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.

JUDGMENT

Vibhu Bakhru, J.

1. The petitioner (hereafter `NHAI') has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act') impugning an Arbitral Award dated 24.09.2019 (hereafter `the impugned award') rendered by an Arbitral Tribunal constituted by three members (hereafter `the Arbitral Tribunal').

2. NHAI challenges the impugned award to the limited extent that it allows KMC's claims for certain extra items (E-2, E-4, E-12, E-16, R2-05, CD-02 & 03) forming part of Claim No. 1 and to the extent that it allows KMC's Claim Nos. 12, 14 and 22.

3. Briefly stated the facts that are necessary to address the controversy are stated hereunder.

3.1. NHAI, by a Letter of Acceptance (LoA) dated 22.08.2001, awarded a contract for the work of `Widening to four lanes and strengthening of the existing two lane carriageway between Km 278/000 to Km 340/000 of Udaipur-Ratanpur-Gandhinagar Section of NH-8 in Rajasthan, package no. UG-1' (hereafter `the Project') to KMC. Subsequently, the parties entered into an agreement dated 05.10.2001 (hereafter `the Agreement'). In terms of the Agreement, KMC agreed to execute the works at a Contract Price of Rs.164,75,76,353/-. The works for the Project were to commence on 30.10.2001 and completed by 30.04.2004.

3.2. It is KMC's case that NHAI had failed to handover the site to it and had provided an incorrect Detailed Project Report (DPR). Despite this, KMC completed the project two months prior to the stipulated date of completion. The works were completed on 28.02.2004 at a Contract Price of Rs.248,00,00,000/- against the original Contract Price of Rs.164,75,76,353/-. KMC submitted its completion statement on 08.05.2004. It is KMC's case that the Engineer did not process the payments due to it and extended the defect liability period. Finally, the Engineer issued the Defect Liability Certificate on 24.05.2006. The Engineer issued a Statement at Completion proposing a recovery of Rs.18,16,34,122/- against the Final Bill of Rs.70,51,84,650/-. Further, the Engineer did not give its decision on the other sums payable to KMC.

3.3. NHAI invoked the Performance Bank Guarantee furnished by KMC in the sum of Rs.16,47,57,636/-.

3.4. In view of the disputes, KMC invoked the Arbitration Agreement by a letter dated 16.09.2006 and nominated Sh. P.V. Rama Raju as an Arbitrator. NHAI nominated Sh. V.S. Dixit as its nominee Arbitrator. Both nominated Arbitrators appointed Sh. Prafulla Kumar as the Presiding Arbitrator and the Arbitral Tribunal was constituted on 12.11.2006.

3.5. In the meanwhile, KMC also filed a Writ Petition (bearing W.P. No. 18269/2006) before the High Court of Andhra Pradesh seeking interdiction of the invocation of the Bank Guarantee. By an order dated 29.11.2006, that High Court restrained NHAI from encashing the aforesaid Bank Guarantee. NHAI appealed against the aforesaid order before the Division Bench of the High Court of Andhra Pradesh and the Court ordered KMC to keep the Bank Guarantee alive during the course of the arbitration proceedings.

3.6. Before the Arbitral Tribunal, KMC raised twenty-two claims aggregating to Rs.135,96,28,549/-. NHAI filed its Statement of Defence and also raised counter-claims.

3.7. By a letter dated 11.10.2013 addressed to the Arbitral Tribunal, both parties requested the Arbitral Tribunal to keep the arbitral proceedings in abeyance, to enable them to amicably resolve the disputes by Conciliation b