* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment reserved on: 27.03.2026 Judgment pronounced on: 04.04.2026 + O.M.P. (COMM) 289/2023, I.A. 14392/2023 & I.A.

14396/2023 UNION OF INDIA .....Petitioner Through: Mr. Rakesh Kumar, SPC with Mr. Sunil, Adv.

versus M/S ANAND AND COMPANY .....Respondent Through: Mr. Kunwar Chandresh, Ms.

Poonam Prasad, Mr. Divyansh Singh & Mr. George Lincoln, Advs.

CORAM:

HON'BLE MR. JUSTICE AVNEESH JHINGAN

J U D G M E N T

1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short „the Act‟) challenging the arbitral award dated 17.02.2023.

2. The facts in brief are that the petitioner invited an e-tender for construction of hundred Family Quarters (Type-II, III & IV) including internal W/S, S/I and electrical works for ITBP 22nd Bn. Campus at Chhawla, New Delhi. The bid of the respondent was accepted and a Letter of Acceptance (for short „LOA‟) dated 20.06.2017 was issued. An agreement (02/EE/AIMSPD/2017-18) was executed between the parties to the lis. The stipulated date of commencement was 11.07.2017 and the time period for completion was twelve months i.e.

10.07.2018.

2.1 During execution of the contract, disputes arose between the parties. The respondent approached the Engineer-in-Charge of CPWD (hereinafter „EE‟) but the disputes were not resolved. Clause 25 of the General Conditions of Contract (hereinafter „contract‟) was invoked for forming a Dispute Resolution Committee (for short „DRC‟). On failure to do the needful the respondent by notice dated 08.04.2021 initiated arbitration proceedings which culminated in the impugned award.

3. Learned counsel for the petitioner contends that the arbitrator erred in directing the release of Rs.35,12,328/- withheld for failure of the respondent to achieve the milestones. The submission is that extension of time and rescheduling of milestones are two distinct aspects. Moreover, extension of time is to be granted by the EE whereas rescheduling of milestones is to be done by the Superintending Engineer, CPWD (for short „SE‟). The respondent failed to apply for rescheduling of the milestones under clause 5.3 of the contract and in case of non-achievement of the milestones the petitioner was entitled to withhold the amount to the extent of ten percent of the tender value. Clause 2 of the contract is relied upon to challenge the award of interest on the withheld amount.

3.1 It is submitted that there is a clerical error in awarding the amount of Rs.71,45,578/- on account of release of pending final bills and while doing so the amount already paid was not deducted.

3.2 The awarding of three percent difference on account of difference between the Goods and Services Tax (for short „GST‟) and Value Added Tax (for short „VAT‟) is canvassed to be based upon assumed calculation and contrary to clause 38 of the contract where under the GST paid is to be reimbursed. The arbitrator erred in awarding the difference of three percent without proof that it was deposited.

3.3 The refund of Rs.3,00,000/- penalty imposed for delay in completing the sample flat is stated to have been allowed without recording reasons and ignoring the terms and conditions of the contract. Neither there was a provision for extending the time for completion of the sample flat nor the time was extended.

3.4 The grant of loss of on-site and off-site expenses for the prolongation period is stated to be against Section 73 of the Indian Contract Act, 1872 (for short „Contract Act‟) and the law laid by the Supreme Court in Kailash Nath Associates v. DDA, (2015) 4 SCC 136 and Unibros vs. All India Radio, 2023 SCC OnLine SC 1366. The argument is that there was no proof of actual loss or damage suffered and the arbitrator without any basis apportioned the expenses depicted in the certificate issued by the Chartered Accountant (for short „CA‟) and awarded the damages.

3.5 The interest awarded at the rate of nine percent is contended to be on the higher side. The costs awarded o