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of <h1>SC upholds arbitration award on construction contract disputes involving reimbursable royalty and tax increases under Sections 34 and 37</h1> <h3>National Highways Authority of India Versus M/s Hindustan Construction Company Ltd.</h3> National Highways Authority of India Versus M/s Hindustan Construction Company Ltd. - TMI Issues Involved:1. Reimbursement of additional expenditure due to increased royalty and associated sales tax on materials.2. Non-payment for executed work of embankment with soil/pond ash for the initial 150 mm depth.3. Reimbursement of additional costs due to increased forest transit fee rates.Summary:Issue 1: Reimbursement of Additional Expenditure Due to Increased Royalty and Sales TaxThe appellant awarded a contract to the respondent for the Allahabad Bypass Project. Disputes arose and were referred to an Arbitral Tribunal. The Tribunal awarded Rs.2,69,91,248/- to the respondent for increased costs due to higher royalty and sales tax rates till 31st December 2008, with interest at 12% per annum. The appellant challenged this under Section 34 of the Arbitration and Conciliation Act, 1996, but the Single Judge upheld the award, relying on a precedent. The Division Bench also dismissed the appeal under Section 37, referencing the same precedent. The Supreme Court concurred with the lower courts, noting that the Arbitral Tribunal's interpretation of contract clauses 70.1 to 70.8 was reasonable and consistent with the principles laid down in previous rulings.Issue 2: Non-payment for Executed Work of EmbankmentThe Arbitral Tribunal awarded Rs.3,47,35,522/- to the respondent for the embankment work, with a price adjustment and interest at 12% per annum. The appellant contested this, arguing that the work was part of clearing and grubbing activities. The Single Judge and Division Bench upheld the Tribunal's majority decision, which found the respondent entitled to the amount. The Supreme Court affirmed this, emphasizing that the Tribunal's interpretation of the contract and factual findings were within its jurisdiction and not subject to interference under Sections 34 and 37 of the Arbitration Act.Issue 3: Reimbursement of Additional Costs Due to Increased Forest Transit Fee RatesThe Tribunal awarded Rs.3,77,74,427.39/- to the respondent for increased forest transit fees, with interest at 12% per annum. The Single Judge and Division Bench upheld this award, and the Supreme Court found no reason to interfere, noting that the Tribunal's decision was based on a reasonable interpretation of the contract and consistent with established legal principles.Conclusion:The Supreme Court dismissed the appeals, finding no merit in the appellant's challenges. The Arbitral Tribunal's awards and the lower courts' judgments were upheld, with no order as to costs.
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