Once an extension of time is granted in a contractual relationship, it cannot be retroactively reassessed to the detriment of the contractor after the expiration of the extended period.

JUDGMENT

Sanjeev Sachdeva, J. (ORAL)

1. The petitioner by this application under Section 34 of the Arbitration and Conciliation Act 1996, impugns the award dated 03.07.2021 rendered by the Arbitral Tribunal deciding Issue no.3 in favour of the respondent and against the petitioner.

2. Issue no. 3 as framed reads as under:-

"Issue No. 3

Whether the action of the Respondent/PMC in granting provisional extension of time is in conformity with the terms of the agreement?"

3. Learned Senior Counsel appearing for the petitioner submits that issue no.3 is intrinsically connected with issue no. 5 and the Arbitral Tribunal has erred in deciding issue no.3 in isolation.

4. Issue no.5 as framed reads as under:

"Issue No. 5

"Whether the actions of the Respondent/PMC in imposing liquidated damages/compensation for delay with retrospective effect is in conformity with the terms of the agreement?"

5. Learned Senior Counsel for the petitioner further contends that the Arbitral Tribunal has erred in rejecting the contention of the petitioner that the extension of the time granted was only provisional and petitioner had reserved its rights to impose liquidated damages at the end of the work.

6. Learned Senior Counsel for the petitioner further submits that the extension of time granted was only provisional and on the conclusion of the contract, petitioners were entitled to assess the exact number of days of delay and accordingly levy compensation for the delayed period.

7. Per contra, learned Senior Counsel appearing for the respondent contends that the extension of the time was not provisional and can never be provisional and once extension of time is granted same cannot be curtailed specially after the extended period is over.

8. For purposes of determining the controversy, brief reference to the factual matrix would be required. Petitioner had awarded the subject contract to the respondent for construction of Civic Centre at JLN Marg, Minto Road, Delhi vide agreement dated 21.05.2005.

9. It is not in dispute that there were certain events which led to the delay in the execution of the contract. Respondent Contractor applied for extension of time on several occasions, which were granted.

10. Petitioner granted the requests in each case upto a specified date, however, also mentioned that it was without prejudice to the rights of the petitioner to recover liquidated damages in accordance with the provision of Clause 2 of the agreement.

11. The contention of the respondent is that the work was completed within the stipulated period of the contract by including the extended periods as sanctioned by the petitioner and the work did not extend beyond the extensions granted by the petitioner.

12. The contention of the petitioner before the Arbitral Tribunal and even before this court is that at the conclusion of the work it was open to the petitioner to re-assess the extensions granted and determine as to whether the extensions granted were correct or not and also that the number of days could be reduced.

13. In the present case, petitioner has after the conclusion of the work and after the period stipulated by the contract and the extended periods as sanctioned, have expired, re-assessed the number of days of delay and reduced the extended period and levied compensation of liquidated damages.

14. Clause 2 refers to compensati