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IN THE HIGH COURT OF DELHI
Sanjeev Narula, J.
Kanwarji Construction Company - Appellant
Versus
Government of NCT of Delhi - Respondent
O.M.P. (COMM) 349 of 2021 & I.As. 15549-50 of 2021
Decided On : 04-03-2022




The scope of judicial review under Section 34 of the Arbitration Act is limited to reasons of law and pertains to the arbitral tribunal's adherence to the contract terms and evidence presented.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Challenge against arbitral award - Claims 2(2), 2(3), 4, 6, 8, 11, and 12 contested; some allowed, others rejected - Excusable delays by government causing extensions considered; substantive lack of supportive evidence for claims specified - The interpretation of contract terms affecting claims matters extensively - Arbitrator's originality and discernment affirmed despite dissent from claimants (Paras 10, 13, 20, 27).

(B) The challenge relied upon the grounds of perverse reasoning and non-admission of key evidence; the court found merit in the latter half, referencing binding contract terms on claims for reimbursement - Lack of substantiated proof for losses led to dismissal (Paras 9-12, 18-19).

(C) The court permitted a referral back to the arbitral tribunal for Claim No. 6 while dismissing others, recognizing the necessity for a reevaluation on proper grounds (Paras 33).

(D)

Result: Petition dismissed except for directives on Claim No. 6.

Table of Content
1. award of contract and delays. (Para 2 , 3 , 4)
2. claims for extra items not paid. (Para 6 , 7)
3. arguments on extra work claims. (Para 8 , 9 , 10)
4. admissibility of claims and contract interpretation. (Para 12 , 16 , 18)
5. reimbursement of service tax. (Para 13 , 14 , 15)
6. withheld amounts for building handover. (Para 19 , 20 , 21)
7. claims for price escalation. (Para 24 , 25 , 26)
8. interest on withheld milestone payments. (Para 27 , 28)
9. electricity generation charges claim. (Para 31 , 32)

JUDGMENT

[VIA HYBRID MODE]

Sanjeev Narula, J. (Oral)--The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] assails the arbitral award dated 8th June, 2021 to the limited extent of Claims No. 2(2), 2(3), 4, 6, 8, 11 and 12 - which were rejected by the Arbitral Tribunal.

FACTS

2. The Petitioner - M/s Kanwarji Construction Company was awarded a contract vide letter dated 29th December, 2008 - for the work of `C/o Police Housing at Mandoli, Delhi. Sh: C/o 360 Nos Type III qtrs. with stilted parking and other related development work' [hereinafter, the "Contract"] by the Respondent - Government of National Capital Territory of Delhi [hereinafter, "GNCTD"].

3. The scheduled date of commencing work under the Contract was 20th January, 2009 and the date of completion was 19th September, 2010. However, owing to certain delays statedly on GNCTD's part, there was a prolongation of the Contract and the Petitioner had to remain at the site for six additional years - till 1st October, 2016, and also subsequently, owing to certain pending electrical work which was eventually completed on 5th June, 2017. There was no delay on the Petitioner's part and an extension was granted without levy of compensation by the GNCTD under Clause 2 of the Contract qua compensation payable.

4. When disputes arose, pursuant to Petitioner's invocation, GNCTD appointed the Arbitrator. In the ensuing arbitration proceedings, the Petitioner filed several claims - of which some were allowed and some rejected. The scope of the present petition, as already noted above, is confined to the award of claims that have been rejected.

5. The contentions of the parties and analysis thereof, is being dealt claim-wise.

CLAIM NO. 2 [QUA EXTRA ITEMS, DULY EXECUTED BUT NOT PAID]

6. Claim No. 2 was for certain extra items that the Petitioner alleged were duly executed, yet, not paid for. The same consists of three parts: (1) Extra for Surface Dressing; (2) Extra for additional lead up to 1.00 Km; and (3) Extra for additional lift of 1.5 M. Whereas, Claim No. 2(1) has been allowed by the Arbitral Tribunal; Claims No. 2(2) and 2(3) were rejected.

7. Ms. Kanika Singh, counsel for the Petitioner, submits that Claims No. 2(2) and 2(3) have been rejected on the basis of perverse reasoning by the Arbitrator, who has confused the said items with those under Claim No. 2(1) and has rendered findings which were neither the pleaded case of the parties, nor borne out from the terms placed on record.

8. Ms. Singh places reliance upon the letters dated 20th May, 2010 and 10th October, 2011 and contends that Petitioner had carried out extra work and raised a claim against the same with GNCTD. The said communications were never replied to, and ultimately, in 2017, when the final bill was approved, the claims qua these extra items were rejected. She emphasises that the Arbitrator has held in her favour on the question of claims being within limitation. However, the findings given in paragraph no. 40 of the impugned Award, are in complete contradiction with the record available on record. The above-noted letters - whereby the Petitioner had raised the claims - were part of the record, yet, never looked into by the Arbitrator. The findings rendered by the Arbitrator, in paragraph 3(a) of the impugned Award, holding that claims for extra items under Claim 2(2) and 2(3) are linked to Claim 2(1) - are incorrect and contrary to

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