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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
ARORA CONSTRUCTION COMPANY PVT. LTD. – Petitioner
Versus
GOVERNMENT OF NCT OF DELHI – Respondent
O.M.P. (COMM) No. 340 of 2020
Decided On : 21-02-2022
Arbitration and Conciliation Act, 1996 - Section 34 - Petition impugning Arbitral Award passed by Arbitral Tribunal comprising of a Sole Arbitrator - Impugned award indicates that ARC had revised amount claimed in respect of one of claims and in addition seven other claims were raised - These claims were also referred to arbitration - Arbitral Tribunal awarded an aggregate amount of Rs. 2,95,000/- along with interest at rate of 10% per annum from date of appointment of Arbitrator till date of award - In addition, Arbitral Tribunal awarded future interest at rate of 12% per annum if awarded amount was not paid within three months from date of award.
Finding of the Court:
ARC had claimed a sum of Rs. 17,44,500/- towards loss of profit due to reduction in scope of civil and electrical works - It also claimed an additional amount of Rs. 15,00,000/- towards loss of profit as according to it, one of profitable items was removed from scope of works of ARC and was executed by another agency - Arbitral Tribunal observed that minor variations in value of works did not warrant award of any amount towards loss of profit - It observed that minor variations to extent of 10% in quantities were required to be anticipated - In addition, Arbitral Tribunal found that ARC had not produced any evidence to substantiate its claim - ARC had not produced any independent evidence to establish its claim for loss of profits - Decision of Arbitral Tribunal in this regard cannot be faulted - Impugned award to extent it rejects ARC’s Claim for escalation under Clause 10C of GCC and to extent it denies award of pendente lite interest, is set aside - ARC is at liberty to agitate these disputes by seeking a fresh reference to arbitration.
Result: Petition disposed of.
JUDGMENT :
VIBHU BAKHRU, J.
1. The petitioner - Arora Construction Company Pvt. Ltd. (hereafter ‘ARC’) has filed the present petition under Section 34 of the Arbitration & Conciliation Act, 1996 (hereafter the ‘A&C Act’) impugning the Arbitral Award dated 10.07.2015 (hereafter the ‘impugned award’) passed by the Arbitral Tribunal comprising of a Sole Arbitrator (hereafter the ‘Arbitral Tribunal’).
2. ARC is a Private Limited Company and is engaged in the business of civil construction. ARC had tendered for and was awarded the work of development of Wrestling Training Venue for Commonwealth Games-2010 at Ludlow Castle School-2, New Delhi. Thereafter, the parties had entered into an Agreement bearing number, 03EE/CW-131/PWD/GNCTD/ 2008-09 (hereafter the ‘Agreement’) whereby, ARC had agreed to execute the works as per the terms and conditions stipulated therein.
3. In terms of the said Agreement, the works were to commence on 19.01.2009 and was stipulated to be completed within a period of eight months that is, on or before 18.09.2009. The completion of the works was delayed and the same was finally completed on 25.01.2010. ARC claims that the delay was solely for the reasons attributable to the respondent-Government of NCT of Delhi (hereafter ‘GNCTD’).
4. GNCTD extended the time for completion of the works under the Agreement upto 25.01.2010 without levy of any compensation.
5. GNCTD paid the Final Bill on 25.07.2011, which according to ARC was less than the amount due to it. ARC accepted the said payment under protest and invoked the arbitration agreement by a letter dated 04.11.2011.
6. GNCTD appointed the Arbitral Tribunal by a letter dated 20.05.2013. ARC had raised six, claims which were referred to arbitration. In addition, GNCTD had also raised a Counter-Claim which was also referred for adjudication. The impugned award indicates that subsequently the ARC had revised the amount claimed in respect of one of the claims (Claim No. 3) and in addition seven other claims were raised. These claims were also referred to arbitration.
7. The gross value of works (civil and electrical) executed by ARC as quantified in the Final Bill was Rs. 10,09,06,326/-. In addition, ARC claimed an amount of Rs. 1,11,87,026/-.
8. The Arbitral Tribunal awarded an aggregate amount of Rs. 2,95,000/- along with interest at the rate of 10% per annum from 20.05.2013 (the date of appointment of the Arbitrator) till the date of the award. In addition, the Arbitral Tribunal awarded future interest at the rate of 12% per annum if the awarded amount was not paid within three months from the date of the award.
9. Ms. Salwan, learned counsel appearing for ARC has assailed the award to the extent the Arbitral Tribunal had rejected ARC’s Claim Nos. 1, 3, 4 and Additional Claim Nos. 2, 5, 6 and 6A.
10. The grievances raised by ARC in respect of the impugned award pertaining to the said claims are considered hereunder.
Re: Claim No. 1
11. ARC’s Claim No. 1 was in respect of increase in the cost of labour consequent to increase in the minimum wages as notified. ARC had claimed a sum of Rs. 12,61,148/- on account of increase in cost of labour engaged in civil works and Rs. 7,42,614/- in respect of electrical component of the works. ARC claimed that it was entitled to the aforesaid amounts in terms of Clause 10C of the General Conditions of Contract (hereafter the ‘GCC’) as applicable to the Agreement.
12. There is no dispute that ARC was entitled to escalation in terms of Clause 10C of the GCC. On the last date for submission of tenders, the minimum wages for an unskilled labour was notified at Rs. 141/- per day. ARC claimed that the minimum wages of unskilled labour were revised with effect from 01.02.2009 to Rs. 151/- per day; and to Rs. 152/- per day with effect from 01.08.2009. Thereafter, it was once again revised to Rs. 203/- per day with effect from 01.02.2010.
13. GNCTD had accepted that ARC was entitled to escalation under Clause 10C of the GCC and had paid a sum of Rs. 4
In terms of Section 21 of the A&C Act, the arbitral proceedings commence on the date of receipt of notice invoking the arbitration agreement.
Point of law: In terms of Section 21 of the A&C Act, the arbitral proceedings commence on the date of receipt of notice invoking the arbitration agreement.
The court upheld the arbitral tribunal's findings on delays caused by the Municipal Corporation but set aside the award for loss of profit due to insufficient evidence.
The scope of judicial review under Section 34 of the Arbitration Act is limited to reasons of law and pertains to the arbitral tribunal's adherence to the contract terms and evidence presented.
The Arbitral Tribunal has considerable discretion in evaluating evidence and interpreting contract clauses, and its decision cannot be interfered with unless found to be patently illegal or in confli....
Failure to raise claims for escalation in a timely manner and acceptance of payments in full and final settlement preclude further claims.
The main legal point established in the judgment is the correct interpretation and application of contractual provisions in arbitration disputes.
The specified authority's decision on quantification of compensation for delay is final, but the responsibility for the delay is subject to arbitration. The court also emphasized the importance of ev....
The Arbitral Tribunal's decision falls within its jurisdiction and does not amount to patent illegality, as it was based on a plausible interpretation of the exclusionary clause in the contracts and ....
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