2022 Supreme(Del) 1595

IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Delhi Metro Rail Corporation Ltd & Ors. - Appellants
Versus
M/s. J. Kumar-crtg Jv & Ors. - Respondents
O.M.P. (Comm) 603/2020 & Ia Nos. 12479/2020, 12480/2020 & 3823/2021 and M.P. (Comm) 39/2020 & IA No. 13874/2021
Decided On : 25-04-2022

The scope of Section 34(4) of the Arbitration and Conciliation Act, 1996 does not extend to calling upon the Arbitral Tribunal to resume the proceedings to re-appreciate the evidence and re-adjudicate any dispute.

Headnote:

ARBITRATION - Setting aside of award - Grounds - Patently illegal - Scope of Section 34(4) of the Arbitration and Conciliation Act, 1996 - Whether the Arbitral Tribunal's decision to accept CRTG's claim for additional payment for providing railing on the parapet wall of the Hazrat Nizamuddin Station is perverse - Whether the Arbitral Tribunal's decision to award sum of Rs. 7,68,46,375/- as compensation on account of idling / under-utilization of resources deployed at Ashram station during the initial period of twenty-nine months due to delay in finalizing the revised layout of the station and the delay in handing over of the land, is patently illegal.

Fact of the Case:

Tenders were invited by Delhi Metro Rail Corporation Ltd (hereafter 'DMRC') for the contract for the 'design and construction of Tunnel by Shield TBM, Tunnels, Stations and Ramps by cut and cover method between Lajpat Nagar and Hazrat Nizamuddin Stations(both including) for underground works on Mukundpur- Yamuna Vihar Corridor of Delhi MRTS Project of Phase III' (hereafter 'the Project'). The Project comprised of four stations namely Lajpat Nagar, Vinoba Puri, Ashram and Hazrat Nizamuddin connected with tunnels. On 22.05.2012, M/s J. Kumar-CRTG JV (hereafter 'CRTG') participated in the bidding process pursuant to the aforesaid Notice Inviting Tenders and submitted a bid of Rs. 909.1917 crores plus USD 1,09,09,423.3. On 16.07.2012, DMRC issued a Letter of Acceptance (hereafter 'LoA'), in favor of CRTG accepting its bid for the contract price. Thereafter, the Contract for the Project was signed by the parties on 28.09.2012. The work commenced on 23.07.2012, prior to the signing of the Contract and the stipulated time for completion of work was forty-two months. However, the Project could not be completed within the stipulated period (that is, prior to 22.01.2016) and the time to do so was extended till 31.01.2019. The work was finally completed on 31.12.2018. The dispute between the parties relates to CRTG's claim for payment of additional amounts as compensation for the increase in costs on account of encountering unforeseen physical conditions; compensation of loss due to flooding and leakage of 900mm and 1500mm DJB pipeline; payment for providing railing on parapet wall of ramp at Hazrat Nizamuddin station; cost incurred for environmental compensation charges (hereafter 'ECC'); compensation for underutilization of resources at Ashram station; and refund of interest on advance.

Finding of the Court:

The Arbitral Tribunal's decision to accept CRTG's claim for additional payment for providing railing on the parapet wall of the Hazrat Nizamuddin Station is not perverse. The drawings attached with the Tender Documents were indicative drawings to reflect the general scheme of structures and the grill / railing was not a structural component of any building / structure. It neither supported any structure nor carried any load. Further, the Arbitral Tribunal's decision to award sum of Rs. 7,68,46,375/- as compensation on account of idling / under-utilization of resources deployed at Ashram station during the initial period of twenty-nine months due to delay in finalizing the revised layout of the station and the delay in handing over of the land, is not patently illegal. Clauses 2.2 and 8.3 of GCC which proscribe CRTG from claiming compensation due under Sections 55 and 73 of the Contract Act are unenforceable, being violative of Section 23 of the Contract Act.

Issues: Whether the Arbitral Tribunal's decision to accept CRTG's claim for additional payment for providing railing on the parapet wall of the Hazrat Nizamuddin Station is perverse. Whether the Arbitral Tribunal's decision to award sum of Rs. 7,68,46,375/- as compensation on account of idling / under-utilization of resources deployed at Ashram station during the initial period of twenty-nine months due to delay in finalizing the revised layout of the station and the delay in handing over of the land, is patently illegal.

Ratio Decidendi: The question whether the railing formed part of the permanent structure of the architectural finishing work is a matter of interpretation of the Contract. The Arbitral Tribunal after considering the evidence led by the parties observed that the structural drawings attached with the Tender Documents were basically to show the general scheme of structures and buildings required to be constructed. In this context, the grill or railing was not a structural component of any building or structure. It neither supported any structure nor carried any load. Further, the Arbitral Tribunal observed that there was no specific mention of railing, which was a separate item to be included as a part of the scope of the work. It accepted the contention that item of fabrication and installation of the 'railing' was covered under Section 6.0 (Metal Works) of Schedule-B (Architectural Finishing Works) of the BOQ. The decision of the Arbitral Tribunal is supported by cogent reasoning and is dispositive of the dispute between the parties. The scope of examination under Section 34 of the A&C Act does not extend to re-evaluation of evidence or re-adjudication of the disputes. It is trite law that this Court does not sit as a First Appellate Court to examine the correctness of the decision of the Arbitral Tribunal. In the present case, the reasoning that the drawings of railing included in the structural drawings were only indicative of the structures and could not be interpreted to be included in the scope of structural work, cannot be interfered with. The Arbitral Tribunal has jurisdiction to decide the question of fact as well as of law. Clearly, the decision of the Arbitral Tribunal that by virtue of Section 23 of the Contract Act, Clauses 2.2 and 8.3 of GCC which proscribe CRTG from claiming compensation due under Sections 55 and 73 of the Contract Act are unenforceable, is a plausible view.

Final Decision: The petitions filed by DMRC and CRTG are dismissed.