The court held that the rejection of KMC's claims for escalation, additional payment, early completion bonus, and loss due to non-release of Performance Bank Guarantee was not illegal. However, the court set aside the rejection of KMC's claim for interest at the contracted rate and for the period when the arbitration proceedings were at a standstill.

JUDGMENT

Vibhu Bakhru, J. - The petitioner (hereafter KMC) 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). KMC also impugns an order dated 21.11.2019 (hereafter the revised order), whereby its application under Section 33 of the A&C Act was rejected.

2. KMC challenges the impugned award in respect of its Claims Nos. 3, 5, 13, 19 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 KMCs 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 KMCs 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 PV Rama Raju as an Arbitrator. NHAI nominated Sh VS 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 KMCs Arbitrator jointly appointed Mr SC Sharma as the Presiding Arbitrator on 19.04.2016.

4. On 24.09.20