Arbitral Tribunal’s Determination of a "Reasonable Period" for Performance in Absence of Contractual Timelines is Legally Sustainable.

The National Highway Authority of India (NHAI) awarded a project for widening NH-6 to a consortium, leading to a Concession Agreement (CA) dated 09.12.2005.

Due to delays in land availability, a Supplementary Agreement (SA) was executed on 22.09.2011 to complete remaining works within 120 days of land being made available, though the SA did not specify a timeline for NHAI to hand over the land.

Post-PCC disputes led to arbitration where the majority Arbitral Tribunal (AT) awarded damages to Atlanta but determined 18 months as a "reasonable period" for land handover rather than the 12 months stipulated in the original CA.

NHAI also filed counterclaims for Atlanta’s failure to perform maintenance (Bituminous Overlay), for which the AT awarded only "token damages" of 0.1% of the cost without multiplying by the days of delay.

Both parties challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.

1. Whether the AT exceeded its jurisdiction or acted with patent illegality by interpreting 18 months as a "reasonable period" for land handover under the SA instead of 12 months

2. Whether the AT’s award of 10% interest for the petitioner and 12% for the respondent was discriminatory or contrary to party agreement

3. Whether the AT erred in awarding only token damages to NHAI for maintenance defaults by failing to calculate damages "for each day of default" as per Clause 18.13

Section 34 of the Arbitration and Conciliation Act, 1996, which restricts judicial interference to grounds of patent illegality or conflict with the fundamental policy of Indian law.

The court relied on Hungerford Investment Trust Ltd. v. Haridas Mundhra to hold that where no time is prescribed for an act, the law implies a "reasonable time" based on facts.

Under Section 31(7) of the Act and Hyder Consulting (UK) Ltd. v. State of Orissa, the AT has discretionary power to award interest at rates it deems reasonable.

Section 74 of the Indian Contract Act, 1872, as interpreted in NHAI v. Patel Knr Heavy Infrastructure, dictates that liquidated damages require proof of actual loss unless the stipulated sum is a genuine pre-estimate.

Regarding the 18-month timeline, the Court found the AT’s reasoning plausible because the SA deliberately omitted the 12-month stipulation found in the CA; thus, the AT did not rewrite the contract but interpreted a "reasonable period" using the land acquisition process as context.

On the issue of interest, the Court held that the 12% rate recorded in previous proceedings was a limited settlement for specific claims and did not bind the AT’s discretion for the entire award.

For Counterclaim 4(c), the Court upheld the award of "token damages." It reasoned that NHAI failed to prove actual loss and that the formula proposed by the Independent Consultant relied on policy guidelines from 2016 which could not be retroactively applied to a 2005 Agreement.

The Court emphasized that interpreting contractual clauses and assessing evidence for damages falls exclusively within the AT’s domain.

The interest rate of 10% was within the AT's discretion under Section 31(7).

The award of token damages (Rs. 88,564/-) under Counterclaim 4(c) was legally sound as liquidated damages cannot be mechanically awarded without demonstrated actual loss.

The Court dismissed both petitions and upheld the Arbitral Award, finding it did not suffer from patent illegality or perversity.