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IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 08.01.2019

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O.M.P. (COMM) 314/2017

NATIONAL HIGHWAYS AUTHORITY OF INDIA

..... Petitioner

Through

Ms. Padma Priya and Mr. Mukesh

Kumar, Advs.

versus

PATI -BEL (JV)

..... Respondent

Through

Mr. Vivek Chib, Mr. Asif Ahmed,

Ms. Ruchika Goel, Ms. P. Kar, Mr.

Vikramditya

and

Ms.

Kaushal

Sharma, Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

RAJIV SHAKDHER, J. (ORAL)

1

This is a petition filed under Section 34 of the Arbitration and

Conciliation Act, 1996 (in short „1996 Act‟) to assail the Award dated

13.04.2017.

2

The record shows that a three member Arbitral Tribunal was

constituted. The petitioner i.e. National Highways Authority of India

(hereafter referred to as „NHAI‟), referred three claims to the Arbitral

Tribunal.

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2.1

The three claims referred were (i) recovery of Rs.3,54,29,325/-

crores from the respondent i.e. M/s PATI-BEL (JV) (hereafter

referred to as „contractor‟) on account of balance amount of Worker's

Welfare Cess; (ii) recovery of excess payment made on account of

price adjustment; and (iii) recovery on account of deduction against

the royalty paid.

2.2

These three claims were captured by NHAI in its notice

invoking arbitration. The notice issued in this behalf is dated

13.03.2015.

3. The Arbitral Tribunal, however, has declined to deal with the

merits of the matter, primarily, on the ground that NHAI had failed to

approach the Dispute Review Board (in short „DRB‟) as required

under Clause 67.1 of the Conditions of Particular Application (in

short „COPA‟).

3.1

Furthermore, the Arbitral Tribunal has also held that what was

referred to it was only claim No.1 and, therefore, it could not rule on

Claim No.2 and 3.

4. To my mind, if the Arbitral Tribunal was inclined to hold that it

would not decide upon the merits of the case as NHAI had not

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approached the DRB, it ought not to have made any observation as to

whether or not Claim No. 2 and 3 were referred to it. In other words,

that the reference made to it was confined only to Claim No.1. It

may, however, be relevant to note that NHAI before this Court has

confined its challenge to the Award in respect of the observations

made vis-a-vis Claim No.1 and 2 only.

5. Therefore, in sum, what I am required to examine is: as to

whether the Arbitral Tribunal was right in coming to a conclusion that

the provision made in Clause 67 of COPA was mandatory, inasmuch

as before NHAI could trigger the arbitration agreement, it ought to

necessarily have taken recourse to the DRB mechanism.

5.1

For this purpose, it may be relevant to extract Clauses 67.1,

67.3 & 67.4 of COPA:

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effective.”

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(emphasis is mine)

5.2

A perusal of Clause 67.1 would show that while it is prolix, it

has the following salient features:

(i) First, where any dispute arises between the employer (in this case

NHAI) and the contractor, in connection with the contract or

execution of any works, it is, in the first instance, referred to the

DRB.

(ii) Second, the DRB, as per the clause, comprises three members.

One member is selected by the employer/NHAI and the other is by

the contractor. The two members are vested with power to agree on

the appointment of a third member. In case of failure to arrive at an

agreement, the third member is to be appointed by the authority,

specified in the appendix to the bid, which is the Chairman of the

Executive Committee of Indian Roads Congress.

(iii) Third,

under

the

clause,

either

party,

that

is,

the

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employer/NHAI or the contractor, can refer the dispute to the DRB.

(iv)

Fourth, as per the clause the recommendations made by the

DRB would be binding on both parties, who, in turn, are req