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2023 Supreme(Del) 1928

IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Ssangyong Engineering & Construction Co. Ltd – Appellant
Versus
National Highway Authority of India – Respondent
O.M.P. (COMM) 518 of 2018 & I.A. 1297 of 2023
Decided On : 23-01-2023

Advocates appeared:
Mr. Navin Kumar and Ms. Aarti Mahto, Advocates, for the Petitioner.
Mr. Anukul Raj, Ms. Nikil Raj, Mr. Anubhav Deep Singh and Mr. Tushar Bhalla, Advocates, for the Respondent.

Limited scope of interference and intervention by a Court in an Arbitral Award.

Headnote:

Arbitration Act - Dispute between Multi-National Company and Government of India Undertaking - Section 34 of the Arbitration Act - 9.3.0, 9.6.7, 9.8.0, 9.8.3, 9.7.0, 9.7.7, 10.2(i), 10.2(ii) - The court discussed the extension of Defect Liability Period (DLP) and the claim for rectification of works and salary of staff during the extended DLP. The court found that the Arbitral Award did not contravene public policy and there was no patent illegality or error apparent on the face of the record.

Fact of the Case:

The petitioner, a Multi-National Company, challenged the Arbitral Award under Section 34 of the Arbitration Act, contending that the Award was against public policy and illegal. The petitioner claimed that the respondent extended the Defect Liability Period (DLP) and failed to compensate for rectification works and salary of staff during the extended DLP.

Finding of the Court:

The court found that the petitioner failed to show any patent illegality or error apparent on the face of the record and also failed to demonstrate that the findings were in contravention of the public policy of India. The court concluded that there was no merit in the petition and dismissed it.

Issues: Extension of Defect Liability Period (DLP) and claim for rectification of works and salary of staff during the extended DLP.

Ratio Decidendi: The court's decision was based on the limited scope of interference and intervention by a Court in an Arbitral Award, as well as the failure of the petitioner to demonstrate any patent illegality or error apparent on the face of the record.

Final Decision: The court dismissed the petition for being devoid of merit.

ORDER

Chandra Dhari Singh, J. (Oral)

1. The instant petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter "Arbitration Act") has been filed on behalf of the petitioner seeking setting aside of the Arbitral Award dated 28th July 2018 (hereinafter "the Award") passed by a three-member Arbitral Tribunal (hereinafter "learned Tribunal").

FACTUAL MATRIX

2. A brief background of the dispute between the parties before this Court is delineated hereunder:

a. The petitioner is a Multi-National Company registered as per the laws of Republic of Korea, represented by its Power of Attorney, Mr. S.J. Kim, working largely in the field of infrastructure development, including construction of roads, highways, dockyards and other such projects across the world. The respondent is the Government of India Undertaking responsible for maintenance, management and development of National Highways or stretch of the National Highways vested in or entrusted to it by the Central Government.

b. The respondent awarded a contract for construction of a four lane Highway at the Jhansi-Lakhanadon section between km 351 to km 405.77, National Highway-26 in the state of Madhya Pradesh to the petitioner vide Letter of Acceptance dated 30th December 2005.

c. During the course of carrying out the work contracted between the parties certain disputes arose, pursuant to which the petitioner invoked the arbitration clause stipulated in their contract. Subsequently, the disputes were referred to the Arbitral Tribunal.

d. Before the learned Tribunal, two major disputes arose amongst the parties, which was narrowed down as under:

    A. Refusal and Delay of the Engineer/Respondent for issuance of Defect Liability Certificate (DLC);

    B. Refusal of the Engineer/Respondent for determination of new rates for additional/new works instructed the Engineer/Respondent and as per the variation Clause 51.1(c), (d), (e) and (f).

e. Subsequently, upon completion and conclusion of arbitration proceedings, the Arbitral Award dated 28th July 2018 was passed and the following findings were made therein:

Regarding Claim A

    i. The Claimant Contractor, M/s. Ssangyong Engineering & Construction Co. Ltd., Gurgaon is partly entitled for Claim. No. 1 i.e. Refusal and Delay of the Engineer/Respondent for issuance of Defect Liability Certificate (DLC).

    ii. The Respondent/Employer, the National Highway Authority of India New Delhi shall pay Rs.24,69,892/- to the Claimant Contractor, M/s. Ssangyong Engineering & Construction Co. Ltd. Gurgaon as per the Tribunals findings as detailed out under sub para 9.3.0 to 9.6.7 supra.

    iii. The Respondent, the National Highway Authority of India shall pay interest on delayed payments from 01.04.2015 to the date of award amounting to Rs.8,05,926/- to the Claimant as per AT's findings under Sub para 9.8.0 to 9.8.3 supra.

Regarding Claim B

    i. The Claimant Contractor, M/s. Ssangyong Engineering & Construction Co.Ltd., Gurgaon is not entitled for Claim No.2 (Or Claim B) i.e. Refusal of the Engineer/Respondent for determination of new rates for additional/new works instructed by the Engineer/Respondent and as per variation clause 51.1 (c), (d), (e) & (f)

    ii. The Respondent/Employer, the National Highway Authority of India New Delhi shall pay nil amount to the Claimant Contractor, M/s. Ssangyong Engineering & Construction Co.Ltd. Gurgaon as per the Tribunals findings as detailed out under sub para 9.7.0 to 9.7.7 supra.

    iii. In view of Arbitral Tribunals decision under sub para 10.2 (i) & (ii) above, AT awards nil amount as interest.

f. The petitioner is aggrieved by the findings of the learned Tribunal, and is, hence, before this Court challenging the same under Section 34 of the Arbitration Act.

SUBMISSIONS

3. Learned counsel appearing on behalf of the petitioner has challenged the impugned Award contending that the same is ex-facie bad in law and contrary to the provisions of Section 31(3) of the Arbitration Act and hence, is liable to set aside under Section

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