Arbitral Tribunal's interpretation of contractual obligations is final unless found patently illegal, supporting the principle that thickness of renewal coat not expressly stipulated must align with performance standards.

JUDGMENT

Vibhu Bakhru, J. The National Highway Authority of India (hereafter `NHAI') has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act') impugning the Arbitral Award dated 18.01.2020 (hereafter the `impugned award') passed by the Arbitral Tribunal constituted of three members (hereafter `the Arbitral Tribunal').

2. The Arbitral Tribunal has rendered the impugned award in the context of the disputes that have arisen between the parties arising out of a Concession Agreement dated 28.09.2006 (hereafter the `Concession Agreement') executed between NHAI and the promoters of the respondent company in respect of the project entailing "Design, Construction, Development, Finance, Operation and Maintenance of Km 463.6 (AP/Karnataka border) to Km 524.0 (Avathi Village), covering 60.4 kms" and "Improvement, Operation and Maintenance of Km 524 (Avathi Village) to Km 527 (Nandi Hills Crossing) and Km 535 (Devanhalli Village) to Km 539 (Meenukunte Village) on NH-7 in the State of Karnataka on Build, Operate and Transfer (BOT) Annuity Basis" (hereafter the `Project').

3. The principal dispute between the parties centers around the obligation of the respondent - Patel KNR Infrastructure Limited (hereafter the `Concessionaire') - to maintain the Project Highways. In terms of the Concession Agreement, the Concessionaire was required to ensure the minimum standard of Pavement Riding Quality and to lay a renewal coat of bituminous concrete (hereafter `BC') every five years after the period of initial construction. At the insistence of NHAI, the Concessionaire had laid a coat of 40mm thickness of BC on the Project Highways even though, according to the Concessionaire, the Concession Agreement did not oblige it to lay a renewal coat of such thickness. The surface roughness of the Project Highways had not deteriorated below the specified standards and therefore the Concessionaire claimed that it did not require a renewal coat. The Concessionaire claimed that in any event the requisite thickness of the renewal coat of BC was not required to exceed 30mm.

4. In the aforesaid context, the Concessionaire claimed costs for laying an additional 10mm thickness of BC, which it quantified at Rs.15,58,64,931/-. The Arbitral Tribunal accepted the aforesaid claim however, it did not accept the costs for executing such work as claimed by the Concessionaire. The Arbitral Tribunal accepted the additional cost of laying 10mm of BC as 8986.41 per cum of BC as determined by the Independent Consultant (IC). And applying the said rate, entered an Award for Rs.11,75,05,551/- against the Concessionaire's claim for costs for the extra 10mm thickness of BC laid at the insistence of NHAI. In addition to the aforesaid claim, the Arbitral Tribunal also awarded interest at the rate of SBI PLR plus 2% per annum from 27.07.2016 (the date on which the work of laying renewal coat of 40mm of BC was completed) till 18.01.2020 (the date of Award). The Arbitral Tribunal computed the average SBI PLR at 13.875% and accordingly awarded pre-award interest at 15.875%. The Arbitral Tribunal also awarded costs computed at Rs.10 lacs and future interest at 10% per annum on the awarded amount from the date of Award till the date of payment.

5. NHAI also raised a counter-claim on account of the delay in laying the renewal coat of BC. The compensation on account of such delay had been determined and recommended by the IC. NHAI recovered the same before the reference of the disputes to a