The Arbitral Tribunal's interpretation of reimbursement based on actual costs incurred due to statutory changes is valid, despite disputes over contract terms, reinforcing the principle of contractual obligations under the arbitration framework.

JUDGMENT

Vibhu Bakhru, J. The parties have filed these petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the `A&C Act') impugning an arbitral award dated 12.06.2020 (hereinafter `the impugned award') delivered by the Arbitral Tribunal constituted of three members, Mr Arun Kumar, I.A.S (Retd.), Justice M.Y. Eqbal (Retd.) and Justice Dr Mukundakam Sharma (Retd.) as the Presiding Arbitrator (hereafter `the Arbitral Tribunal').

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

2.1. Tenders were invited by NTPC Limited (hereafter `NTPC') for implementation of contracts relating to setting up of the Khargone Super Thermal Power Project (hereinafter `the Project'). The work was divided into three packages as under:

Contract Package 1 : CIF Supply (Indian Port of Entry)

Contract Package 2 : Ex-works (India) Supply

Contract Package 3 : Inland Transportation, Inland Insurance, Civil Works, Structural Works, Installation, Testing & Commissioning of EPC

2.2. Larsen and Toubro Limited (hereafter `L&T') had participated in the bidding process pursuant to the aforesaid notice inviting tenders. L&T's bid for the contracts was accepted and on 31.03.2015, NTPC issued three Notifications of Awards in favor of L&T.

2.3. Thereafter, contracts for all the aforesaid packages were signed by the parties on 03.04.2015.

2.4. The impugned award was rendered in the context of the disputes that have arisen between the parties in connection with the third contract package (hereafter `the Contract Agreement') for the `supply and erection including civil works of EPC Package Khargone Super Thermal Power Project' awarded to L&T by NTPC by the Notification of Award on 31.03.2015.

2.5. The dispute between the parties relates to the L&T's claim for payment of additional amounts as compensation for the increase in costs on account of increase in the basic minimum wage rates notified in terms of notification no. S.O.188 (E) dated 19.01.2017 (hereafter `the Notification') issued under the Minimum Wages Act, 1948.

2.6. By its various communications, L&T stated that the increase in minimum wages of construction workers had severely affected the labour cost portion in executing the contracts and requested NTPC to consider reimbursement of additional costs in terms of Clause 31.4.3 of the Special Conditions of Contract (hereafter `SCC'), which provided for reimbursement of increased expenses, inter alia, resulting from any change in law.

2.7. NTPC rejected L&T's claim stating that price adjustment for compensation for any increase in the minimum wages was covered in Appendix-2 of the Contract Agreement.

2.8. L&T did not accept NTPC's stand and requested NTPC to appoint an adjudicator for settlement of the disputes. By the award passed by the adjudicator on 07.10.2018, NTPC was directed to reimburse L&T in terms of Clause 31.4.3 of the SCC.

2.9. Aggrieved by the award passed by the adjudicator, NTPC invoked Clause 6.2 of the General Conditions of Contract (hereafter `GCC') read with Clauses 4 and 42 of the SCC and referred the matter to arbitration for adjudication of the disputes.

3. The claims made by L&T before the Arbitral Tribunal are set out below:

4. The impugned award was delivered by majority, with Justice (Retired) M.Y. Eqbal entering a partially dissenting opinion. The Arbitral Tribunal partially allowed the claims of L&T and held that