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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
National Highways Authority Of India - Appellant
Versus
Continental Engineering Corporation (CEC) - Respondent
Original Miscellaneous Petition (COMM) No. 422 of 2019, I. A. No. 14163 of 2019
Decided On : 13-04-2022
arbitration and Conciliation act - National Highways authority of India - Section 34 - Summary of Acts and Sections: The court discussed Section 34 of the arbitration and Conciliation act, 1996 and its applicability to an international commercial arbitration. It highlighted the legal provisions related to the grounds for challenging an arbitral award and the public policy of India. The court's decision was influenced by the interpretation of these provisions and their application to the case.
Fact of the Case:
NHaI filed a petition under Section 34 of the arbitration and Conciliation act, 1996 to challenge an arbitral award delivered in an international commercial arbitration. The disputes arose between NHaI and CEC regarding a project agreement, and the arbitral Tribunal awarded sums in favor of CEC for various claims. NHaI contested the award as vitiated by patent illegality.
Finding of the Court:
The court found that the grounds raised by NHaI did not support the contention that the impugned award was in conflict with the public policy of India. It also considered the contentions advanced by NHaI in respect of each of the claims awarded in favor of CEC. The court concluded that there were no grounds to interfere with the impugned award and dismissed the petition.
Issues: The issues involved the challenge of an arbitral award under Section 34 of the arbitration and Conciliation act, 1996, and the interpretation of the grounds for challenging an arbitral award in an international commercial arbitration.
Ratio Decidendi: The court's decision was based on the interpretation of Section 34 of the arbitration and Conciliation act, 1996, and its application to the case. It also considered the legal principles related to the public policy of India and the grounds for challenging an arbitral award in an international commercial arbitration.
Final Decision: The court dismissed the petition and disposed of the pending application, finding no grounds to interfere with the impugned award.
JUDGMENT
Vibhu Bakhru, J. - The National Highways authority of India (hereinafter 'NHaI') 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 30.04.2019 (hereinafter 'the impugned award') delivered by the arbitral Tribunal comprising of three members (hereinafter 'the arbitral Tribunal') in respect of disputes that had arisen between the parties in relation with an agreement dated 20.02.2007 (hereinafter 'the agreement').
Factual Context
2. NHaI invited bids for the work of 'four laning of Hyderabad-Bangalore section from KM 293.400 to KM 336.000 of NH-7, in the State of andhra Pradesh' (hereinafter the 'Project') from all eligible contracto Rs.
3. The respondent (hereinafter 'CEC'), a company incorporated in Taiwan, submitted its bid on 18.09.2006, pursuant to the aforesaid invitation to bid. CEC's bid was accepted by a Letter of acceptance (Loa) dated 22.11.2006, and the contract for executing the Project was awarded to CEC.
4. Thereafter, on 20.02.2007, the parties entered into the agreement. The date of commencement of works was stipulated as 15.03.2007, and the works were to be completed within a period of thirty months, that is, by 14.09.2007. The Project was not completed within the stipulated period and the causes of delay are also a subject matter of dispute between the parties.
5. NHaI claims that it granted Extension of Time (EOT) to complete the Project up to 15.02.2011 due to delay attributable to CEC. However, it did not levy any liquidated damages on the delay.
6. Thereafter, disputes arose between the parties. CEC contends that certain amounts were due to it on account of the work executed but NHaI disputes the same.
7. The disputes were referred to the Dispute adjudication Board (hereinafter the 'DaB') on 18.09.2017, however, the DaB failed to give its recommendation within the stipulated period of eighty-four days, that is, by 11.12.2017.
8. On 04.01.2018, CEC, issued a letter invoking the arbitration agreement - Clause 67.4 of the Conditions of Particular application (COPa) - and sought reference of the disputes to arbitration.
9. Before the arbitral Tribunal, CEC filed its Statement of Claims. The claims made by CEC are tabulated below:
| Claim No. | Particulars of Claim | amount of claim |
| 1. | Non-payment of executed quantities of Retaining Wall constructed in lieu of RE Wall | RS. 8,32,38,846/- |
| 2. | Non-payment of BOQ item 7.16a; 7.16b; 7.16d (Construction of Water harvesting unit alternately on either side of the carriage way) | RS. 1,19,54,697/- |
| 3. | additional Royalty charges deducted by the Engineer by applying varying compaction factors for calculating the quantities of Soil for various Permanent Works | RS. 1,46,20,178/- |
| 4. | additional expense incurred on | RS. 69,03,621/- (Reduced to RS. 59,63,309/-) |
| 5. | Refund of amount deducted | RS. 33,37,240/- (Reduced to RS. 21,62,071/-) |
| 6. | Interest on delayed payments of IPCs | RS. 5,82,35,217/- (Reduced to RS. 3,29,81,083/-) |
| 7. | Claim towards pendente lite and future interest @ 10% p.a. on the total claim amount from 01.07.2018 till date of award |
|
| 8. | Cost of arbitration |
|
10. NHaI filed its Statement of Defence, however, it did not raise any counter-claims.
11. By the impugned award, the arbitral Tribunal awarded (i) an amount of RS. 7,23,30,632/- against CEC's claim for a sum of RS. 8,32,38,846/- in respect of the works relating to RE Retaining Wall (Claim No. 1); (ii) a sum of RS. 1,09,58,464/- against CEC's claim for a sum of RS. 1,19,54,697/- in respect of payment for construction of water harvesting units (Claim No. 2); (iii) an amount of RS. 1,34,01,819/- as against CEC's claim for a sum of RS. 1,46,20,178/- on
The main legal point established in the judgment is the interpretation and application of Section 34 of the arbitration and Conciliation act, 1996 to an international commercial arbitration, and the ....
The inapplicability of the ground of patent illegality to international commercial arbitration and the importance of interpreting specific contractual clauses in determining the validity of claims an....
The arbitral Tribunal found NHaI's actions to expel the respondent from the site was unjustified and illegal based on various grounds, including the delay in granting Extension of Time (EOT) and the ....
The main legal point established is that an arbitral award must be based on relevant material and evidence, and claims for loss of profit must be substantiated with evidence of missed opportunities.
An expulsion under a contract must have legitimate causes, and unjustified actions by one party render such expulsion illegal, reaffirming constraints under arbitration frameworks.
Execution of the works was delayed and the respondent sought Extension of Time for completion of the works on successive occasions, which were approved by NHAI.
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 c....
The court emphasized that arbitration awards must adhere strictly to contract terms regarding payment and interest, rejecting arbitrary reductions of entitlement.
The court affirmed that arbitral awards are upheld unless blatant illegality is shown, emphasizing the tribunal's final authority under Section 34 of the Arbitration and Conciliation Act.
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