Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on : 01.10.2015
+ FAO(OS) 448/2014, C.M. APPL.17439-17440/2014 & 12533/2015
NATIONAL HIGHWAYS AUTHORITY OF INDIA..... Appellant
Through : Sh. Ravi Sikri, Sr. Advocate with Sh. Deepank
Yadav, Ms. Meenakshi Sood and Sh. Mukesh Kumar,
Advocates.
versus
M/S SRICON INFRASTRUCTURE PVT. LIMITED..... Respondent
Through : Sh. Ravi Gupta, Sr. Advocate with Ms. Kiran
Shukla, Sh. Varun Amar and Sh. Junaid Akhtar,
Advocates.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MS. JUSTICE DEEPA SHARMA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
1. This appeal is preferred by the National Highways Authority of India
(“NHAI”) impugning the judgment and order of a learned Single Judge,
dismissing its objections/application, under Section 34 of the Arbitration &
Conciliation Act, 1996 (hereafter “the Act”). NHAI had sought for setting
aside an Award dated 03.06.2009, together with notice dated 11.06.2009
FAO (OS) 448/2014 Page 1
amending the Award dated 03.06.2009. The award had directed NHAI to
pay the respondent (hereafter “the Contractor”) ` 1366.23 lakhs together
with future interest @ 12% from three months from the date of the Award.
By its correction dated 11.06.2009, the Arbitral Tribunal corrected the
Award and enhanced the awarded amount to 1369.57 lakhs.
`
2. NHAI had, in 2005 invited bids for rehabilitation and improvement of
pavement for Gurgaon-Kotputli-Amer Section of National Highway-8 from
Km 42.00 to Km 248.00. The notice inviting tenders – so states NHAI-
contained certain errors and, accordingly, on 18.03.2005, it informed the
responsive bidders that the unit of item 10 of Bill of Quantities was
inadvertently mentioned as Square Meters instead of Cubic Meters. The
bidders were requested to submit bids as per the amended Bill of Quantity.
The Contractor’s bid was accepted and a Contract Agreement dated
17.05.2005 was executed between it and NHAI. Disputes arose between the
parties during the contract execution, which were referred to the Engineer.
The claims of the Contractor were rejected by the Engineer on 02.02.2007,
resulting in the issuance of notice of intention to commence the arbitration
against Engineer's decision. An Arbitral Tribunal consisting of sole
Arbitrator was constituted with the consent of the parties. The Contractor
filed its statement of claim, which was resisted by the NHAI, which filed its
statement of defence. After considering the materials, the pleadings and
submission of the parties, the Arbitral Tribunal by the Award dated
03.06.2009 awarded a sum of ` 1366.23 lakhs. By issuing notice of making
correction to the Arbitration Award, dated 11.06.2009, the Tribunal carried
out 23 corrections to the Award and enhanced the awarded amount to
1369.57 lakhs from 1366.23 Lakhs. The NHAI preferred objections to the
` `
FAO (OS) 448/2014 Page 2
award under Section 34, which were considered and rejected by the learned
Single Judge, in his impugned judgment.
Appellant NHAI’s contentions
3. It was argued that the impugned judgment discloses three serious
errors which call for interference. Mr. Ravi Sikri, learned senior counsel for
NHAI argued that that the scope of work is clearly defined under Clause 8
of the Contract Data. The tender was complete in all respects as it contained
drawings, specifications for execution of the work involved. The work in
terms of the tender drawings to be completed by the Contractor were (i)
Milling + DBM + BC (ii) DBM + BC and (iii) Reconstruction of road in
some reaches. The said work was to be done in terms of Clause 16.1 of the
General Conditions of Contract which required the Contractor to construct
and install the Works in accordance with the Specification and Drawings. It
was argued that Clause 15 of Contract Data stipulates that the site
possession dates shall be the issue of notice to proceed with the work.
Counsel stated that the notice to proceed withthe execution of work was
issued by NHAI to to the Contractor by its letter dated 17.05.2005. Reliance
was placed on the Contractor’s letter dated 14.06.2005 to say that the latter
was unprepared to commence work. Thus, stated counsel, submissions in the
form of a detailed chart submitted to the Tribunal depicting true picture of
front available month-wise that in the beginning of the contract periods, i.e.
15.6 Km. for milling 65mm, 51.40 Km for DBM 65mm, 5.750 Km for DBM
150 mm and 57.15 Km for BC 40 mm, were available in the month of May
2005 with Contractor and that adequate fronts were available throughout
during the contract period. The Contractor defaulted in its contractual
FAO (OS) 448/2014 Page 3
obligations, which led to the prolongation of the contract period for which
no fault could be attributed to NHAI. It was submitted that on this score as
well as in regard to other claims, the findings of the Tribunal were clearly
erroneous. Counsel highlighted the fact that ` 8,06,06,858/- was claimed
against therespective Claims A & B. Thereafter, the Contractor unilaterally
and without any basis increased the said amount to ` 12,99,49,000/-. Learned
senior counsel submitted that the errors in appreciation and findings went to
the root of the award and required interference. He stated that by refusing to
exercise powers under Section 34 of the Act, the learned Single Judge erred
in law.
4. It was next argued that as regards Claim No. 1, which was awarded
due to difference of quantity actually executed and what was certified by the
Engineer, the Tribunal fell into fundamental error. It was submitted that all
along, till submission of Running Bill No. 12, the Contractor had not
disputed the standard for measuring the thickness of the work. The
insistence that there should be change in the standard, to judge work, was
utterly unprincipled. Counsel relied on the details of computation of the
claim (CH -20/Annexure 1/ 63) to show that the amount adopted for the
claim was ` 1082/- per cu. Metre for 12,759.58 cu.m. However, the Tribunal
erroneously awarded ` 1570/- for 27,229 cu. Metres. This was unsupported
in law and evidence.
5. Counsel for NHAI lastly contended that the Tribunal awarded ` 51.47
lakhs, towards Sub-Claim C – 2. Here, it was submitted that the findings
were clearly beyond the agreement, because the Contractor had insisted for
payment at the rate of ` 4100/- per cu.metre. The Contractor had agreed to
accept ` 3100/- per cu.metre. Despite these facts, the Tribunal awarded the
FAO (OS) 448/2014 Page 4
sum in favour of the Contractor at the rate of ` 4900/- per cubic metre.
6. At the outset, this Court notes that the learned Single Judge held that
the rulings of the Supreme Court restrict the supervisory role of the courts
while testing the validity of an Arbitration Award. Mcdermott International
Inc. v Burn Standard Co. Ltd. &Ors (2006) 11 SCC 181, ( “Intervention of
the court is envisaged in few circumstances only, like, in case of fraud or
bias by the Arbitrators, violation of natural justice, etc. The court cannot
correct errors of the Arbitrators. It can only quash the award leaving the
parties free to begin the arbitration again if it is desired. So, the scheme of
the provision aims at keeping the supervisory role of the court at minimum
level and this can be justified as parties to the agreement make a conscious
decision to exclude the court's jurisdiction by opting for arbitration as they
prefer the expediency and finality offered by it." ) was relied on. It was also
held that when a Tribunal assesses the material and evidence placed before it
in detail, the Court, under Section 34 cannot sit as a court of appeal and re-
appreciate the entire evidence or reassess the case of the parties.
7. The first two grounds urged in support of this appeal, by NHAI relate
to pure findings of fact. Sans patent illegality or the terms of an award
exceeding the reference or a term of the contract, the Court cannot re-
appreciate the Tribunal’s findings. Unlike in traditional litigation, where
courts assume the primary adjudicatory role of fact appreciation, the
jurisdiction conferred by Section 34 calls for a radically different- by and
large deferential, “hands off” approach. The jurisprudence evolved by Indian
courts admits a narrow window of appreciation- to courts, under Section 34,
i.e. patent illegality, findings contrary to or in excess of express terms of
contract, or findings which are so unreasonable as to conclude that no
FAO (OS) 448/2014 Page 5
reasonable man, given the set of facts, could have arrived at them.
Approached from this prism, there is no infirmity in the findings or
judgment of the learned Single Judge, warranting interference. We also
notice that on the second question, i.e. findings on Claim No. C-1, NHAI
significantly does not say that the issue was urged, but erroneously
overlooked or not discussed by the impugned judgment. Therefore, no
interference on the fist two contentions is called for.
8. In regard to Claim No. C-2, this Court notices that the claimant had in
two letters of September, 2005, stated that it would not agree for any amount
less than ` 4100/- per cu.metre. Subsequently, it claimed before the Tribunal
that it was pressurized to accept ` 3100/- per cu.metre. It however, claimed
` 4900/- per cu.metre which was uncritically accepted. This Court had
enquired of the Contractor’s counsel whether there was any justification for
increasing the amount originally agreed to, i.e. ` 4100/- per cu.metre; he was
unable to disclose any. In these circumstances, we are of the opinion that the
sum awarded ` 4900/- per cu.metre, cannot be justified- there is no apparent
basis for this; the award is also silent on this aspect. The claimant’s counsel
furthermore did not press for affirmation of the award on this score.
Consequently, we direct that instead of ` 4900/- per cu.metre the Contractor
can claim the sum of ` 4100/- per cu.metre (or in other words, ` 800/- per
cu.metre less) for the quantity in question, i.e. 2820 cubic metres. The award
on this score shall stand modified to ` 4100/- per cu.metre for 2820 cubic
metres (Claim C-2).
9. No other contentions were urged in support of the appeal. The appeal,
FAO 448/2014 accordingly succeeds in part, to the extent of modification in
FAO (OS) 448/2014 Page 6
the award, indicated in respect of Claim No. C-2; the rest of the impugned
judgment is allowed. The appeal is, to the said extent, partly allowed.
S. RAVINDRA BHAT
(JUDGE)
DEEPA SHARMA
(JUDGE)
OCTOBER 1, 2015
FAO (OS) 448/2014 Page 7