Court decision on toll tax, service tax appeal. Compound interest upheld, excess embankment amount set aside.

The court dismissed the appeal regarding toll tax and service tax claims, upheld the award of compound interest, and set aside the award for the extra amount related to the embankment construction. The court found the majority view of the arbitral tribunal on the embankment issue to be incorrect and not in line with the contract terms, allowing the appeal to this limited extent and granting a timeline for restitution.

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Issues Involved:
1. Extra amount awarded for the making of embankment.
2. Allowing of claims for toll tax and service tax on transportation imposed by a subsequent legislation.
3. Award of compound interest post-award period on both principal and interest amount.

Detailed Analysis:

1. Allowing of Claims for Toll Tax and Service Tax on Transportation by Subsequent Legislation:

The court addressed the issue of claims related to toll tax and service tax imposed by subsequent legislation, referencing previous judgments. The court noted that the learned Single Judge had already dealt with similar issues in cases like National Highways Authority of India v. Oriental Structural Engineers Pvt. Ltd. and ITD Cementation India Limited. The court reiterated that the claims allowed by the Arbitral Tribunal were in line with the Division Bench judgments and did not require awaiting the Supreme Court's decision on pending Special Leave Petitions. The court found no merit in the appellant's argument to defer the hearing and dismissed the appeal, emphasizing that the issues had attained finality within the jurisdiction of this court.

2. Award of Compound Interest Post-Award Period on Both Principal and Interest Amount:

The court examined the grievance regarding the arbitral tribunal granting 12% compound interest for the pre-reference, pendente lite, and future periods. It was noted that the contract explicitly provided for compound interest at 12% with monthly rates as per clause 60.8(b) of the "Conditions of Particular Application" (CoPA). The court cited the Supreme Court's decision in State of Haryana v. S.L. Arora, which allowed compound interest only if specified by contract or statute. The court found that the contractual terms justified the award of compound interest and that this aspect was not contested before the learned Single Judge. Consequently, the court upheld the award of compound interest.

3. Extra Amount Awarded for the Making of Embankment:

This issue was the most contentious, involving detailed submissions. The appellant argued that the embankment could be constructed using soil alone or a combination of soil and pond ash, with different costs associated with each method. The appellant contended that the rate per cubic meter should depend on the quantity of soil or pond ash used, whereas the respondent argued that the higher rate for pond ash should apply irrespective of the quantity used. The court noted that the Dispute Resolution Board (DRB) and the arbitral tribunal had differing opinions, with the majority ruling in favor of the respondent.

The court scrutinized the majority award, which incorrectly interpreted the contract clauses, suggesting two separate items for soil and pond ash embankments. The court clarified that the contract provided one item for embankment construction, with different rates for soil and pond ash. The court emphasized that the terms of the contract were clear and did not support the respondent's interpretation. The court found that the majority view of the arbitral tribunal was not plausible and bordered on absurdity, especially since the parties had acted consistently with the appellant's interpretation for over 30 months.

The court set aside the award related to Dispute No.4, which granted the extra amount for the embankment to the respondent, while upholding the award in all other respects. The court allowed the appeal to this limited extent and granted the respondent six weeks to restitute the overdrawn amount to the appellant.

Conclusion:

The court dismissed the appeal regarding toll tax and service tax claims and upheld the award of compound interest. However, it set aside the award for the extra amount related to the embankment, finding the majority view of the arbitral tribunal to be incorrect and not in line with the contract terms. The court allowed the appeal to this limited extent and provided a timeline for restitution.

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