Factual Background
The present writ petition is filed to challenge the Arbitral award pronounced on December 12, 2020 by the Arbitral Tribunal constituting sole Arbitrator.
Brief facts of the case are that the East Central Railway came into an agreement with Icron to execute work pertaining to construction of steel superstructure and other ancillary work for the project Rail-cum-road Bridge across river Ganga. Thereafter Icron sub lets the work of fabrication of steel bridge girders for new rail-cum Road Bridge over river Ganga. The respondent came out to be the lowest bidder and consequently Icron issued a ‘Letter of Award” to the respondent in order to execute the contract at a total cost of Rs. 135.59 crores. Thereafter the parties entered into another contract referred as “Erection Contract” at a cost of Rs 107.08 crores. The matter of dispute arose with respect to the time period assigned for completion of the “Erection Contract’, the same was completed after eighty six months; however the stipulated time period to complete the contract was forty- five months from the date of its commencement.
The respondent kept alleging Icron for the delay in contract. However both the parties arranged a meeting to resolve the claims and a NO Claim certificate was issued by the respondent to Icron, hence restraining respondent from raising any further claims. The cause of action in the present matter arose, when the resplendent in spite of settling its claim and issuing “NO Claim Certificate” raised claims via its letter dated March 27, 2018. The respondent claimed an amount of ₹50, 95, 18,949/- in respect of the Fabrication Contract and an amount of ₹35, 26, 10,345/- under the Erection Contract.
The Arbitral Tribunal partially allowed the claims of the respondent; the same is being challenged by Icron in the present writ petition.
Case of the Petitioner
The Counsel for the petitioner contended that the NO Claim Certificate issued by the respondent is conditional and not binding is illegal. It was further contended that awarding claim on the ground of delay in completion of the contract is unreasonable as delay was caused by both the parties. Additionally it was argued that the claims were awarded on the basis of the Certificate issued by the Chartered Accountant on prolongation of work, was denied by Icron and contents of the same shall be proved by the respondents.
Case of the Respondent
The respondents on the other hand, countered the above stated submissions and stated the NCC issued was involuntary in nature and the same was stated even in the cover letter beneath which the NCC was issued. Lastly it was contended that the Tribunal has not erred in awarding the claim to the respondents, as the Tribunal has followed the principle of appointment, which is well recognized in the eyes of law as well and hence cannot be challenged. It was also added that the Certificate of the Chartered Accountant is valid and supported by vouchers and bills.
The Arbitral Tribunal contended on the interpretation of clause 49.95 of GCC that in the event of any delay on the part of Ircon or the Engineer, the time for completing the Contracts would be reasonably extended but no damages would be payable to the respondent.
Observation of the Tribunal
The Tribunal relied on the decision of this Court in the case of Simplex Concrete Piles (India) Ltd. v. Union of India: 2010 (115) DRJ 616 wherein the Court assessed the validity of the clause in the light of Section 23 of the Indian Contract Act. The Tribunal was thus of the view that the clause does not restrict the Tribunal from entertaining a claim with respect to compensation if the delay is reasonable. However if the delay is abnormal the inherited right via clause 49.95 to sought claim cannot be exercised. The Tribunal stated that an “Efficacy” test is required for application of exclusionary clauses. Apex Court case of Nabha Power Ltd. v. Punjab State Power Corporation Limited & Anr. (2018) 11 SCC 508 was referred.
It was also stated that the scope of interference on the ground of patent illegality under Section 34(2A) of the A&C Act does not extend to re-appreciating the material before the Arbitral Tribunal and re-adjudicating the disputes. Additionally it was held that though there was delay in the completion of the work by both the parties, however the delay caused by Icron played a major role in prolongation of work. On the submission of patent illegality the Tribunal was of the view that principles of Indian Evidence Act, 1872 do not apply strictly on Arbitral proceedings and the certificate produced by the Chartered Accountant was also accepted by the Tribunal as it was supported by invoices, bills and vouchers etc. Thus, the High Court refused to intervene with the above stated findings of the Tribunal and dismissed the present petition filed before it.
Case Details
Before: Delhi High Court
Case Title: Icron International Limited vs. GPT Rahee Jv
Coram: Vibhu Bhakru
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