The court upheld the arbitral award directing the release of the performance bank guarantee, finding all contractual requirements were satisfied and counter claims were untimely.

JUDGMENT

Vibhu Bakhru, J. (Oral)

I.A. 3836/2021 & I.A. 3840/2021

1. For the reasons stated in the application, the delay in filing as well as re-filing is condoned.

2. The application is disposed of.

I.A. 3837/2021 & I.A. 3838/2021

3. Allowed, subject to all just exceptions.

O.M.P. (COMM) 112/2021 & I.A. 3839/2021

4. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the `A&C Act'), impugning the interim award (hereafter `the impugned award') passed by the Arbitral Tribunal comprising of a Sole Arbitrator. By the impugned award, the Arbitral Tribunal had directed that the Performance Bank Guarantee (Bank Guarantee No. 130391 BG 0000505) for a sum of Rs.15,06,31,160/-, furnished by the respondent (hereafter `NCC') be returned to NCC, with the attendant direction to replace the same by a Bank Guarantee in the sum of Rs.1.5 crores.

5. The petitioner contends that the impugned award is patently illegal as it effectively dilutes the security available with the petitioner, to recover its counter-claims. According to the petitioner, the performance of the contract was delayed inordinately and it is entitled to recover damages, which have been articulated as counter-claims. The petitioner contends that such an interim award, without adjudication of its counter claims, is patently illegal and is liable to be set aside.

6. The controversy in the present case arises in the following context:

7. On 21.12.2009, the petitioner issued a Notice Inviting Tenders (NIT) for "Construction of Dwelling Units including allied services for officers, Senior Sailors & Junior Sailors at Naval Station (Dolphin Hill, DGNP site), Bheemunipatnam (Navy), Vizag". NCC submitted its bid pursuant to the said NIT.

8. On 05.03.2010, the petitioner issued the Letter of Award (LoA), awarding the contract for the construction of dwelling units including allied services for officers, senior sailors and junior sailors at three sites - Dolphin Hill, DGNP Site and Bheemunipatnam (Navy site) - at Vizag. In terms of the LoA, NCC was required to construct 1,369 Dwelling Units (hereafter DUs). The construction was planned in three Pockets and one hundred and seven blocks as under:

9. The period of completion of the works was stipulated as twenty-five months. The construction was to be completed in five phases and separate dates for commencement and completion of construction for each phase were stipulated in the Work Order - Work Order No.1 was issued on 18.03.2010.

10. In terms of the contract between the parties, the original date for completion of the last phase of the contract (Phase-V) was stipulated as 17.04.2012. The work in respect of the other phases was to be completed earlier. However, the dates of completion in respect of the five phases were extended from time to time.

11. The work commenced as per Work Order-I on 18.03.2010 and was completed on 13.08.2015.

12. The contract between the parties stipulated the defect liability period as two years. This period expired on 12.08.2017.

13. The respondent submitted its Final Bill on 09.11.2016, which included an undisputed amount as well as the disputed amount. Though the undisputed portion of the Final Bill was for a sum of Rs.1,31,02,606.50, however, a sum of Rs.1,07,91,165/- was released to the respondent.

14. The disputes between the parties have been referred to arbitration. The same also includes NCC's claim regarding return of the Bank Gurantee (Bank Guarantee No. 130391 BG 0000505) for a sum of