National Highways Authority Of ... vs M/S Sew Infrastructure Limited
2013 Latest Caselaw 3414 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI

                                  DECIDED ON:       2nd August, 2013

+     FAO(OS) 347/2013

NATIONAL HIGHWAYS AUTHORITY OF INDIA..... Appellant

                   Through :      Mr. Sudhir Nandrajog, Sr. Adv. with
                                  Ms.Meenakshi Sood, Mr. Mukesh
                                  Kumar and Ms. Tanupriya, Advs.

                         versus

M/S SEW INFRASTRUCTURE LIMITED                      ..... Respondent

Through : None.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI

% MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)

CM 11705/2013(exemption)

Allowed, subject to all just exceptions.

The application stands disposed off.

FAO(OS) 347/2013 & CM 11704/2013(stay)

1. This appeal questions the order of the learned Single Judge

dated 25th April, 2013 made in a Section 34 petition preferred by the

appellant - National Highways Authority of India (NHAI).

fao(os) 347/2013 Page 1

2. Briefly the facts are that the respondent - M/s. Sew

Infrastructure Limited (hereinafter referred to as "the Contractor")

made an offer to the NHAI to complete certain works which had been

awarded to another Contractor sometimes in 2001. The offer was

made by the Contractor in this case on 5th January, 2005. The

Contractor stated that it was willing to execute the balance work of the

contract on the same terms and conditions and BOQ rates with price

adjustment formula as applicable. The offer was eventually accepted

by the NHAI on 29th August, 2005. Apparently, the work had to be

completed within a year; the site was handed over on 26th December,

2005; consequently the last date of completion was 25th December,

2006. Apparently, the Contractor made certain claims towards price

escalation. In terms of the Agreement, the Contractor was obliged to

approach the Engineer in the first instance with the claim. The

Engineer opined against the Contractor on this aspect by his letter

dated 12th January, 2008. The Contractor had relied upon clauses

70.1 - 70.8 of the Agreement. Apart from this, the Contractor also

claimed amounts towards higher tax liability, i.e. local VAT. The rate

fao(os) 347/2013 Page 2 of taxation had been increased from the existing 2.6% to 4% post

April, 2005.

3. The disputes were referred to arbitration; on the two aspects

referred, the award was rendered in favour of the Contractor. NHAI

claimed to be aggrieved and approached the Court under Section 34 of

the Arbitration Act, 1996. By the impugned award, the learned Single

Judge had rejected the challenge to the award on both counts.

4. So far as the first aspect, i.e. price escalation and interpretation

placed by the Arbitrator on clause 17 is concerned, the learned Single

Judge had relied upon previous decisions of this Court, including

certain Division Bench judgments. The relevant discussions of the

learned Single Judge in the impugned order are as follows:-

"22. Relating to the same issue of price escalation the Arbitral Tribunal has noticed the decision dated 8th March, 2010 of the learned Single Judge of High Court of Delhi in OMP No.362/2008 National Highways Authority of India Vs. Unitech-NCC JV dismissing the petitioner's petition for setting arise the award in that case, made under Section 34 of the Arbitration and Conciliation Act, 1996 and further therein the judgment of Division Bench of High Court in FAO (OS) No.338/2010 NHAI Vs. Unitech-NCC JV upholding the judgment and order dated 8th March, 2010 of the learned Single

fao(os) 347/2013 Page 3 Judge and dismissing NHAI‟s appeal with additional costs. In both the said judgments relevant findings of that Arbitral Tribunal are itself reproduced as affirmed without reservation by the learned Single Judge and approved by Division Bench. Therefore, the matter relating to the price adjustment under clause 70 of the Contract is fully covered by the judgment of Division Bench of this Court in the said FAO No.338/2010 NHAI Vs. Unitech-NCC JV, reported as 178(2011) DLT 496."

23. The respondent has also placed the reliance on the orders passed by the Division Bench of High Court of Delhi dismissing several appeals filed by the applicant in FAO (OS)No.143/2011 NHAI Vs. ITD Cementation India Ltd., FAO (OS)No.144/2011 NHAI Vs. ITD Cementation India Ltd., FAO (OS)No.375/2011 NHAI Vs. Elsamexs-TWS-SNC (JV) as the matter being covered by the decision of Division Bench in the said FAO (OS)No.338/2010 NHAI Vs. Unitech- NCC JV.

24. It is settled law that finality is attached with the decision of the Arbitral Tribunal which is the final judge of both the questions of fact and law referred to it. The petitioner has no such case that the Arbitral Tribunal has no jurisdiction to adjudicate the disputes referred to the Arbitral Tribunal. When the petitioner has no such contention that the Arbitral Tribunal has no jurisdiction to decide the claim, the merit of the decision of the Arbitral Tribunal cannot be challenged by a party to the contract merely because the interpretation given by the Arbitral Tribunal to the contract terms is not to its liking.

In this regard, the Supreme Court has held in the case of Maharashtra State Electricity Board Vs.

fao(os) 347/2013 Page 4 Sterilite Industries (India) & Anr. (2001) 8 SCC 482, in paragraph 9 of the said judgment, as under:

"9. ...the arbitrator's award both on facts and law is final; that there is no appeal from this verdict; that the court cannot review his award and correct any mistake in his adjudication, unless the objection to the legality of the award is apparent on the face of it."

25. Thus, I agree with the finding arrived at by the Arbitrator Tribunal with regard to Claim No.1. Under the scope of Section 34 of the Act, the objections raised by the petitioner are not tenable in view of settled law on this aspect."

5. The learned senior counsel does not dispute this position but

states that the said judgments are the subject matter of pending appeals

by Special Leave in the Supreme Court.

6. This Court is of the opinion that rule of consistency compels us

to follow the previous judgments of the Division Bench which are

binding upon us. Consequently, the Court does not discern any

infirmity on the approach of the learned Single Judge under Section 34

on claim No.1, i.e. price escalation. As far as claim No.2 is

concerned, the learned senior counsel urged that the interpretation

placed on clause 14.3 in the present case was misplaced. The counsel

stressed that unlike in the case of original contract, there was no

fao(os) 347/2013 Page 5 bidding process and the respondent Contractor straightaway proceeded

to make his offer. Thereafter, the process of negotiation was

undertaken and the contract was a culmination of that process on 29th

August, 2005. By that time, the increased in the rate of taxation had

been put in place. Consequently, these facts had to be taken into

consideration and reasonable interpretation had to be given to clause

14.3 which means that the said increased rate of taxation had to be

borne by the Contractor. Clause 14.3 of the Agreement between the

parties reads as follows:-

"All duties, taxes and other levies payable by the contractor under the contract, or for any other cause, as on date 28 days prior to the deadline for submission of bids, shall be included in the rates and prices and the total bid price submitted by the bidder and the evaluation and comparison of bids by the employer shall be made accordingly"

7. In this case there is no dispute that the bid was eventually

finalized by the letter dated 29th August, 2005. Yet the Court cannot

be oblivious of the circumstance that the Contractor in this case was

none other than the one who approved the sub-Contractor for the very

same contract, which had been successfully tendered for by another

Contractor, who had entered into the original Agreement in 2001. The

fao(os) 347/2013 Page 6 terms of the bid or offer made by the respondent Contractor itself are

revealing - in the letter dated 29th August, 2005, they were willing to

execute the balance left out work on the same terms and conditions

and BOQ rates with price adjustment formula, as applicable and

would be bound by the same rates with original contract as per

original sub-Contractors. The Arbitrator held that the subsequent rate

of taxation had to be borne by the NHAI; a determination which was

also formed by the learned Single Judge.

8. This Court is of the opinion that there is no infirmity in the

reasoning of the impugned judgment in this regard. If the respondent

Contractor stepped into the shoes of the original Contractor as he

concededly did, his compelling rationale is obvious; if the original

Contractor had continued with the Agreement, the enhanced rates

were to be borne by the appellant - NHAI. Even otherwise, the

reasonable construction - which has been favoured by the Arbitrator

and the learned Single Judge concurrently as to clause 14.3 is that the

28 days of the period, which is determinative for fixing the rate of

taxation was applicable in the present case and the period of 28 days

prior to the bid or offer made by the Contractor sometimes the end in

fao(os) 347/2013 Page 7 December, 2004. At that time, concededly the rate of taxation was

lower; it was enhanced later. The Court is unimpressed with the

submission that the parties were negotiating and the contract was

finalized only on 29th August, 2005. The reason is again simple; even

in the case of the original bid, negotiations would have ensued on

various aspects. But, it did not necessarily mean that the time or

period mentioned in clause 14.3 was variable. It was constant and

unaltered.

9. In view of the above reasons, the Court is of the opinion that the

present appeal is meritless. It is accordingly dismissed without any

order as to costs.

S. RAVINDRA BHAT, J

(JUDGE)

NAJMI WAZIRI, J

(JUDGE)

AUGUST 02, 2013 'sn'

fao(os) 347/2013 Page 8