Liability Period, and had incurred a cost of Rs.46,36,760/-.
7. The petitioner claims that the recovery of the aforesaid amount is illegal as it had not committed any default in performance of its obligation. The petitioner further claims that it had executed certain additional works during the Defect Liability Period and is entitled for payment for the same.
8. In view of the disputes, the petitioner approached the Secretary General, Indian Roads, for appointment of a Dispute Resolution Expert in terms of the Contract. However, no appointment was made. Thereafter, the petitioner nominated its Arbitrator. NHAI also nominated its Arbitrator and both the nominees appointed the Presiding Arbitrator.
9. The petitioner submitted its Statement of Claims before the Arbitral Tribunal claiming: (i) a sum of Rs.2,85,96,218/- for extra work executed by it during the Defect Liability Period (Claim No.1); (ii) refund of an amount of Rs.47,07,951/- recovered by NHAI by encashment of the petitioner’s Bank Guarantee (Claim No.2); (ii
