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IN THE HIGH COURT OF DELHI AT NEW DELHI

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Judgment delivered on: 28.03.2022

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O.M.P. (COMM.) 133/2021

M/S SARADA CONSTRUCTION

..... Petitioner

Versus

M/S NATIONAL HIGHWAY AUTHORITY

OF INDIA

..... Respondent

Advocates who appeared in this case:

For the Petitioner

:

Mr. Rajat Arora, Ms. Renu Bhandari

& Mr. Ekansh Bansal, Advs.

For the Respondent

:

Mr. Alok Kumar Jain, Adv.

CORAM

HON’BLE MR JUSTICE VIBHU BAKHRU

JUDGMENT

VIBHU BAKHRU, J

1.

The petitioner has filed the present petition under Section 34 of

the Arbitration and Conciliation Act, 1996 (hereafter ‘the A&C Act’)

impugning an Arbitral Award dated 17.12.2020 (hereafter ‘the

impugned Award’) rendered by an Arbitral Tribunal comprising of

three members (hereafter ‘the Arbitral Tribunal’).

2.

The petitioner assails the impugned award to the limited extent

that its claim for extra work done quantified at ₹3,66,44,746/- and the

cost of arbitral proceedings quantified at ₹9,68,000/-, has been denied.

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/001103

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3.

The respondent (hereafter ‘NHAI’) had issued an invitation to

tender for work of “Repair & Maintenance work of remaining stretches

1/2016)”

4.

The petitioner had submitted its bid pursuant to the aforesaid

invitation to tender and by a Letter of Acceptance dated 27.05.2016, the

petitioner was awarded the aforesaid contract at a value of

₹5,78,87,054.25/- (Rupees Five Crores Seventy Eight Lakhs Eighty

Seven Thousand Fifty Four and Twenty Five paise). Thereafter, on

20.06.2016, the parties had entered into an agreement (the Contract). In

terms of the Contract, the date of commencement of work was

20.06.2016 and the same was required to be completed within a period

of three months; that is, on or before 19.09.2016. The Defect Liability

Period was stipulated as twenty-four months from the date of the

completion of the works. The works were completed on 11.10.2016,

therefore, the Defect Liability Period would expire on 10.10.2018.

5.

The Arbitral Tribunal accepted NHAI’s contention that it had

pre-closed the Contract in respect of the stretch of the highway from

KM 51.00 to KM 52.400 with effect from 14.03.2017 and had informed

the petitioner regarding the same on 04.01.2018. Similarly, the Contract

in respect of some stretches of the highway were pre-closed with effect

from 27.07.2018 and some were pre-closed with effect from

14.10.2018. However, the petitioner disputes that the Defect Liability

Period was foreclosed and claims that the Defect Liability Period

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/001103

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Certificate dated 22.10.2018, issued by the Engineer does not mention

any pre-closure.

6.

NHAI, by a letter dated 16.01.2019, informed the petitioner that

the Bank Guarantee furnished by the petitioner for a sum of

₹57,88,710/- was encashed. NHAI appropriated a sum of ₹47,07,951/-

and deposited the balance amount of ₹10,80,759/- recovered by

encashment of the Bank Guarantee in the petitioner’s bank account.

The sum of ₹47,07,951/- retained / appropriated by NHAI comprised of

₹71,191/- as penalty for pre-closure of the Defect Liability Period and

₹46,36,760 as amount paid for execution of the balance works at the

risk and cost of the petitioner. NHAI claims that it had engaged the

Public Works Department for executing the repair work, which the

petitioner had failed to do during the Defect Liability Period, and had

incurred a cost of ₹46,36,760/-.

7.

The petitioner claims that the recovery of the aforesaid amount is

illegal as it had not committed any default in performance of its

obligation. The petitioner further claims that it had executed certain

additional works during the Defect Liability Period and is entitled for

payment fo