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Rules NLC's Did Not Waive Right
The has dismissed an appeal by and against a single judge order that upheld an arbitral award in favor of . A division bench comprising Justice P. Velmurugan and Justice K. Govindarajan Thilakavadi ruled that NLC’s grant of extensions of time did not waive its right to claim , as each extension expressly reserved that right.
The Project and the Dispute
The case arises from NLC’s expansion of its First Thermal Power Station by two 210 MW units. The project was divided into packages, and the Ansaldo group companies were awarded Package A-01 for erection of the boiler, furnace, and allied works under a Letter of Award issued on . Provisional takeover was scheduled for (Unit I) and (Unit II). NLC granted three extensions—on January 31, April 29, and —extending the period to , while expressly reserving its right to levy .
Disputes arose over delays, and a three-member by majority rejected the appellants’ claims for and declaration that were not leviable. The appellants challenged the award under , but the single judge dismissed that petition on . The present appeal under Section 37 followed.
Arguments Before the Division Bench
, appearing for the appellants, argued that and that NLC was required under to give notice of its intention to claim compensation when accepting delayed performance. He contended that no such notice was given at the time of actual acceptance, rendering the subsequent levy of legally unsustainable. Alternatively, he argued that if time was not of the essence, the contract was at large and NLC had not proved actual damages.
, representing NLC, countered that each extension expressly reserved the right to levy , and the appellants were fully aware that did not amount to . He also pointed out that the tribunal found the appellants themselves responsible for substantial delays, including in supply of steel and erection work.
Court’s Analysis: Notice and
The bench held that Section 55(3) does not require notice to be given only at the final acceptance of completed works. Instead, the purpose of the notice is to prevent the from being misled into believing that the has waived his right to compensation. Since NLC had while granting extensions, that mischief did not arise.
“Where the permits further performance and extends the period, the question whether the right to claim compensation has been waived has to be determined from the conduct and communications between the parties. In the present case, the extensions granted by the Respondent were not .”
The court also declined to reassess the causes of delay, noting that the tribunal had considered the evidence and found the appellants contributed to delays. It reiterated that proceedings under Sections 34 and 37 cannot be converted into a merely because another interpretation is possible.
Key Observations
The court highlighted the under Section 37:
“The very purpose of the notice contemplated under Section 55 is to prevent the from being misled into believing that the has waived his right to compensation. That mischief does not arise here because the Respondent had .”
Final Decision
The division bench dismissed the Original Side Appeal, confirmed the single judge’s order, and left the arbitral award undisturbed. It also allowed NLC to withdraw the sum of ₹66,16,458 along with accrued interest, which had been deposited pursuant to an earlier interim order. No costs were imposed.
