The arbitral tribunal's decision to not expel the contractor was upheld, recognizing NHAI's breaches and the contractor's financial incapacity as reasons for the award.

JUDGMENT

Najmi Wazri, J. (Oral)

The hearing has been conducted through hybrid mode (physical and virtual hearing).

1. This appeal under s.37(1)(c) of the Arbitration & Conciliation Act, 1996 (`the Act') impugns the order dated 23.03.2022 passed by the learned Single Judge in O.M.P. (COMM) No.77/2016, dismissing the appellant's petition under s.34 of the Act which had impugned an arbitral award dated 15.12.2015, passed by a three-member Arbitral Tribunal. The respondent's claims were allowed, the appellant was directed to pay monies relating to an Agreement for "Widening to 4/6 lanes and strengthening of existing 2-Lane Carriageway of NH-5 in the State of Orissa from km 284.00 to km 338.00 (Ganjam-Sunkhala) Contract Package OR-VII".

2. The grounds for challenge in this appeal are that albeit the learned Arbitral Tribunal found that the Contractor/Claimant/(respondent herein), admittedly did not have the financial wherewithal to continue with the aforesaid project and had indeed, abandoned the project site, the Tribunal did not consider the contractor at fault. The appellant says that the logical sequitur to the admitted financial inability and other incapacity of the respondent would have been, that the respondent be "expelled" from the contract and there be no case for foreclosure, but the award has not done so.

3. The learned counsel for the appellant refers to para 72 of the Award which has held as under:

"...72. It is obviously clear that the execution of work was rendered almost impossible by various omissions and innumerable inaction on the part of respondent from the inception. That apart, the respondent had confiscated the machineries and equipment stationed on the site despite there being no valid cause for such a confiscatory action of the respondent.

The respondent placed reliance on the ruling of Delhi High Court 2011 (Vol. III) Arbitration law report pg. 26 (Delhi) in C.K. Engineers vs. Delhi Development Authority. It was brought to our notice that said single Judge judgment had been subsequently reversed by the Division bench in C.K. Engineers vs. Delhi Development Authority reported in 2013 (vol. 137) DRJ 152. Per contra the claimant placed reliance upon Ex. CD-11, wherein in identical circumstances another independent arbitral tribunal held that identical termination under clause 63.1 is illegal and compensation was awarded under the various heads. The said award has been affirmed by the Delhi High Court by a single Judge as well as by Division: bench. On the findings recorded by Arbitral Tribunal constituted by u/s G.S. Tawarmalani, S.C. Vasudeva and I.M. Singh between the same parties, it has since been affirmed by the higher forums, has been rightly relied upon by the claimant. Hence on an overall consideration of the entire facts, innumerable documents, correspondences exchanged between the parties, the innumerable omissions on the part of respondent leads us to an irresistible conclusion that expulsion cannot be sustained at all on facts & is illegal and the consequences as claimed by the claimant deserve to be sustained. We must however keep in mind while deciding on the claims that the claimant had, by its own admission, become financially so weak that it had become well-nigh impossible for it to continue with the work at an acceptable pace and that it had itself requested for an amicable foreclosure of the contract. While we hold that the expulsion was unjustified and illegal, the claimant was also not in a position to continue with the work without substantial financial support. The best, fair and equitable course