The main legal point established in the judgment is the interpretation and application of the Contract Agreement, CENVAT and VAT provisions, and the terms of price adjustment under the Agreement.

JUDGMENT

Vibhu Bakhru, J. - Steel Authority of India Limited (hereinafter 'SAIL'), a company incorporated under the Companies Act, 1956, 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 01.05.2020 (hereinafter 'the impugned award') delivered by the Arbitral Tribunal comprising of three arbitrators.

2. The impugned award has been rendered in the context of disputes that have arisen between the parties in relation to a Contract Agreement dated 16.03.2009 (hereinafter 'the Agreement').

3. By the impugned award, the Arbitral Tribunal accepted the claims preferred by the respondent in part and entered an award of Rs.15,90,14,025/- in its favour. The Tribunal allowed interest at the current rate of interest in accordance of the Interest Act, 1978 on the amount due to the respondent and; post award interest at the current rate of interest (as per the Interest Act, 1978) plus 2%, with effect from ninety days after 01.05.2010, on the amount payable to the respondent.

4. Briefly stated, the relevant facts that are necessary to address the controversy are as under:- 4.1 By a notice dated 13.01.2009, SAIL invited bids from various contractors for "Additional Civil Works of Rolling Mills, BOF, CCP Complex including Lime and Dolomite Plant (Package No.: 48 C-1)" under 2.5 MT New Stream Expansion at IISCO Steel Plant (hereinafter 'the Project').

4.2 The respondent (hereinafter 'L&T') submitted its bid of Rs.245,33,43.297/- on 02.02.2009. Thereafter, SAIL issued a Letter of Acceptance (LoA) dated 27.02.2009 to L&T, accepting a total price Rs.189,52,29,602 for the execution of the Project on Item Rate basis. In terms of Clause 8.2.1 of the General Conditions of the Contract (GCC), L&T was required to submit a security deposit equivalent to 5% of the total contract value.

4.3 On 16.03.2009, pursuant to the issuance of the LoA, SAIL and L&T entered into the Contract Agreement (the Agreement) for execution of the works at a contract price of Rs.189,52,29,602. In terms of Article 5 of the Agreement, the time of completion of the Project was stipulated as twelve months from the date of the contract. Subsequently, two change orders were issued on 29.09.2009 and 02.07.2010 for extra items amounting to Rs.26,48,90,255/- and Rs.56,43,69,208.31/- respectively and the contract price was adjusted accordingly.

4.4 In terms of Article 6 of the Agreement, Mecon Ltd. (hereinafter 'Mecon') was appointed as the Consultant to undertake the functions delegated by SAIL.

4.5 On 30.09.2011, L&T completed the work awarded to it by SAIL and, on 04.01.2013, SAIL issued the Preliminary Acceptance Certificate (PAC) effective from 30.09.2011.

4.6 Thereafter, on 21.09.2015, SAIL issued the Final Acceptance Certificate (FAC) with effect from 21.06.2014.

4.7 SAIL withheld certain payments due to L&T on various grounds. Disputes arose between the parties, inter alia, with respect to processing the invoices and release of payments and processing of payments for price adjustment. L&T issued a notice dated 11.07.2016 claiming a sum of Rs.29.20 crores and inviting SAIL for resolution of the said claims through conciliation.

4.8 The conciliation proceedings were not successful and Mr. S.S. Agarwal, Conciliator, issued a letter dated 29.03.2018 confirming that the conciliation had failed.

4.9 Thereafter, on 06.05.2019, L&T invoked the Arbitration Clause, as contained in the Agreement. The Arbitral Tribunal comprising of Mr. Rajeev Kher, as the Presiding Arbitrator, Justice (Retd.) D.R. Deshmukh and Dr. Vishwapati Trivedi was constituted to adjudicate the disputes between the parties.

5. The claims made by L&T in its Statement of Claims are summarized as under:-