TaxTMI 
TaxTMI 
2025 (9) TMI 550
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....3 of the 1996 Act by the learned sole Arbitrator. Respondent herein was the Claimant before the Arbitrator while GAIL was the Respondent. 2. To the extent relevant and shorn of unnecessary details, the facts are that Respondent is a private limited company engaged in the business of engineering, procurement and construction of plants for oil and gas refineries and power, cement, petrochemical, fertilizer sector etc., both in and outside India. Presently, Respondent is under liquidation by virtue of order dated 23.01.2020 passed by NCLT, Mumbai in Company Petition (I.B.) No. 1374/2017 and was represented by a Liquidator in the arbitral proceedings. Petitioner is a Public Sector Undertaking engaged in processing and distribution of natural gas and is under the administrative control of the Ministry of Petroleum and Natural Gas. 3. Disputes which are subject matter of this petition emanate out of a Contract Agreement dated 21.05.2012. The backdrop of the disputes is that Petitioner decided to expand the petrochemical complex at Pata, U.P., to enhance its polymer capacity from 410 KTA to 810 KTA per annum by setting up the required revamp in the Gas Processing Unit ('GPU'), New G....
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.... Under Clause 45.1 of GCC, Respondent was entitled to extension of time for completing the work, only in case the performance was delayed by Petitioner. As per the Respondent, it had achieved mechanical completion of the works in January, 2015 and the entire project was commissioned by March, 2015, after various extensions of time sought by Respondent and granted by the Petitioner and this fact was acknowledged by the Petitioner. Respondent sought ESC on 31.03.2015 but the response from the Petitioner was evasive. Petitioner continued to insist on additional work through emails and hand sketches etc. Respondent sought further extension of time till 31.05.2015 on 05.03.2015 and till 30.06.2016 on 10.05.2016. Final Extension of Time was granted by the Petitioner till 31.10.2015 vide letter dated 16.09.2015 and E-in-C issued certificate dated 26.05.2016, certifying that Respondent had achieved 99.5% completion of work. 6. In the meantime, on 24.11.2015, Respondent wrote to the Petitioner reiterating various difficulties faced by it on account of acts and omissions of the Petitioner and pointing out the delays in grant of additional work, piping parallelism job of C3R compressor, no....
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....thereof? (d) Whether the Respondent has illegally withheld assets of the Claimant inside the Project Area and wilfully created impediments in site clearance and safe passage of Claimant's trucks from the said Project area, if yes, effect thereof? (e) Whether the Claimant is entitled to its claims as specified in the Statement of Claims? (f) Whether the Respondent could withhold the amounts due and payable to the Claimant on account of alleged sub-contractor dues? (g) Whether the Claimant is entitled to interest against the sum of money specified as claims at items (I) to (XIV) at an interest rate of 18% or at any other rate to be decided by the Learned Tribunal and the period on which interest is entitled for and cost of arbitration? (h) Whether the Respondent is entitled to the Counterclaims which are preferred by it? (i) Whether the Claimant or the Respondent is entitled to costs, if so, then what amount? (j) Relief?" 9. By a separate order, following additional Issue No. 8 was settled :- "Whether the Respondent is entitled to the counterclaims which are preferred by it?" 10. Respondent examined one wit....
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....m of INR 9,84,82,967/- II. Compensation towards Extended Stay - INR 46,20,00,000/- 46,20,00,000 Rejected III. Reimbursement of Input Credit on the Excise Duty on account of change in Service Tax Rules in the sum of INR 3,20,53,564/- 3,20,53,564 Rejected IV. Fire Proofing differential cost amounting to INR 1,54,79,250/- 1,54,79,250 Rejected IV. Reimbursement of illegally encashed BG-INR 19,23,35,350/- 19,23,35,350 Allowed in the sum of INR 19,23,35,350/- VI. Reimbursement of Finance Charges incurred in the extension of BG to the tune of INR 1,62,28,293/- 1,62,28,293 Rejected VI. Compensation towards escalation cost for manpower differential wages in the sum of INR 24,91,10,604/- 24,91,10,604 Rejected VIII. Amount receivable against site clearance withheld by the Respondent (In the SOC, this amount is claimed at INR 40.00 lakh, however, during arguments, the Claimant stated that the amount withheld is INR 35.00 lakh) 35,00,000 Rejected IX. Amount receivable against GST for INR 2,27,11,007/- 2,27,11,007 Allowed with the condition that : (i) the same amount shall be depo....
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.... the date of invocation of the arbitration i.e. 16.08.2019. SUBMISSIONS MADE ON BEHALF OF THE PETITIONER: 14. Claims of the Respondent were time barred under Section 3 of the Limitation Act, 1963 and it was the duty of the Arbitrator to satisfy himself on this aspect, which he failed to discharge. Cause of action arose in favour of the Respondent when its claims were rejected on 26.02.2016. Arbitration notice was issued on 16.08.2019 i.e. after prescribed period of 3 years of limitation. The project was completed on 31.10.2015 and even from this date, limitation period expired much before the invocation notice was issued. In Manindra Land and Building Corporation Ltd. v. Bhutnath Banerjee and Others, AIR 1964 SC 1336 and Nagpur Improvement Trust v. Sheela Ramchandra Tikhe (Dead) through Legal Representatives, (2019) 11 SCC 552, it was held that irrespective of whether the opponent sets up a plea of limitation or not, it is a duty of the Court to look into the aspect of limitation and not proceed with the application, if it is found to be beyond the prescribed period of limitation. 15. The Arbitral Award suffers from 'patent illegality' and deserves to be set aside. Arbitra....
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....eyond the contractual mechanical completion of work ...' and it was clearly enunciated that mere mechanical completion will not amount to completion of work under the contract. Arbitrator failed to consider the evidence of Shri Bhagat, who deposed that while E-in-C on one hand recommended grant of extension vide letter dated 26.11.2016, on the other hand, it wrongly concluded that due to delay in providing inputs owing to changes suggested by the Petitioner, delay upto December, 2015 was a concurrent delay, contrary to contemporaneous correspondence and the contract. He deposed that E-in-C's role was limited to making recommendations and Petitioner was entitled to disagree and reduce the price under the Price Reduction Schedule ('PRS'), in accordance with Article 27 of GCC due to delays by the Respondent in completing the work. Shri Bhagat's testimony was not dented by the Respondent in cross examination. In this light, the finding of the Arbitrator that since the plant started functioning in 2015 itself, there was no justification in reducing the contract price, strikes at the very heart and soul of the contract and virtually amounts to re-writing the same. 17. Arbitrator has p....
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....al equipment and the feed temperature is reduced to -150° C, approximately, leading to production of ethylene and propylene along with other products. Therefore, it can be clearly seen that till both sections are completely commissioned, including insulation and piping, contract cannot be treated as fully executed. 19. Perversity in the award is further evident from the contradictory reasoning and approach taken by the Arbitrator in parallel proceedings between the same parties on the same day in an award passed in Case No. DIAC/2861/01-21 ('GPU case'), which has been separately challenged by the Petitioner in O.M.P. (COMM) 447/2023. From a reading of the two awards, juxtaposed with each other, it is clear that in the GPU case, recommendations of E-in-C, which were adverse to the Petitioner on the aspect of delay analysis and applicability of PRS, were not only completely accepted by the Arbitrator but were made the basis of the conclusion that delay was also attributable to the Petitioner, while in the present case, recommendations of E-in-C favourable to the Petitioner, on both delay and applicability of PRS, have been ignored or deviated from by the Arbitrator, without an....
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....ng sustenance from the judgments of this Court in Engineers India Limited v. Tema India Limited, 2016 SCC OnLine Del 86 and R.B. Enterprises v. Union of India, 2023 SCC OnLine Del 8321, is plainly in the teeth of the contract between the parties, which provided in Clause 27.1 that in the event, Respondent fails to complete the work within the stipulated period, Total Contract Price shall be reduced by 1/2% of Total Contract Price per completed week of delay or part thereof, subject to a cap of 5%. Parties had unequivocally agreed that this would be deduction in price on account of delay and not a penalty. Clause 27.3, provided that if Respondent achieved completion of work in all respects prior to time schedule stipulated in the SCC, Petitioner shall pay to the Respondent relevant sum mentioned in SCC as bonus for early completion, subject to cap of 2.5% of Total Contract Price. It goes without saying that if Respondent had completed the work within stipulated time, it would have earned bonus under the same contractual arrangement and would not have questioned the contractual provisions. Respondent cannot question imposition of PRS, which is clearly distinguishable from Liquidated ....
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....ded that E-in-C's recommendations will be final and binding on the Respondent. Arbitrator was under a solemn obligation to maintain consistency insofar as essential reasoning was concerned while deciding the dispute under the GCU Contract, where recommendations of E-in-C were in favour of the Petitioner or at least afforded opportunity to the Petitioner to present its case, if he was inclined to adopt a reasoning inconsistent with the reasoning in the GPU Award, following the principle of issue estoppel, emphasised in Arnold & Ors. v. National Westminster Bank plc, (1991) 2 AC 93. 24. Learned Arbitrator has committed patent illegality while dealing with counter claim of the Petitioner. Petitioner claimed Rs.4.16 crores towards mesne profits over 5 acres of land which Respondent was utilizing, however, Arbitrator restricted the award to Rs. 35 lacs inter alia on the ground that Respondent itself raised Claim for a sum of Rs.40 lacs under Claim No. VIII towards 'Site Clearance' and took no steps to mitigate the damages, if any, overlooking that Petitioner had established that it suffered a continuous loss of well over Rs. 35 lacs since Respondent continued to unlawfully occupy a h....
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....hich the Respondent was far from. Arbitrator disregarded the fact that contract was designed to create an economic disincentive to draw from a Mobilization Advance that causes loss of principal amount to the Petitioner and erroneously awarded the same rate of interest in favour of the Respondent in teeth of the principle laid down by the Supreme Court in Fortune Infrastructure (Now known as M/s Hicon Infrastructure) and Another v. Trevor D'Lima and Others, (2018) 5 SCC 442. Principles on which interest is to be awarded under Section 31(7) of the 1996 Act are well settled and Arbitrator was bound to exercise the discretion in consonance with these yardsticks. [Ref: State of Rajasthan and Another v. Nav Bharat Construction Co., (2002) 1 SCC 659 and Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra Reddy and Another, (2007) 2 SCC 720]. 27. The Arbitral Award is in the teeth of Section 28(1)(a) of the 1996 Act which requires the Arbitrator to decide the disputes submitted to arbitration in accordance with substantive law for the time being in force in India. The Arbitrator has decided the disputes inter se the parties in a manner negating Petitioner's right under Section 55 of Contr....
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....r imposition of PRS is rejected on grounds that Respondent had admittedly completed 99.4% of the work on 02.05.2015 and no evidence was led by the Petitioner to substantiate actual loss under Clause 27, while in GPU case Arbitrator accepted the recommendations, which were against the Petitioner, purely on the ground that E-in-C's recommendations are binding and there is no reason to differ therefrom. These objections are based on a misconception of the Petitioner that there are contrary findings in the Arbitral Awards in the two cases. Arbitrator has given entirely different reasons to accept the report of E-in-C in one case and reject the same in the other. In the present case, the Arbitrator rightly came to a finding that upto 02.05.2015, 99.4% work was completed and plant had started functioning. This finding was rendered, basis the documents on record reflecting that only miniscule work remained after December, 2015 and only minor work was completed between May, 2015 and December, 2015, the date upto which there were concurrent delays. These findings were based on Petitioner's Annual Report for 2014-15, acknowledging that gas cracking and polymer production had commenced in Mar....
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....treated Clause 12 as one for liquidated damages and the Arbitral Award was set-aside because the Arbitrator re-characterised this clause as a price reduction clause, thereby exceeding the scope of reference under Section 28(3) of the 1996 Act, whereas in the present case, both parties have always understood Clause 27 as an LD clause. Petitioner's contention that PRS is not in the nature of LD, is contradictory to its own pleadings and the case set up before the Arbitrator. Petitioner has throughout in the related correspondence and in the Statement of Defence used the terms 'PRS' and 'liquidated damages' interchangeably, treating them as synonymous, both in language and intent. This is exemplified by Petitioner's own averment in para 3.27 of Statement of Defence, wherein it refers to the deduction of PRS in the context of R.A. Bill Nos.64 and 65 describing the same as 'PRS/LD (liquidated damages)'. Arbitrator therefore rightly considered the legal character of PRS in this light and assessed its imposition on the basis of established principles governing LD, including delay and binding effect of E-in-C's delay analysis. Once it was established through E-in-C's final recommendation t....
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....therwise due to the corporate debtor. 34. Petitioner's objection to the award of Rs. 2,27,11,007/- under the Head of GST reimbursement, that such direction amounts to re-writing of contractual terms as also that GST was reimbursable only upon Respondent depositing the tax with the authorities and reflecting it in its returns, thereby enabling the Petitioner to claim Input Tax Credit, has no merit. Arbitrator acknowledged that no doubt, GST liability initially falls on the supplier and ultimate burden lies on the service recipient, but considering that Respondent was under liquidation and hence unable to deposit the GST due to financial constraint, it was held that Petitioner's retention of GST amount cannot be sustained indefinitely, especially, when tax component was part of admitted final Bill verified by E-in-C. Importantly, Arbitrator adopted a balanced and legally sound approach by directing the Petitioner to release the GST amount subject to an affidavit of undertaking by the Liquidator that the said amount shall be deposited with the GST Authorities. This condition preserves Petitioner's right to claim ITC upon proper deposit and ensures compliance of statutory tax obliga....
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.... date of award deserves to be rejected, being contrary to well-settled principles under Section 31(7)(a) of the 1996 Act. Arbitrator's discretion to award interest is unquestionable in the absence of any contractual bar and admittedly, in the present case there is no clause restricting such discretion. Arbitrator has exercised his jurisdiction judiciously awarding interest @ 18% for pre-award period and 12% post-award, after excluding Rs. 14.62 crores attributable to sub-vendor liability. Rate of interest was pegged close to 19.75%, which the Respondent actually paid to the Petitioner on mobilization advance under the same contract. The interest is merely compensatory and neither speculative nor punitive. None of the objections raised by the Petitioner fall within the scope of Section 34 of the 1996 Act and the petition deserves to be dismissed. ANALYSIS AND FINDINGS: 38. On a factual note, tenders were invited in December, 2011 by the Petitioner for setting up GCU Plant at Pata, UP for its Petrochemical Complex-II, Project. Respondent being a successful bidder was awarded the contract and the contract agreement was executed on 21.05.2012 with contract value of Rs. 192,33,53,....
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....he essence of the Contract. In case the Contractor fails to complete the work within the stipulated period, then, unless such failure is due to Force Majeure as defined in Clause 26 here above or due to Employer's defaults, the Total Contract Price shall be reduced by 1/2% of the Total Contract Price per complete week of delay or part thereof subject to a maximum of 5% of the Total Contract Price, by way of reduction in price for delay and not as penalty. The said amount will be recovered from the amount due to the Contractor/Contractor's Contract Performance Security Payable on demand. The decision of the Engineer-in-Charge in regard to applicability of Price Reduction Schedule shall be final and binding on the Contractor. 27.2 All sums payable under this clause is the reduction in price due to delay in completion period at the above agreed rate. 27.3 Bonus For Early Completion If the Contractor achieves completion of Works in all respect prior to the time schedule stipulated in the SCC, the Employer shall pay to the Contractor toe relevant sum, if mentioned specifically in SCC, as bonus for early completion. The bonus for early completion, if p....
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....claim the amount thereunder in the event of the Contractor failing to honour any of the commitments entered into under this Contract and/or in respect of any amount due from the Contractor to the Employer/Consultant. In case the Contractor fails to furnish the requisite Bank Guarantee as stipulated above, then the Employer/Consultant shall have the option to terminate the Notification of Award of Work and forfeit the Bid Security/ Earnest Money amount and no compensation for the works performed shall be payable upon such termination. 12.4 Upon completion of the Works as per Completion Schedule stipulated in the Contract, the above said guarantee shall be considered to constitute the Contractor's warranty/guarantee for the work done by him or for the works supplied and their performance as per the specifications and any other conditions against this Contract. The warrantee/guarantee shall remain in force for 12 months from the date of issuance of certificate of completion and acceptance against this Contract as per GCC. The Contractor shall also arrange for the Performance Guarantee to remain valid until the expiration of the Guarantee period for the entire works covered un....
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.... Cenvat Credit on Service Tax paid. In case Contractor does not furnish such invoices enabling the Employer to claim Cenvat benefit, then such amount shall not be reimbursed to the Contractor irrespective of whether the Contractor has paid such amount to the Tax Authorities. 7.0 Compensation for Extended Stay Extended Stay Compensation @ INR 80,00,000/- per month, if applicable, shall be payable extra as per the provisions of the Tender Documents." 40. As noted above, the objections in the present petition are limited to imposition of PRS, amount receivable under GST, reimbursement of amount under BG encashed by the Petitioner and rate of interest as also partial rejection of counter-claim of the Petitioner. Before proceeding further, it will be pertinent to allude to the law on scope of interference with an Arbitral Award under Section 34 of the 1996 Act. Under the unamended Section 34(2) as it stood prior to Amendment Act, 2016, inter alia interference in an Arbitral Award was envisaged if it was in conflict with Public Policy of India and the Supreme Court in Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705 and Associate Builders v. Del....
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....ions 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. 35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground. 36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justic....
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....in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A). 41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse. 42. Given the fact that the amended Act will now a....
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.... Relevant passages from the judgment are as follows :- "26. The prevailing view about the standard of scrutiny - not judicial review, of an award, by persons of the disputants' choice being that of their decisions to stand - and not interfered with, (save a small area where it is established that such a view is premised on patent illegality or their interpretation of the facts or terms, perverse, as to qualify for interference, courts have to necessarily choose the path of least interference, except when absolutely necessary). By training, inclination and experience, Judges tend to adopt a corrective lens; usually, commended for appellate review. However, that lens is unavailable when exercising jurisdiction under Section 34 of the Act. Courts cannot, through process of primary contract interpretation, thus, create pathways to the kind of review which is forbidden under Section 34. So viewed, the Division Bench's approach, of appellate review, twice removed, so to say (under Section 37), and conclusions drawn by it, resulted in displacing the majority view of the tribunal, and in many cases, the unanimous view, of other tribunals, and substitution of another view. As long ....
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....lauses of a commercial contract. In a recent judgment OPG Power Generation Private Limited v. Enexio Power Cooling Solutions India Private Limited and Another, (2025) 2 SCC 417, the Supreme Court reiterated and re-affirmed that Arbitral Tribunal must decide in accordance with terms of the contract and where the Arbitral Award is against the contractual terms, the award would be patently illegal albeit the Arbitral Tribunal has the jurisdiction to interpret a contract having regard to terms and conditions of the contract, conduct of the parties, including correspondences exchanged etc. If the conclusion of the Arbitrator is based on a possible view of the matter, Court should not interfere, however, where on full reading of the contract, the view is not a possible view, the award will be perverse and as such amenable to interference. Importantly, it was also held that ordinarily terms of the contract are to be understood in the way the parties intended. An unexpressed term cannot be read into a contract except where the term was always obviously intended by the parties to give business efficacy to the contract and although tacit, forms part of the contract. 45. With these judgmen....
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....paragraphs from the award are as follows :- Delay Analysis 137. The record reveals that vide letter dated 10.10.2016 addressed to EIL, the Claimant had mentioned various reasons, which according to the Claimant, led to the delay in work. It is stated by the Claimant that though the Claimant was at all times ready, willing and able to execute the contract within the contractual timelines, it was prevented from achieving timely completion by various factors beyond its control. Following are the factors highlighted by the Claimant in the said communication. Reason for delay No. of days of Delay i) Delay in provision of Isometrics/Drawings 275 ii) Delay in handing over foundations 348 iii) Delay caused by revision in GA drawings 84 iv) Delay/Non-provision of material 634 v) Hindrances at the site 103 vi) Delay caused by execution of additional jobs / works and modification in scope of work 332 vii) Delay on account of procurement 840 viii) Delay in approval of extra items ix) Other delays 138. The letter also mentions that the Claimant has been repeatedly communicating ....
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....with a total delay of 33 months and 15 days. The detailed analysis for the activities having impact on delay during execution against various contentions of agency is elaborated as under :- 1) Delay due to drawings :- All the civil GADs and Piping GADs were released well within the CCD. Majority of isometrics accounting for more than 5 lakh ID out of 5.6 lakh ID were released till CCD (Refer MOM dated 02.12.2013, page no. 24-26 of Annexure-A). Though there were certain delays in issuance of drawings as referred in PECL letter dated 09.05.2012. ISOs were issued progressively and further isometrics were issued on 11.05.2012 (transmittal no. 744, refer page no. 3 of Annexure A). Planning isometrics issued were good for fabrications which were later converted to AFC. AutoCAD drawings sought by PECL for structural were not required for fabrication/erection; hence no delay is admissible regarding same. M/s. PECL letter dated 06.07.2012 regarding resource mobilization was duly replied by letter No. 2972 dated 07.07.2012. PECL referred letters dated 28.08.2012, 27.09.2012, 15.09.2012, 16.10.2012, 02.01.2013, 22.04.2015 were duly replied by our letter No. 3601 dated 31.08.2012. MOM....
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.... M/s. PECL. M/s. PECL referred letter dated 28.02.2013 about the list of equipment for which foundation was not found was incorrect as many of the equipment listed were already erected (refer attached reports of 110-PA-560 A/B, 110-PA-802A/B, page no. 48-51 of Annexure A). PECL letter regarding erection of 110-VV-241 was duly resolved and equipment was erected on 05.08.2013 (refer DPR of 05.08.2013, page no. 52 of Annexure A). PECL letter dated 08.01.2014 regarding delay in works was replied on 09.01.2014 vide letter no. 9793 (page no. 35-56 of Annexure A). PECL letter dated 18.11.2014 regarding delays in foundation handover was found incorrect when several of the listed equipment where either pipe spools or already erected (refer page no. 57 of Annexure A). PECL has elaborated the delay in erection of pumps in J-zone but majority of the pumps (9 out of 17) got erected before 30.06.2013 (refer erection reports of 110-PA-342 A/B and 343 A/B, page no. 58-61 of Annexure A). Hence, there was no issue of front even before the CCD. It may be noted that critical equipment like compressor and huge no. of static equipment erected could not be grouted for more than six months after ....
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....Annexure A). Due to delay in platform erection works, the fronts for column internal agencies were also affected. Regarding increase in quantities, please note that the quantities of individual items may vary as per contract provisions and it is contractor's obligation to complete the same. As such, increase in quantities does not qualify as a reason for delay. Delay up to 10.10.2014 can be considered not solely attributable to M/s. PECL on this account owing to DCN-260 issued on 19.09.2014. 4) Delay/Non-provision of material: It may be noted that sufficient material was always available but works were delayed due to inadequate manpower mobilized by M/s. PECL. By the end of November 2013 i.e., at CCD, nearly 1.25 lakh ID welding and 2.25 lakh IM erection was balance. PECL referred letter dated 28.08.2012 regarding lack of material and availability of insufficient drawings was refuted by EIL vide letter No. 3601 dated 31.08.2012 (page no. 5-6 of Annexure A). It was also highlighted in the letter that front was available for more than 3 lakh ID while PECL has fabricated hardly 60,000 ID. Referred letter dated 16.10.2012 of PECL was replied vide our letter No. 4156 dated 22.1....
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....ne storage vide our letter No. 2092 dated 16.05.2012 ((page no. 103 of Annexure A). Even separate graded area of 125 X 75 was allocated for blasted/painted spools vide mail dated 16.10.2012 (page no. 104 of Annexure A) in reply to PECL letter dated 10.10.2012. But even those areas were under-utilized as highlighted vide our letter dated 11.01.2013 (page no. 12-13 of Annexure A). Also, poor spool management by PECL was highlighted in our various mails and OQAs (OQA No. 03, 12, 15A, 16, page 105-108 of Annexure A). This led to damage and loss of fabricated spools. PECL referred letters dated 15.07.2013, 22.07.2013 were duly replied vide our letter No. 7641, 7718 dated 18.07.2013 24.07.2013 (page no. 109-110, 71-74 of Annexure A). Covered space for insulation was refuted as warehousing of bought out items comes under contractor scope of work as per SCC clause no. 76. PECL has elaborated the delay in erection of 23 pumps on 18.05.2013 but many pumps got erected before 30.06.2013. Hence there was no issue of front even before CCD (page no. 58-61 of Annexure A). Erection in grid 36-40 in W-zone started on 22.05.2013 (page no. 111 of Annexure A) though highlighted by PECL in thei....
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.... delay up to 30.06.2014 is not attributable to the contractor on this account. After commissioning of SS-31, Motor to load work for 200 motors were carried out from July, 2014 to October, 2014. VFD panel for motor 703A/B and 704A/B was received in the month of July, 2014 and same was commissioned from 09.12.2014 to 12.12.2014 by M/s. Milton Roy representative. The mentioned works were carried out in tandem with other agencies. Also, capacitor bank foundation clearance was provided in October 2014 from civil and same was installed and commissioned only by December 2014. (Refer page 159 of Annexure A). Hence, delay up to 31.12.2014 is not attributable to the contractor on this account. 110-PA-935 A/B motor in cold pipe rack area was installed in January 2015 and no load of same could only be completed by 24.02.2015 after all clearances by other departments. There was an upward increase in the executed quantities of earthing system due to site conditions and actual requirements in January 2015. The earthing works was completed in February 2015, the time taken for which is found reasonable. Hence delay up to 28.02.2015 is not solely attributable to the contractor on t....
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....hange in set pressure as per licensor and client requirement (page no. 144-156 of Annexure A). The delay up to June 2015 is not solely attributable to M/s. Petron on this account. As per PECL, instrument air was received in the month of December 2014 for airline charging and Control Valve stroke checking. Stroke Checking of Control and On-Off valves was completed on 06.06.2015. Control Valve Stroke checking was possible using portable air compressor or Nitrogen cylinders. No delay on this account is tenable. 8) Delay caused by execution of additional and modification in works/ jobs: Regarding increase in quantities, it may be noted that the quantities of individual items may vary as per contract provisions and it is contractor's obligation to complete the same. It may be noted that total executed value shall be within total contract value. Last communication regarding hydro jetting can be referred vide mail dated 13.09.2014 addressing balance hydro jetting lines (page no. 117 of Annexure A). Increased quantities of work whether it is fire proofing, structural or painting was intimated well within CCD as latest equipment data sheet and line schedules were provided within CC....
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....bmission of supporting documents, same was forwarded on 27.10.2015. After submission of supporting documents, same was forwarded on 27.10.2015 and approved on 22.01.2016 by client (page no. 123 of Annexure A). Keeping in view only Installation works, no impact on other works is admissible on this account. Delay up to April 2015 can be considered as concurrent delays on this account. Catalyst loading is a sequential commissioning activity which is performed after completion of all works, dry out of lines and clearance from client. Accordingly, after completion of prerequisites, vendor was called by client and same was completed on 15.03.2016 (refer mail dated 15.03.2016 page no. 124 of Annexure A). As various other prerequisite activities were delayed by PECL leading to delay in completion of this activity, no delay in admissible on this account. It may be noted that Provisional Time Extension were granted without prejudice to the contract clause of levying PRS. Also, various request letters of PECL for Provisional Time Extension were replied negating various incorrect submissions." "Delay due to reasons attributable to the Contractor: Further to ....
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....equirements. d) Inordinate delays in procurement of various materials like structural steel, insulation material including PUF supports, grouting material (epoxy and non-shrink), fire-proofing materials, etc. This part contributes to major delay on the account of contractor. PECL inordinately delayed structure procurement even up to Sor quantity. Though quantities exceeded beyond Sor quantities but the quantities of individual items may vary as per contract provisions and it is contractor's obligation to complete the same. Refer letter No. 12151 11.07.2014 in this regard (refer page no. 18-20 of Annexure A). Critical equipment like compressor and huge no. of static equipment erected could not be grouted for more than six months after erection due to shortage of epoxy and non-shrink grouting material. Refer letter No. 12151 dated 11.07.2014 (page no. 18-20 of Annexure A) Regarding PUF pipe supports, major material was not ordered till 08.01.2014 (refer page no. 136 of Annexure A). Due to exigency of work, certain project specific approvals for the same were accorded to help in expediting the works like PUF support supplied by M/s. Multiproduct. As far as insulation....
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....ought out items. Huge backlog of E&I was agreed by PECL at the time of CCD during MOM dated 02.12.2013 (page no. 24-26 of Annexure A). PECL failed to provide front even in its own structures namely TS-2, 9, 10, 12. Delay in piping has sequential delay on the Instrumentation works. h) GI piping works: GI piping works were standstill till11.07.2014 almost one year after CCD (reference page no. 18-20 of Annexure A). All major materials were procured by PECL but adequate gangs were not deployed leading to huge delay in completion of jobs. The final hydro test of GI works by PECL could only be completed by March 2015. i) P91 piping works: Due to lack of manpower and improper management, PECL was not able to erect a single pipe till 01.08.2013 and only 1700 ID out of 8000 ID was completed till that date (page no. 142-143 of Annexure A). Lack of welder/fitter was again highlighted in our letter no. 9325 (page No. 139 of Annexure A). By CCD, PECL had only achieved half of the fabrication scope as highlighted vide our letter no. 9497 (page no. 157-158 of Annexure A). Final hydro test of P91 could only be completed by 08.09.2014. j) Mismanagement in local issues: I....
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....rst place, it is mentioned that adopting the date of commission of the Project as 15.09.2016 is faulty and in fact, the Unit was commissioned by March, 2015. To support this plea, the Claimant has referred to the following documents: a) Annual Report for the year 2014-15 of the Respondent where the Respondent has accepted that the unit had been commissioned in March, 2015 in the following words: "Your company has doubled the petrochemicals production capacity of Pata plant to 900,000 TPA. The mechanical completion of the project has already been achieved. All the utilities are successfully commissioned. The gas cracking and polymer production has started in March, 2015." b) E-mail dated 01.04.2015 addressed by the General Manager (Projects) of the Respondent to EIL, which reads as under: "Congratulations Heartiest congratulations to all the agencies and associates made contribution in successful completion since inception of this mammoth project from soil testing, enabling, piling, civil and structure, building and composite works, Packages, etc. Your committed and untiring efforts made it possible to achieve commissioning of va....
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....he plant had started working, it necessarily follows that the Respondent suffered no loss. In the absence of any loss suffered by the Respondent, there is no question of invoking the provisions of PRS. To summarise the conclusion of EIL, and resultantly the imposition of PRS, is questioned by the Claimant by raising the following pleas: i) Up to December, 2015, the delays mentioned by EIL are concurrent and the Claimant is not held solely responsible for this period. On the contrary, the responsibility is fastened upon the Claimant for delay after December, 2015 and up to 15.09.2016 and that is the sole reason for imposition of PRS. However, the Project itself had been commissioned much prior to December, 2015 and therefore, there is no valid reason for imposition of PRS on the basis of alleged delay beyond 2015. ii) Even as per the Respondent, by May, 2015 (which is the period of concurrent delays), 99.4% work had been completed and therefore, there was no justification in imposition of PRS. iii) In the absence of any loss suffered by the Respondent, invocation of PRS and deduction of Contract Price amounts to penalty which is impermissible under the Ind....
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....ned to be completed which was completed at a later date and the Project was treated as completed only on 15.09.2016. 153. Having said so, the Respondent's own record shows that by 02.05.2015, 99.4% work had been completed. Thus, as on that date, only 0.06% work remained to be completed. Out of this, some work must have been completed between May, 2015 and December, 2015 (the date up to which there are concurrent delays). Therefore, only miniscule work was left which was done after December, 2015. More importantly, the plant had started functioning. This is demonstrated from various documents which are referred to by the Claimant and taken note of above and to which there is hardly any refutation by the Respondent. Thus, in such a state of affair, when the plant started functioning in 2015 itself on the substantial completion of the Project [99.4% by 02.05.2015], the Tribunal does not find any justification on the part of the Respondent in invoking Clause 27 and reducing the Contract amount by 5%. Prima facie, no loss is suffered by the Respondent as the Plant had started running. Above all, the Respondent has not produced any evidence of loss suffered by it in spite of Cla....
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....ember, 2015 and upto 15.09.2016, required for contractual mechanical completion, as detailed in Clause 2.0 of IFB in conjunction with Clause 5 and Annexure-III of SCC, was solely attributable to the Respondent. 49. In light of this conclusion, E-in-C recommended that final time extension upto 15.09.2016 be granted to the Respondent with levy of maximum 5% PRS on Part-I contract value, but extended stay compensation was not payable. As noted above, Respondent questioned E-in-C's Report on two-fold grounds: (a) adopting 15.09.2016 as date of commission of the project was faulty; and (b) plant was functional on time and thus Petitioner suffered no loss for it to claim PRS. It bears repetition to state that on the first aspect, the Arbitrator disagreed with the Respondent, but agreed on the second aspect, holding that major part of the work was completed in 2015 and even otherwise Petitioner had not produced any evidence of loss suffered by it. 50. Having examined the rival pleas and after carefully perusing the contractual provisions, E-in-C's Report and the relevant part of the Award, I am of the considered view that there is merit in the contention of the Pet....
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....ipment and is fed to hot furnace, where the process of thermal cracking begins. The gas so cracked is subsequently cooled down to ambient temperature again, after passing it through different equipment in hot section. The gas so produced then falls into the cold section, where it passes through several equipment and feed temperature is reduced to -150℃. approximately, finally leading to production of Ethylene and Propylene and other products. 52. From the documents on record, more particularly, letter dated 02.05.2015, wherein Respondent claimed that it had achieved 99.4% of the total work, it is evident that balance piping and insulation work inter alia were remaining, for which extension was sought. This position stands substantiated from Respondent's letters dated 02.07.2015 and 02.09.2015 seeking extension. As explained on behalf of the Petitioner, piping and insulation work were crucial for completing the two essential sections of GCU i.e. hot and cold and completing one, without the other, meant that what was installed was only a machinery and not a working plant. Admittedly and as brought forth by Mr. A.K. Bhagat RW-1, only the hot section was completed in 2015 whil....
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....hought and not based on correct facts. The said letter has been annexed as Annexure R-38 to the documents filed by the Respondent. I hereby tender the said document in evidence and request that it be marked as an Exhibit by this Hon'ble Tribunal. Accordingly, a detailed delay analysis was carried out by EIL and based on facts and observations, the final time extension was recommended to the Respondent for completion of composite works under the Contract, with levy of maximum 5 % PRS on Part I contract value in terms of Clause No.27 of the GCC. EIL gave reasons and concluded that it was amply clear that major reasons for delay in completion of works are attributable to Claimant. Hence, the aforesaid was intimated through a letter dated 26.11.2016, which has been annexed as Annexure R-39 to the documents filed by the Respondent. I hereby tender the said document in evidence and request that it be marked as an Exhibit by this Hon'ble Tribunal. 43. Without prejudice to the correct recommendation concluded by EIL apropos levy of maximum 5% PRS on the Claimant through the above-mentioned letter dated 26.11.2016, it is submitted that the delay due to drawings up to 29.05.2015 is ....
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....04 dated 04.11.2013; (xxx) EIL's letter No. EIL/Gail-Pata-II/A096/PECL/01/9325 dated 28.11.2013; (xxxi) minutes of meeting between the parties herein dated 02.12.2013; (xxxii) EIL's letter No. EIL/Gail-Pata-II/A096/PECL/01/9389 dated 02.12.2013; EIL's (xxxiii) letter No. EIL/Gail-Pata-II/A096/PECL/01/9497 dated 14.12.2013; (xxxiv) EIL's letter No. EIL/Gail-Pata-II/A096/PECL/01/9693 dated 31.12.2013; (xxxv) EIL's letter No. A096/GCU-PECL/19-42/GAIL/14470 dated 05.02.2016; and (xxxvi) EIL' s letter No. EIL/Gail-Pata-11A/ 096/PECL/l5316 dated 02.09.2016. The contents of all the above-mentioned communications establish that the delay due to drawings up to 29.05.2015 is solely attributable to the Claimant. As regards to delay in handing over of foundations, it is submitted that the delay up to 15.01.2015 is solely attributable to the Claimant. For the aforesaid, reliance is placed on EIL's letter No. EIL/Gail-Pata-II/A096/PECL/15316 dated 02.09.2016, contents of which establish that the delay is solely attributable to the Claimant. As regards to the delay caused in revision in GA drawings, it is submitted that the d....
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.... The contents of the aforementioned communications establish that delay up to July 2015 in electrical works is solely attributable to the Claimant. As regards to delay caused by the execution of additional works and modification of works is solely attributable to the Claimant. Reliance is placed on EIL's letter No. EIL/Gail-Pata-II/A096/PECL/15316 dated 02.09.2016, contents of which establishes that the delay due to execution of additional -works and modification works is solely attributable to the Claimant. As regards to various delays dealt with under paragraph 9 of the letter dated 26.11.2016, it is submitted that even those delays are solely attributable to the Claimant for which, reliance is placed on EIL's letter No. EIL/Gail-Pata-II/A096/PECL/l5316 dated 02.09.2016, contents of which establish that the other delays as dealt under paragraph 9 of the letter dated 26.11.2016, are solely attributable to the Claimant. In view of the above, it is most respectfully submitted that the final time extension recommendations were reviewed by the Respondent, and it was observed that the mobilization was delayed by the Claimant. Additionally, some of the major delays were due to: ....
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....yer's default, total contract price shall be reduced by 1/2% of the total contract price per completed week of delay or part thereof, subject to maximum of 5% by way of reduction in price for delay and not as penalty. Respondent was thus fully aware and conscious of the consequences of its failure to abide by the stipulated time period under the contract. Therefore, the finding of the Arbitrator that completion of 99.4% work, would absolve the Respondent of its contractual obligations and that imposition of PRS was not justified, is wholly untenable in light of the contractual provision. In fact, by so observing, learned Arbitrator has re-written the contractual bargain between the parties, which is impermissible in law. Significantly, there is no discussion on Clause 27 GCC and its impact in the entire award. Emphasis of the Arbitrator on the Annual Report for the year 2014-15 and e-mail dated 01.04.2015 does not take away the case of the Petitioner for imposing PRS, in light of E-in-C's report, which was accepted by the Arbitrator. 56. There is also merit in the contention of the Petitioner that in the present case, Respondent has not led any independent evidence to contradict....
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....re part of the agreed terms. Construing the clause, Court held that the termination charges were not contingent only on breach of the agreement and thus cannot be treated as liquidated damages in terms of Section 74 of the Contract Act and that termination charges were clearly a part of contractual consideration agreed to by the parties. In the present case, a bare perusal of Clause 27 indicates that imposition of PRS was not contingent on breach or proof of loss. It was simply an agreed condition of contract between the parties that for failure to complete the project, a certain percentage of the total contract value was to be deducted from the final Bill. Hence, this Court is unable to agree with the Arbitrator that Petitioner was not justified in imposing the PRS on account of concurrent delays by the parties. As held by the Supreme Court, if an Arbitrator decides contrary to a commercial bargain between the parties and rewrites the contract, the award suffers from patent illegality and becomes vulnerable. This part of the award is, therefore, set aside holding the Petitioner entitled to deductions towards PRS from the final Bill. 59. The next claim allowed by the learned Arb....
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.... 62. Learned Arbitrator held that there was no justifiable reason for the Petitioner to keep the BG alive after 15.12.2017. It was observed that there were concurrent delays till December, 2015 and Respondent had executed 99.4% of the work by 02.05.2015 and also that the contract period was completed by 15.09.2016. As per Clause 56.1.1 SCC, Defect Liability Period was applicable till 15.09.2017 and CPBG had to be extended upto 03 months, i.e. till 15.12.2017, which was agreed to by both the parties. The Arbitrator held that since some of the deductions in the final Bill including PRS have been held to be unjustified, invocation of BG in the sum of Rs. 3,94,71,624/- was unjustified. With regard to remaining amount of Rs. 15,28,63,726/-, it was held that the same was encashed against claim of mesne profits and anticipated liability of sub-vendors. Petitioner was not entitled to mesne profits, save and except, to the tune of Rs. 35 lacs, already retained by the Petitioner by deduction from the final Bill and insofar as non-payment of sub-vendors is concerned, while the action of the Petitioner in encashment was justified, in fact, the amount was never paid to the sub-vendors and in....
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.... the Liquidator. On these counts, encashment was held unjustified. Looking at Clause 12.1 of SCC which prescribed the period within which CPBG was to be returned as also actual finding that BG could not be indefinitely retained by the Petitioner and that too for reasons, some of which were found unjustified, this part of award calls for no interference. 65. Coming to claim IX of the Respondent with respect to GST for Rs. 2,27,11,007/-, the learned Arbitrator found as a matter of fact that Respondent had not deposited the said amount towards GST with the authorities and Petitioner could not be faulted in its action to deduct this amount. However, having so held, a direction was issued to the Petitioner to pay the said amount to the Respondent subject to furnishing of an affidavit of undertaking by the Liquidator that on receipt of this amount, the same shall be deposited by him with the GST Authorities and the sole basis for this direction was that Respondent was in liquidation. In my view, this direction is contrary to the law in the GST regime. Contract between the parties provided for GST being a reimbursable item and liability of the Petitioner arose only after Respondent discha....
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....isions of Section 31(7)(a) of the 1996 Act whereby an Arbitral Tribunal has the sole discretion to award interest, in absence of any contractual bar and in the present case, there is no clause in the contract which restricts such discretion. Learned Arbitrator exercised the discretion judiciously awarding the interest by pegging it close to the rate of interest of 19.75%, which Respondent actually paid to the Petitioner on mobilization advance under the same contract. 67. Perusal of the award on this aspect shows that the learned Arbitrator allowed 18% interest per annum for the pre-award period, keeping in view the fact that Respondent had also paid interest @ 19.75% per annum on mobilization advance and @ 12% post-award excluding Rs.14.62 crores with respect to sub-vendor liability. It was rightly argued by the Respondent that in the absence of an express bar in the contract between the parties, it is the Arbitrator who enjoys absolute discretion to award interest including post-award interest. Under the 1996 Act, power of the Arbitrator to award interest is governed by Section 31(7) which is in two parts. Under Clause (a), in the absence of an agreement between the parties to....
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....ed provision. It was held that the Arbitrator has the discretion to grant post-award interest and this discretion is not fettered by clause (b) albeit it is open to the Arbitrator to decline interest in its discretion. It was highlighted that purpose of granting post-award interest is to ensure that the award-debtor does not delay the payment of the awarded amount. With proliferation of arbitration, issues involving both high and low financial implications are referred to arbitration and Arbitrator takes note of various factors such as financial standing of the award-debtor and circumstances of the parties in dispute before awarding interest. No provision under the 1996 Act restricts the exercise of discretion to grant post-award interest by the Arbitrator though Arbitrator must exercise the discretion in good faith taking into account relevant considerations and must act reasonably and rationally. It was concluded by the Supreme Court that according to Section 31(7)(b) only where the Arbitrator does not grant post-award interest, provisions of second part of sub-clause (b) will come into play. 69. In the present case, learned Arbitrator has exercised its discretion on a sound r....
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....r, but no steps were taken to mitigate the situation. Simple measures could have been adopted by the Petitioner by issuing formal notice for vacation but it failed to do so. Alternatively, Petitioner could have initiated steps to remove the machinery, equipment and material from the site to be stocked at some place so that the site could have been utilized for its own purpose, but even this was not done. 71. Learned Arbitrator placed reliance on the law of mitigation of damages citing Halsbury's Law of England (4th Edition Volume II) Paragraph 1193, which states that Plaintiff must take all reasonable steps to mitigate the loss which he has sustained consequent upon Defendant's wrong and, if he fails to do so, he cannot claim damages for any loss which he ought reasonably to have avoided. Reliance was also placed on the judgment of the Supreme Court in M/s. Murlidhar Chiranjilal v. M/s. Harishchandra Dwarkadas and Anr., AIR 1962 SCC 366, wherein the Supreme Court examined the scope of Section 73 of the Contract Act and observed that Plaintiff has a duty to take all reasonable steps to mitigate the losses consequent on the breach. Additionally, the Arbitrator also took note of th....
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....cessing Unit ('GPU'), new Gas Cracker Unit, followed by production of LLDPE/HDPE Swing Unit, Butene-1 Unit, associated utilities and off-site facilities. 76. It is averred that between 02.12.2011 to 12.01.2012, Petitioner invited bids through EIL, which was appointed as Consultant to the project, for carrying out certain composite works for setting up a GPU at Pata. Scope of work involved mechanical works covering erection of equipment, fabrication and erection of structural steel, associated piping, civil works, chemical cleaning, associated electrical and instrumentations work, pre-commissioning, commissioning and post-commissioning activities. On 28.01.2012, Respondent submitted its bid and being a successful bidder, received a FOA on 02.04.2012 along with Terms and Conditions incorporated in GCC and SCC and on 11.05.2012, a contract agreement was executed and signed between the parties. 77. It is averred that on 06.06.2012, a DLOA was issued to the Respondent. Contract value was estimated to be around Rs. 67,07,56,553/- inclusive of all taxes and duties, except service tax. Completion time for the work was 16 months for mechanical completion, starting from date of issue o....
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....if no, effect thereof? (e) Whether the Respondent could withhold the amounts due and payable to the Claimant on account of alleged sub-contractor dues? (f) Whether the Claimant is entitled to its claims as specified in the Statement of Claims? (g) Whether the Claimant is entitled to interest against the sum of money specified as claims at items (I) to (XI) at an interest rate of 18% or at any other rate to be decided by the Learned Tribunal and the period on which interest is entitled for and cost of arbitration? (h) Whether the Claimant or the Respondent is entitled to costs, if so, then what amount? (i) Relief?" 80. Petitioner filed its affidavit of admission/denial on 02.11.2021 while Respondent filed the affidavit on 08.11.2021. Oral evidence was led by the respective parties, which concluded on 13.08.2022 and thereafter arguments were heard and award was reserved on 28.01.2023. As the learned Arbitrator notes in the award, in the GCU case, proceedings were held along side and award was reserved on 28.01.2023. Arbitrator decided to pronounce the award in this case after hearing the parties in the GPU case where the arguments were ....
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....lity of Price Reduction Schedule shall be final and binding on the contractor. Respondent entered into the contract with its eyes open and with no reservation to this provision and therefore cannot question the imposition of PRS. There was a delay of more than 26 months in completing the project by the Respondent, over and above the 16 months of scheduled completion period stipulated in the contract. At every juncture, Respondent requested for Extension of Time, which was granted but without prejudice to Petitioner's right to impose PRS as per Clause 27 GCC. In any event, the levy of PRS was capped at 5% and even though the delay was much more, the levy was @ 1/2% per week for a maximum of ten weeks. Learned Arbitrator has completely glossed over Clause 27 which enabled the Petitioner to impose PRS if the contractor delayed completion of work. Arbitrator is a creature of the contract and cannot rewrite the contract between the parties. 83. Learned Arbitrator has erred in relying on the conclusion and recommendation of E-in-C, which was contrary to E-in-C's own correspondence prior to the final extension upto 31.10.2015. Record shows that Respondent claimed multiple extensions fr....
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.... treating E-in-C's recommendation as final and binding, Arbitrator has completely disregarded the contract between the parties and the vital evidence of Mr. A.K. Bhagat. 85. The best evidence of perversity in the impugned award is the contradiction in the approach of the Arbitrator in the present case and the GCU case albeit parallel proceedings were being conducted in both the cases. In the GCU case, recommendations of E-in-C were favourable to the Petitioner and Respondent had not led any contrary expert evidence, despite which the Arbitrator held that the recommendations could not be accepted and decided contrary to the said recommendation. In the instant case, following the same criteria Arbitrator ought not to have accepted E-in-C's recommendation since no contra evidence was led by the Respondent. Moreover, Petitioner's right to impose PRS arises from Section 55 of the Contract Act but there is no analysis in the award as to whether time was of essence or not. Even assuming that time was not of essence, promisee is entitled to compensation from the promisor for any loss occasioned by promisor's failure under second part of Section 55. The award is therefore in the teeth of....
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.... there was no option but to approach the Petitioner for mobilization advance at a high rate of interest of 19.75% per annum for timely completion of the project. Due to delays by the Petitioner, Respondent sought Extension of Time under Clause 44.1 of GCC from time to time, which was granted. In various letters to the Petitioner such as letters dated 27.09.2014 and 30.07.2014, Respondent elaborated the reasons attributable to the Petitioner causing obstruction in completion of the work. The balance work that remained after 03.03.2015 was only pertaining to shut down job for which extension was sought and was recommended by E-in-C. 89. On 07.09.2016, E-in-C addressed a letter to the Petitioner certifying the work and recommending payment of Rs. 3,02,84,585/- to the Respondent. Imposition of PRS was completely arbitrary and wrongful. As per Clause 27 of GCC, PRS was to be imposed only as a price deduction and not penalty. No PRS was deducted/adjusted for the entire duration of alleged delay from September, 2013 to October, 2013 and in any event, deduction of PRS was never approved by E-in-C, which was a pre-requisite under Clause 27. Moreover, Petitioner did not suffer any loss eithe....
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....Petitioner in terms of Clause 4 of DLOA and mobilized its resources. Under Clause 45.1 of GCC, Respondent was entitled to Extension of Time for completion of work in case performance was delayed due to factors attributable to the Petitioner. Respondent was entitled to Extended Stay Compensation at the rate of Rs.80 lacs per month in accordance with Clause 7 of DLOA. Equally undisputed is a fact that work was not completed within the time stipulated in the contract and was completed by 31.10.2015 after several time extensions sought by the Respondent and granted by the Petitioner. As noted above, Respondent made a number of claims but the Arbitrator allowed Claim No. (I) to the tune of Rs. 22,20,000/- as against the claimed amount of Rs. 3,46,85,469/- as also Claim No. (VII) arising due to PRS to the extent of Rs. 37,01,360/- as against claim of Rs. 7,81,38,712/ -. Interest was awarded @ 18% per annum till the date of the award in respect of claim No. (I) from 07.10.2016 and in respect of claim No. (VII) from 23.03.2018. Post award interest was granted @ 12% per annum. 92. The main controversy between the parties relates to PRS under Clause 27 of GCC, which is extracted hereunder....
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....-in-C recommended that Final Time Extension upto 31.10.2015 be granted without levy of PRS as the reasons for delay upto this period were not solely attributable to the contractor. Having so recommended, E-in-C also opined that since certain reasons for delay were attributable to the contractor, Extended Stay Compensation was not payable. Petitioner questions the opinion of E-in-C on the ground that the delays were solely attributable to the Respondent as also that the opinion of E-in-C was not binding on the Petitioner albeit it did bind the Respondent. 95. In order to decide the issue as to whether PRS was rightly imposed, learned Arbitrator conducted detailed 'delay analysis' to find out which party was responsible for delay. In this context, the Arbitrator observed that various correspondences exchanged between the parties, where they blamed each other, were not required to be looked into for the reason that an independent Engineer appointed for the project by the Petitioner itself had carried out delay analysis which was contained in the letter dated 20.05.2016 (R-36). The Arbitrator noted that parties had not led any expert evidence on delay which could indicate either tha....
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....ings. Works to be required to be done during Shut downs of '2014 and 2015'etc., delay in procurement of bought out items, internal financial/local issues of PECL, etc. Though certain delays were attributable to the contractor like delay in procurement of bought out items, Financial constraints, Completion of Insulation works, etc. certain activities pertaining to existing units were required to be done in shutdowns only. The second shutdown was taken in May '15. Certain requirements of additional modifications and stubs were suggested later by GAIL and finally the normalization of steam lines along with associated jobs were completed in October after clearance for same. Activities are plotted on Bar Chart (Annexure-I for reference. As the delays pertaining to Contractor were concurrent with delays not solely attributable to contractor like shutdown, additional requirements, front clearance, etc. overall delay in completion up to 31st October 2015 was not solely attributable to the contractor. Recommendation: In view of above, it is recommended that the Final Time Extension up to 31.10.2015 may please be granted without levy of PRS as the reasons ....
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.... Interestingly, for delay on the part of the Contractor to execute the work, there is no provision for imposition of Liquidated Damages (LDs). On the contrary, the Contract makes a provision for Price Reduction in the Contract Price in Clause 27. Insofar as Clause 27.3 provides for bonus also for early completion and the maximum bonus is 21/2% of the Total Contract Price. Further, Clause 47 stipulates that in case there are delays on the part of the Employer, or his authorised agents, no adjustment in the Contract Price shall be allowed and only Extension of Time shall be granted. Issues have arisen as to whether such price reduction clause is in the nature of penalty clause and is contrary to the provisions of Contract Act which does not allow any 'penalty' for breach but only damages which are actually suffered by the other side. Some case law in this behalf has emerged in Indian Courts as well as UK courts. However, since no such argument was raised by the Claimant on the validity of this clause, it is not necessary to go into this issue. The limited purpose of mentioning the aforesaid state of affairs was to highlight that such a provision has to be strictly construed. ....
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....13, EIL had highlighted certain major areas where delay occurred due to inadequate resource deployment and delay in procurement of bought out items by the Claimant. However, that was the initial delay. What matters is the final analysis undertaken by EIL. 141. Even at the time of issuance of the completion certificate i.e., on 07.09.2016. the Respondent did not mention anything about PRS. The earlier documents show that the Respondent 'retaining' amount on account of PRS but there was no 'deduction' made in this behalf. 142. Deductions/withholding of amount on this account, therefore, is unsustainable. The Tribunal is, therefore, of the opinion that the Respondent has not made out a case for invocation of Clause 27.1/PRS. 143. Insofar as withholding of the amount on account of alleged dues of the sub-contractors are concerned, though the Respondent has tried to highlight that the amount is payable to the sub-contractors, it has not given any answer to the legal proposition advanced by the Claimant that since the Claimant company is now in liquidation, the sub-contractors can raise the claim before the Liquidator. The Tribunal finds force in the submission....
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....solely attributable to the Contractor. As certain reasons for delay during execution of contract were attributable to Contractor also, Extended Stay Compensation is not payable to the contractor in line with Contract provisions. Same has been duly refuted to the Contractor. M/s. PECL in their request letter confirmed that they shall not claim any amount against reduction in executed value beyond 25% of Awarded Contract Value in case no PRS is levied." 97. Petitioner placed heavy reliance on earlier communications of E-in-C, pointing out delays on the part of the Respondent. It is true that at the initial stages there were delays by the Respondent, which position was conceded during the arbitral proceedings, but the entire delay upto 31.10.2015 cannot be attributed to the Respondent as brought forth by E-in-C in its in-depth analysis. It is noted by E-in-C that major reason for delay in completion of the work was progressive release of drawings. Certain delays were attributed to the Respondent also, such as delay in procurement of bought out items, financial constraints, completion of installation work etc. However, after a complete analysis, E-in-C concluded that the delays pert....