Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
M/s National Highways Authority Of India - Appellant
Versus
PCL Sticco (JV) - Respondent
Original Miscellaneous Petition (COMM) No. 77 of 2016, I.A No. 2511 of 2021
Decided On : 23-03-2022
NHaI - Arbitration and Conciliation - 1996 (Section 34) - The National Highways authority of India (NHaI) filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (the a&C act) impugning an arbitral award. The disputes arose in connection with the agreement for 'Widening to 4/6 lanes and strengthening of existing 2-Lane Carriageway of NH-5 in the State of Orissa from Km 284.00 to Km 338.00 (Ganjam-Sunkhala) Contract Package OR-VII'. The arbitral Tribunal found NHaI's action under Sub-clause 63.1 of the General Conditions of Contract (GCC) to expel the respondent from the site was illegal on various grounds. The arbitral Tribunal held that NHaI's action in withholding or delaying grant of Extension of Time (EOT) was contrary to the terms of Clause 44 of the GCC. The arbitral Tribunal found that the delays had arisen on various grounds attributable to NHaI including delay in handing over of the sites and substantial change in the design. The arbitral Tribunal also found that the Engineer/NHaI had delayed processing the applications for EOT. The arbitral Tribunal concluded that NHaI's actions to expel the respondent from the site was unjustified. The petition was dismissed.
Fact of the Case:
The National Highways authority of India (NHaI) filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (the a&C act) impugning an arbitral award. The disputes arose in connection with the agreement for 'Widening to 4/6 lanes and strengthening of existing 2-Lane Carriageway of NH-5 in the State of Orissa from Km 284.00 to Km 338.00 (Ganjam-Sunkhala) Contract Package OR-VII'. The arbitral Tribunal found NHaI's action under Sub-clause 63.1 of the General Conditions of Contract (GCC) to expel the respondent from the site was illegal on various grounds.
Finding of the Court:
The arbitral Tribunal found NHaI's action under Sub-clause 63.1 of the General Conditions of Contract (GCC) to expel the respondent from the site was illegal on various grounds. The arbitral Tribunal held that NHaI's action in withholding or delaying grant of Extension of Time (EOT) was contrary to the terms of Clause 44 of the GCC. The arbitral Tribunal concluded that NHaI's actions to expel the respondent from the site was unjustified. The petition was dismissed.
Issues: The issues revolved around NHaI's action under Sub-clause 63.1 of the General Conditions of Contract (GCC) to expel the respondent from the site and the withholding or delaying grant of Extension of Time (EOT) contrary to the terms of Clause 44 of the GCC.
Ratio Decidendi: The arbitral Tribunal found that 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 delays attributable to NHaI.
Final Decision: The petition was dismissed.
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 15.12.2015 (hereinafter 'the impugned award') delivered by an arbitral Tribunal comprising of three members - Justice (Retd.) Shri E. Padmanabhan, Shri T.C. Bhagoria and Shri Surjeet Singh as the Presiding arbitrator (hereinafter 'the arbitral Tribunal').
2. The impugned award was rendered by the arbitral Tribunal in respect of disputes that had arisen between the parties in connection with the agreement for 'Widening to 4/6 lanes and strengthening of existing 2- Lane Carriageway of NH-5 in the State of Orissa from Km 284.00 to Km 338.00 (Ganjam-Sunkhala) Contract Package OR-VII'.
3. NHaI had invited bids for the aforesaid works in the year 2001. On 30.03.2001, the respondent submitted its bid pursuant to the said invitation to tender. The respondent's bid was accepted by a Letter of acceptance (Loa) dated 09.07.2001, and the contract was awarded to the respondent.
4. Thereafter, on 20.08.2001, the parties entered into a formal contract (hereinafter 'the Contract'). The date for commencement of the works was stipulated as 22.09.2001, and the works were to be completed within a period of thirty-two months, that is, by 21.04.2004.
5. The execution of the works was delayed and by a letter dated 31.07.2003, the respondent sought extension of time (EOT) till 30.06.2005. NHaI granted the same by a letter dated 01.08.2003. Thereafter, the respondent again sought EOT till 31.12.2005, which was granted by NHaI by its letter dated 20.09.2004. Thereafter, the respondent sought EOT till 30.06.2006 which was also granted by NHaI by its letter dated 05.08.2005.
6. Since the works were further delayed, the respondent applied for EOT till 31.12.2007 by a letter dated 13.06.2006. The respondent's request for EOT was recommended by the Engineer by its letter dated 08.07.2006. However, NHaI did not confirm the same.
7. NHaI alleged that the progress of the works was slow and the respondent had practically abandoned the site. On 12.05.2007, the Team Leader recommended that the Contract be repudiated in case of non-completion of the works by 31.12.2007. Thereafter, by a letter dated 05.06.2007, the respondent once again sought EOT till 31.12.2008. However, by a letter dated 14.06.2007, the Engineer declined the request for EOT and stated that it had recommended repudiation of the Contract.
8. The parties conducted mutual discussions and the respondent also proposed by its letter dated 23.10.2007 that the Contract be amicably foreclosed. On 31.03.2008, the respondent once again sent a letter reminding NHaI to consider its request for grant of EOT and/or foreclosure of the Contract.
9. By a letter dated 03.04.2008, NHaI rejected the respondent's request for foreclosure of the Contract. It issued a separate letter dated 03.04.2008 initiating action under Sub-clause 63.1 of the General Conditions of Contract (hereinafter 'GCC') and expelled the respondent from the Contract.
10. The resultant disputes between the parties were referred to arbitration.
11. Before the arbitral Tribunal, the respondent filed a Statement of Claims and raised the following claims:
Claim No. | Particulars of Claim | Amount of claim |
1. | Unpaid amount of balance work executed including claim of escalation for which Bank Guarantee was given and the same had been encashed by therespondent. | Rs. 20,71,14,460/- |
2. | Claim towards infructuous overhead and profit | Rs. 19,12,20,340/- |
3. | Loss due to illegal confiscation of claimant's machinery and equipment lying at the site by the respondent on 4.4.2008 and | Rs. 16,45,24,510/- |
4. | Cash loss due to encashment of bank guarantee | Rs. 28,64,48,202/- |
5. | Loss suffered due to forcible occupation of leased land where plant and machinery were installed and material was stacked, and which has been c | |
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 ....
An expulsion under a contract must have legitimate causes, and unjustified actions by one party render such expulsion illegal, reaffirming constraints under arbitration frameworks.
The arbitral tribunal's decision to not expel the contractor was upheld, recognizing NHAI's breaches and the contractor's financial incapacity as reasons for the award.
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....
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 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.
Inconsistent findings across arbitral awards do not provide grounds for setting aside an award under Section 34 of the Arbitration & Conciliation Act, 1996.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
