TaxTMI 
TaxTMI 
2024 (5) TMI 407
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....hree claims referred to arbitration, which are as follows: * Claim no.1 - Reimbursement of additional expenditure incurred due to an increase in the rates of royalty and associated sales tax on soil, sand and crushed stone aggregates; * Claim no.2 - Non-payment for executed work of embankment with soil/pond ash for the initial 150 mm depth stripped in accordance with the requirements of the contract and * Claim no.3 - Reimbursement of additional costs incurred due to an increase in the forest transit fee rates. 2. The Arbitral Tribunal made an award on 30th March 2010. The summary of the award is as follows: * Claim no.1 - The Arbitral Tribunal granted an amount of Rs.2,69,91,248/- as an additional cost to the respondent till 31st December 2008, along with interest and future interest of 12% per annum. A direction was also issued to the appellant to pay an additional cost to the respondent post-31st December 2008 on account of an increase in royalty charges and associated sales tax; * Claim no. 2 - Two members of the Arbitral Tribunal consisting of three members held that the respondent was entitled to Rs.3,47,35,522/- towards the formation of the embankment for an initi....
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....ii) of the contract, which provides for a price adjustment for all local material based on Wholesale Price Index (WPI). The learned counsel submitted that while submitting the bid, the appellant accepted that WPI would be the only yardstick to be used in the matter of price adjustment. The learned counsel submitted that the Division Bench erroneously interpreted clause 70.8 of the agreement. 5. The learned senior counsel submitted that though the contract provided for partly fixed and partly adjustable prices, the adjustment in costs for inputs would be covered only to the extent to which they are covered by a formula in clause no. 70.3 of the agreement. She submits that the learned Single Judge and Division Bench of the High Court have failed to notice that clause 70.8 starts with a non-obstante clause. It provides that such additional or reduced costs shall not be separately paid or credited if the same has already been taken into consideration in the indexing of any inputs to the price adjustment formulae in accordance with clauses 70.1 to 70.7. She submits that in the present case, such additional costs have been dealt with in Clause 70.3 (vii). She submitted that the sales ta....
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....ieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (2019) 7 SCC 236, in paragraphs 9.1 and 9.2, this Court held thus: "9.1. In Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], this Court had an occasion to consider in detail the jurisdiction of the Court to interfere with the award passed by the Arbitrator in exercise of powers under Section 34 of the Arbitration Act. In the aforesaid decision, this Court has considered the limits of power of the Court to interfere with the arbitral award. It is observed and held that only when the award is in conflict with the public policy in India, the Court would be justified in interfering with the arbitral award. In the aforesaid decision, this Court considered different heads of "public policy in India" which, inter alia, includes patent illegality. After referring Section 28(3) of the Arbitration Act and after considering the decisions of this Court in McDermott International Inc. v. Burn Standard Co. Ltd. [McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181] , SCC paras 112-113 and Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran [Rashtriya Ispat Nigam Ltd. v. Dewan ....
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....and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury [Associated Provincial Picture Houses v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract." (emphasis added) 9. This Court, in the case of UHL Power Company Ltd. v. State of Himachal Pradesh (2022) 4 SCC 116 held that the jurisdiction of the Court under Section 34 is relatively narrow and the jurisdiction of the Appellate Court under Section 37 of the Arbitration Act is all the more circumscribed. In the light of the limited scope for interference under Section 37 appeal, we will have to deal with the submissions. 10. We have carefully perused the material part of the award of the Arbitral Tribunal and the impugned judgments. For convenience, we refer to the impugned judgment in Civil Appea....
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....resulting from a subsequent legislation falls in a separate category. In other words, the contention that stands accepted was, that the escalation in price premised on fluctuation in market value of the inputs stands on one footing, while the additional cost resulting from the impact of any statute, decree, ordinance, law etc as referred to in sub-clause 70.8 stands on the other. Resultantly the governing clauses in the instant case were held not to be sub-clauses 70.1 to 70.7 but the substantive part of sub-clause 70.8. The award also considered whether minor minerals in question were or were not included in the basket of materials whose cost variation was taken into account as an input while arriving at WPI. It also considered that the WPI is an index applicable uniformly in all states while the increase 2 Page 30 in Seigniorage Fee would vary from state to state. It further dealt with the aspect that NHAI itself was of the opinion that the additional impact as a result of subsequent legislation was admissible separately, as signified by the letter dated 03.09.2003 to the Economic Advisor. In the backdrop of the law laid down by this court, the construction of the terms of the co....