Court Upholds Arbitral Tribunal Decision Dismissing Petition on CVD & SAD Reimbursement

L&T-SUCG JV CC27 Delhi Versus Delhi Metro Rail Corporation Limited

L&T-SUCG JV CC27 Delhi Versus Delhi Metro Rail Corporation Limited - TMI Issues Involved:
1. Claim for reimbursement of Countervailing Duty (CVD) and Special Additional Duty (SAD).
2. Delay in procurement of Tunnel Boring Machines (TBMs).
3. Interpretation of relevant contractual clauses.
4. Scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996.

Issue-wise Detailed Analysis:

1. Claim for reimbursement of Countervailing Duty (CVD) and Special Additional Duty (SAD):
The petitioner claimed reimbursement for CVD and SAD imposed on the TBM THI-02 and CREG TBM imported due to a notification dated 03.02.2014. The Arbitral Tribunal rejected this claim, stating that Clause 11.1.1(ii) of the General Conditions of Contract (GCC) clearly indicated that "nothing extra shall be payable over the quoted rates" except what is specifically provided in the contract. The Tribunal found that no specific clause in the contract entitled the petitioner to additional reimbursement for duties imposed after the contract was signed. Thus, the Tribunal held that the petitioner was not entitled to claim any amount on account of the imposed duties.

2. Delay in procurement of Tunnel Boring Machines (TBMs):
The petitioner argued that the delay in importing TBM THI-02 was due to unforeseen geological conditions and issues with suppliers, not attributable to them. The Arbitral Tribunal found this argument unconvincing, noting that the Purchase Order for both TBMs was placed simultaneously, and TBM THI-01 arrived on time. The Tribunal concluded that the delay in TBM THI-02's arrival was not due to any fault of the respondent (DMRC). Additionally, the import of CREG TBM was necessitated by encountering hard rock, which was not anticipated and could not be attributed to DMRC.

3. Interpretation of relevant contractual clauses:
The Tribunal extensively debated the interpretation of Clause 11.1.3(v) of the Special Conditions of Contract (SCC) and concluded that it proscribed any adjustment on account of changes in taxes, duties, and levies. The Tribunal reasoned that the imposition of CVD and SAD constituted a change in the levy of duties, which fell within the scope of Clause 11.1.3(v). The petitioner's contention that the clause should be read restrictively to apply only to changes in duty rates was found unpersuasive. The Tribunal's interpretation aligned with the clear import of the clause, indicating that DMRC would not be responsible for any changes in duties, taxes, and levies.

4. Scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996:
The Court emphasized that the scope of interference with an arbitral award under Section 34 is limited. The award can only be set aside if it is beyond the Tribunal's jurisdiction or opposed to the Public Policy of India. The Court found that the Tribunal's interpretation of the contract was within its jurisdiction and not perverse or plainly contrary to the contract's terms. Therefore, even if the interpretation was erroneous, it did not warrant interference under Section 34.

Conclusion:
The petition was dismissed, with the Court upholding the Arbitral Tribunal's decision. The Tribunal's findings on the non-entitlement of reimbursement for CVD and SAD, the lack of delay attributable to DMRC, and the interpretation of contractual clauses were deemed reasonable and within its jurisdiction. The Court reiterated the limited scope of interference under Section 34, emphasizing that the award was neither perverse nor contrary to public policy. The parties were left to bear their own costs.