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IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
National Highways Authority of India – Appellant
Versus
Orissa Steel Expressway Pvt. Ltd. – Respondent
O.M.P. (COMM.) No. 278 of 2019 and I.A. Nos. 9870 of 2019, 17853 of 2019, 7921 of 2020, 10163 of 2020 and 150 of 2021
Decided On : 26-05-2023
Arbitral Tribunal's decision to award foreclosure compensation to the respondent was upheld as it was a plausible view based on the evidence and terms of the contract. The Tribunal's interpretation of the contract was within its jurisdiction and not amenable to correction by the Court. The Tribunal's rejection of the counterclaim due to non-payment of arbitration fees was also upheld as it was in accordance with the provisions of the Arbitration and Conciliation Act, 1996.
Fact of the Case:
The petitioner, a government body, invited bids for the construction of a highway. The respondent, a company, was awarded the contract. Disputes arose between the parties, and the petitioner unilaterally foreclosed the contract. The respondent invoked arbitration, claiming foreclosure compensation and other costs. The Arbitral Tribunal awarded foreclosure compensation and certain other costs to the respondent, but rejected the counterclaim filed by the petitioner due to non-payment of arbitration fees.
Finding of the Court:
The Court held that the Arbitral Tribunal's decision to award foreclosure compensation was based on a plausible view of the evidence and the terms of the contract. The Tribunal's interpretation of the contract was within its jurisdiction and not amenable to correction by the Court. The Tribunal's rejection of the counterclaim due to non-payment of arbitration fees was also upheld as it was in accordance with the provisions of the Arbitration and Conciliation Act, 1996.
Issues: 1. Whether the Arbitral Tribunal erred in awarding foreclosure compensation to the respondent. 2. Whether the Arbitral Tribunal erred in rejecting the counterclaim filed by the petitioner.
Ratio Decidendi: 1. The Court held that the Arbitral Tribunal's decision to award foreclosure compensation was based on a plausible view of the evidence and the terms of the contract. The Tribunal's interpretation of the contract was within its jurisdiction and not amenable to correction by the Court. 2. The Court held that the Tribunal's rejection of the counterclaim due to non-payment of arbitration fees was in accordance with the provisions of the Arbitration and Conciliation Act, 1996.
Final Decision: The Court dismissed the petition challenging the Arbitral Tribunal's award.
JUDGMENT
Chandra Dhari Singh, J.
1. The instant petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter "Act,1996") has been filed on behalf of the petitioner seeking the following reliefs:
"a. Call for the entire/complete records of the arbitration case between the Respondent and the Petitioner, which was decided by the Learned Arbitral Tribunal by an award dated 31.03.2019;
b. Set aside the Impugned Award dated 31.03.2019.
c. Allow cost of this petition in favour of the Petitioner.
d. Pass any other order as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case."
FACTUAL MATRIX
2. The present petition has been filed by the petitioner against the impugned award of total sum of Rs.322.78 Crores in favour of the respondent/claimant, against the petitioner, along with the future interest at the rate of 10% p.a. from the date of award till the date of its realization. The present petition under section 34 of the Act arises out of the said award dated 31st March, 2019 passed by the learned Arbitral Tribunal.
3. The petitioner is an autonomous body constituted under the National Highways Authority of India Act, 1988 and is working under the supervision of the Ministry of Road Transport and Highways, Government of India. The petitioner is responsible for the development, maintenance, and management of the National Highways.
4. The respondent is a Company incorporated by a consortium comprising MBL Infrastructure Ltd. and SREI Infrastructure Finance Ltd. under the provisions of the Companies Act, 1956. The respondent is a Special Purpose Vehicle.
5. The petitioner invited bids for the 4/2 laning of the Rimuli- Roxy - Rajamunda section of NH-215 from km 163.00 to km 269.00 equivalent to 106 kms.with an indicative project cost of Rs.449 Crores as Built, Operate and Transfer (BOT) (Toll) on Design, Build, Finance, Operate, and Transfer (DBFOT) pattern. The respondent participated in the said bid and it was found lowest. Accordingly, the Letter of Award dated 29th April, 2010 was issued in favour of the respondent by the petitioner. Consequently, the parties entered into a Concession Agreement on 06th July, 2010. According to, Article 9 of the Concession Agreement, the respondent furnished the Performance Bank Guarantee for Rs.14.65 Crores on 27th June, 2012.
6. The petitioner vide letter dated 30th December, 2011 agreed that 21st June, 2011 shall be the Appointed Date. A Meeting was conducted between the parties since period of two months had elapsed since the signing of the Concession Agreement and there were certain disputes regarding the work hence, the petitioner waived off the Conditions Precedent under Clause 24.1.1 and Clause 4.3 of the Concession Agreement.
7. During the period of 2012-2017, there were continuous correspondences between the parties wherein the petitioner had constantly stated that the respondent could not complete the project within the stipulated time frame due to numerous factors.
8. The petitioner in its letter dated 16th February 2016 informed the Independent Engineer that the encumbrance-free land for the length of 100% of project highway was not handed over to the respondent till date. In reply to the said letter, vide communication dated 17th February 2016, the Independent Engineer issued a letter to the petitioner for the extension of the concession period. The respondent however, did not agree to terms of extension of the concession period. As a result of which meeting was held on 05th April, 2016 amongst the petitioner's employees wherein a decision was taken that the project would be foreclosed and settled as per the Concession Agreement.
9. The respondent vide letter dated 20th April, 2016 based on its calculations provided the actual cost incurred by it in the project till date of foreclosure. A Pre-Conciliation meeting under the Chairmanship of CGM, NHAI along with the respondent and the Independent Engineer was held on 22nd August, 2
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The right to file counter-claims in arbitration is independent of previous permissions, and decisions rejecting such claims qualify as interim awards subject to challenge under Section 34 of the Arbi....
Refusal to frame issues on counterclaims violates fundamental principles of justice, warranting judicial intervention.
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An order dismissing an application under Section 23(3) of the Arbitration Act is procedural and not an interim award amenable to challenge under Section 34.
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