TaxTMI 
TaxTMI 
2023 (8) TMI 1551
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....mencement and completion of the Project were 13.09.2014 and 12.03.2016 respectively. Indisputably, the Project could not be completed within the stipulated period, resulting in a request for extension of time by the Contractor. The extension was granted, and the Project was finally completed on 17.01.2019. Disputes having arisen w.r.t payment of final bills and attributability of delays, arbitration was invoked. In its statement of claim, the Contractor raised claims for a total of Rs. 5,44,24,036/-, inter alia, alleging that the delay in execution of work was attributable to the petitioner. A total of 8 claims were filed, pursuant to which the petitioner filed its statement of defence, but no counter claim. 4. The details of the claims raised are as follows: i) Claim 1: Claim on account of work done not paid. Petitioner denied the claim on the ground that the cost of the initial test pile was not payable as per MORTH specification and that the pile was rejected as per the terms and conditions of the agreement, as the quantity of RMC poured in pile was less than the required quantity. Thus, nothing extra is payable ii) Claim 2: Claim on account of less payment ....
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....000/- 17.03.2021 (b) 1,02,95,700/- (c) 1,09,58,800/- 1 ,36,10,349/- (e) 62,96,384/- (d) 50,36,057/- 17,00,000/- 6. Interest @12% p.a. Interest @ 1 0% p.a. As per claim no. 6 7. GST @12% Declaratory Award As per claim no. 7 8. 12,54,000/- 10,00,000/- Nil Total 5,44,24,036/- plus interest 3,89,87,204/- plus interest As per claim no. 6 6. During the course of submissions, Mr. Anupam Srivastava, learned counsel appearing for the petitioner has restricted the challenge to the impugned Award, to the extent that claims for escalation cost and for prolongation of Contract were allowed. He further submitted that the ground of challenge is also restricted to sub-section 2A of Section 34 of the A&C Act i.e., patent illegality. 7. Mr. Srivastava, while assailing the impugned Award, contended that the delay in completion of the Project was entirely attributable to Contractor, as while seeking extension of time, the following endorsement was made by it: 'we have not suffered any loss due to delay and extra work hence we will not claim anything extra.' 8. It was further contended that subsequent to such extensi....
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....d and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, 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 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." 17. A similar view, as stated above, has been taken by this Court in K. Sugumar v. Hindustan Petroleum Corpn. Ltd., where it has been observed as follows: "2. The contours of the power of the Court under Section 34 of the Act are too well establi....
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....act, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person could do." 12. Recently, in Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation, reported as (2022) 1 SCC 131, Supreme Court explained the expression 'patent illegality' in the following manner:- "29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality". Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression "patent illegality". What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as Courts do not sit i....
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....mediately after the stipulated date of start on 13.09.2014 particularly as stipulated time of contract was 18 months. 7.5.5.6.6. Admittedly, the claimant completed the work. The overall position, based on the facts and figures as brought out by the claimant and admitted by respondent as per EOT proforma filed by the Respondent vide letter dated 23.08.2022 which is on record, is mainly given as under: i. Hindrance due to pile design . ii Due to change of methodology of boring of piles . iii Hindrance due to change of level of deck slap iv Hindrance due to NGT order for closure of Hot mix plant in winter season v. Hindrance due to funds vi. Monsoon 7.5.5.6.7. Due to these admitted hindrances the work was delayed for 1041 days whereas the Claimant has claimed the delay for 1042 days and the Respondent admitted the delay for 1047 days as justified delay against the required EOT for only 1041 days. 7.5.5.6.8. The Respondent has submitted that they have granted EOT without levy. 7.5.5.6.9. It has been observed by me that all the hindrances are not attributable to the contractor. Delay is mostly due ....
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.... amended as necessary by agreement between the Engineer-in-Charge and the Contractor within the limitations of time imposed in the Contract documents, and further to ensure good progress during the execution of the work, the contractor shall in all cases in which the time allowed for any work, exceeds one month (save for special jobs for which a separate programme has been agreed upon) Complete the work as per mile stones given in Schedule 'F'. 5.2 If the work(s) be delayed by: (i) force majeure, or (ii) abnormally bad weather, or (iii) serious loss or damage by fire, or (iv) civil commotion, local commotion of workmen, strike or lockout, affecting any of the trades employed on the work, or (v) delay on the part of other contractors or tradesmen engaged by Engineer-in-Charge in executing work not forming part of the Contract, or (vi) non-availability of stores, which are the responsibility of Government to supply or (vii) non-availability or break down of tools and Plant to be supplied or supplied by Government or (viii) any other cause which, in the absolute discretion of the Engineer-in-Charg....
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...., the court cannot reject the same on the ground of issuance of "No Due Certificate". (ii) Inasmuch as it is common that unless a discharge certificate is given in advance by the contractor, payment of bills are generally delayed, hence such a clause in the contract would not be an absolute bar to a contractor raising claims which are genuine, at a later date even after submission of such "no-claim certificate". (iii) Even after execution of full and final discharge voucher/receipt by one of the parties, if the said party is able to establish that he is entitled to further amount for which he is having adequate materials, he is not barred from claiming such amount merely because of acceptance of the final bill by mentioning "without prejudice" or by issuing 'no-dues certificate'." 17. Issuance of NOC No Objection Certificate or other similar 'no claim' certificate by a party, in favour of another contracting party, by itself does not disentitle the party having a claim from explaining the circumstances in which NOC is issued. Reverse of the same is equally true. There is no absolute rule which outrightly negates the evidentiary value of NOC's or 'no cla....
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....heads i.e., claim on account of increase in wages for labour on prevailing wages as per Clause 10C and claim on account of increase in prices of material. The AT observed that the petitioner had granted extension of time considering the hindrances, and without levy of any compensation, which showed that the delay was attributed to the petitioner. A party cannot draw any benefit out of its own folly, to the detriment of the other. In the case of P.M. Paul (Supra), Supreme Court while dealing with the same issue has held as under:- "12. In the instant case, it is asserted that the extension of time was granted and the arbitrator has granted 20% of the escalation cost. Escalation is a normal incident arising out of gap of time in this inflationary age in performing any contract. The arbitrator has held that there was delay, and he has further referred to this aspect in his award. The arbitrator has noted that claim No. I related to the losses caused due to increase in prices of materials and cost of labour and transport during the extended period of contract from 9/5/1980 for the work under phase I, and from 9/11/1980 for the work under phase II. The total amount shown was Rs....
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....he contrary in the Supplemental Agreement, the appellant could have made any claim on account of escalation of costs and whether the Arbitrator exceeded his jurisdiction in allowing such claims as had been found by the High Court. 32. Ordinarily, the parties would be bound by the terms agreed upon in the contract, but in the event one of the parties to the contract is unable to fulfil its obligations under the contract which has a direct bearing on the work to be executed by the other party, the Arbitrator is vested with the authority to compensate the second party for the extra costs incurred by him as a result of the failure of the first party to live up to its obligations. That is the distinguishing feature of cases of this nature and Alopi Parshad's case and also Patel Engg.'s case. As was pointed out by Mr. Dave, the said principle was recognized by this Court in P.M. Paul's where a reference was made to a retired Judge of this Court to fix responsibility for the delay in construction of the building and the repercussions of such delay. Based on the findings of the learned Judge, this Court gave its approval to the excess amount awarded by the arbitrator o....