The court upheld the principle that the award of interest and costs in arbitration proceedings should be in accordance with the contract and the provisions of the Arbitration and Conciliation Act, 1996.

JUDGMENT

Vibhu Bakhru, J. - The petitioner (hereinafter the Railway) 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 08.04.2020 (hereinafter the impugned award) passed by the Arbitral Tribunal constituted by Justice (Retd.) Anil Kumar as the Sole Arbitrator (hereinafter the Arbitral Tribunal).

2. The impugned award was rendered in the context of disputes that have arisen between the parties in relation to a contract signed between the parties on 16.12.2011 (hereafter the Contract).

Factual Matrix

3. On 13.01.2011, tenders were invited by the Railway for work described as Earth work in filling for embankment with contractors own earth and cutting to the required profile , Blanketing materials including compaction by vibratory roller, construction/extension of minor bridges less than 6.00 m, retaining wall and other allied works from Ch 0.00 km to Ch 22.71 kms between Ambala Cantt- Dhappar railway Stations in connection with Ambala-Dhappar doubling on UMB-KLK Section, with the overall supervisory control of the Dy. Chief Engineer/C Ambala, Northern Railway. (hereafter the Project).

4. Pursuant to the said tender, the respondent firm (hereafter OVC) submitted its bid. The same was accepted and by a Letter of Acceptance dated 07.04.2011 (hereafter the LoA), the work was awarded to OVC. The period of completion of the works was stipulated to be eighteen months and was required to be completed by 06.10.2012. The Contract with respect to the said work was finally signed on 16.12.2011.

5. OVC claims that after the award of the works, the Railway advised it to deploy its machinery, staff, labour and construct the site office(s) as per the tender stipulations for expeditious execution of the works within the stipulated time. However, the arrangements made by OVC at the site remained unutilized due to non-availability of drawings, site for execution, cutting of trees, non-sanctioning of Engineering Scale Plan (ESP) etc.

6. Despite, OVCs repeated efforts to execute the works, no progress was made as the trees causing hinderances were not removed and full site was not made available to OVC. Thereafter, OVC sent several letters to the Railway requesting it to supply a complete set of drawings, remove the ESP of Dhappar, Lallru and Dhoulkot stations and, to remove the trees at the railway track at Lallru station; however, the said letters did not elicit any satisfactory response.

7. Due to addition in the scope of work and the various hindrances in executing the works, the Railway extended the date of completion of the works to 30.10.2014, without levy of any penalties.

8. Thereafter, on 08.08.2013, one of the constituent partners of OVC expired in a road accident and OVC requested the Railway to treat the work as closed. OVC requested the Railway to prepare the Final Bill along with the extra items executed at the site on the instructions of the supervisory staff. OVC claimed that it was assured that the extra items would be paid along with the Final Bill at an early date along with the earnest money, Performance Guarantee and security deposit.

9. The work was finally treated as satisfactorily completed on 15.10.2014 and thereafter, a Completion Certificate was issued and the Performance Guarantee furnished by OVC was released.

10. OVC states that the Railway had assured it that it would settle all disputes at the time of finalization of the Final Bill. However, the Railway failed to include some of OVCs claims in the Final Bill. OVC claims that it was directed to accept the Final Bill prepared by the Railway without any protest and, to tender its No Claim Certificate failing which the admitted amounts due would not be released.

11. OVC had requested the Railway to prepare the Final Bill on 18.11.2014. However, the Final Bill was prepared after a pe