Delhi High Court
National Highways Authority Of ... vs Afcons Infrastructure Ltd. on 11 August, 2015
Author: Sanjeev Sachdeva
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 28th April, 2015
Judgment delivered on: 11th August, 2015
F.A.O. (OS) 234 of 2015
NATIONAL HIGHWAYS AUTHORITY OF INDIA .... APPELLANT
VERSUS
AFCONS INFRASTRUCTURE LTD. ... RESPONDENT
Advocates who appeared in this case:
For the Appellant: Mr Ravi Sikri, Sr Advocate with Ms Tanu Priya Gupta and
Mr Deepank Yadav, Advocates
For the Respondent : Mr Sandeep Sethi, Sr Advocate with Mr Manu Seshadri
and Mr Tanmay Nandi, Advocates
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SANJEEV SACHDEVA
JUDGEMENT
SANJEEV SACHDEVA, J
1. This appeal under Section 37 of the Arbitration & Conciliation Act,
1996 (hereinafter referred to as the Act) impugns the order dated 10 th
February, 2015 whereby the objections of the appellant under Section 34 of
the Act challenging the award dated 05th March, 2013 have been rejected.
The award was in respect of disputes arising out of a contract dated 28th
March 2001 for the construction of a new carriageway (NCW) and the
widening and strengthening of the existing carriageway (ECW) between km
340 and km 402 Haveri to Hubli Section on NH-4 in Karnataka.
2. The Arbitral Tribunal in the award was concerned with two claims
raised by the respondent. The first claim being on account of compensation
for repair of distress pavement and the second claim being on account of
compensation for differing ground conditions in respect of quarries.
3. The contract stipulated that the NCW was to be completed first and
thereafter work on the ECW was to be undertaken after the traffic was
diverted over the NCW. The new pavement on NCW showed certain distress
over the total length of 2.48 km. To ascertain the probable causes,
investigations were undertaken by the respondents through a Professor of
Civil Engineering at IIT, Chennai who submitted a report based on which
the Engineer instructed the respondent to carry out the repair work.
4. The respondent claims payment for the repair work contending the
same to be a compensation event under clauses 44.1 (g), 44.1 (i) read with
Clause 11.1 of the conditions of contract. The appellants denied the claim.
The defence raised by the appellant was that the distress in the pavement
was due to non-compliance of the Respondent of the instructions given, poor
management, non-performing construction, slow progress of work, poor
quality work, use of non-compliance materials and negligence in
undertaking proper action on different layers. The contention was that the
recommendation was by way of repairs and that there was no additional
work or variation in the nature of work and the repairs and restorations were
on account of defective workmanship solely attributable to the Respondent.
5. The Arbitral Tribunal found, as a matter of fact, that there was no
defect in the work executed by the respondent. The Arbitral Tribunal found
that there was a lack of vertical lateral support to the revision of the final
road level (FRL) and during construction of the NCW, the approved FRL
was at a much higher level than the ECW and there was insufficient drainage
due to revision of the FRL and distress pavement occurred, no drawings for
longitudinal side drains/median drains were supplied for construction. As a
result of insufficient drainage, the rainwater could not drain out and
ingressed to the lower pavement layers where it was causing distress to the
pavement. The Arbitral Tribunal found that the work had been executed
under the direct control and supervision of the representative of the Engineer
and had been carried out as per the contract specifications. The materials
were tested and approved before laying of each layer and compaction tests
and other tests were conducted and approved as per the terms of the contract.
The Arbitral Tribunal rejected the contention of the appellant that the failure
of the pavement was due to substandard workmanship and use of non-
compliance materials. The Arbitral Tribunal thus found the respondent
entitled for the cost of repair works under the above referred conditions of
the contract.
6. The learned Single Judge has noticed that the Arbitral Tribunal had
discussed the report of the Professor at IIT who had conducted the
investigation in great detail and noticed that the report did not include the
results of various tests and had not taken into consideration the increase in
the FRL of the NCW. The Arbitral Tribunal did not find that the report of
IIT suggested that the distress in pavement was due to use of non-compliant
materials. The Arbitral Tribunal and the learned Single Judge thus found that
the appellant had been unable to establish that the distress was on account of
defective work on the part of the respondent. The learned Single Judge held
that the conclusion reached by the Arbitral Tribunal, that the reasons for
distress of the pavement was not attributable to the respondent, was based on
detailed analysis of the data and the correspondence placed before it. The
Arbitral Tribunal has concluded that the Engineer's instructions to the
respondent to carry out the work was in the nature of additional work for
safety and other reasons and therefore was a compensation event covered
under Section 44.1 (g). Learned Single Judge has thus declined to interfere
with the conclusions reached by the Arbitral Tribunal. The Arbitral Tribunal
after detailed examination of the materials and the evidence before it has
concluded that the distress event occurred not on account of fault of the
respondent but on account of the factors attributable to the appellant. Since it
is a finding of fact based on appreciation of evidence and material placed
before the Arbitral Tribunal, the learned Single Judge has rightly refused to
interfere with the said finding of fact. We see no reason to interfere with the
findings arrived at by the Arbitral Tribunal with regard to claim No. 1 and
the view taken by the learned Single Judge.
7. Now coming to claim No. 2. It arose on account of differing ground
conditions in respect of quarries. The property of rock in the area of the
project was such that stone aggregates from the quarried rock met all the
specific specifications provided by Appellant except the maximum 30%
specification for combined index of flakiness and elongation. The
respondent in terms of the requirement of the contract installed and
commissioned two 125 tonnes per hours crushers for primary and secondary
crushing. The respondent, however, found that the flakiness and elongation
index was on the higher side due to inherent property of rock extracted from
the quarries and could not be improved. The respondent tried all
combinations of crushing equipment, however, with no success. The
respondent developed more than 40 quarries in different locations but none
yielded the rock needed to meet the required specifications. The Engineer
and the Project Director of the appellant accepted that given the inherent
property of the rock in the area, the required quantity of aggregates of the
required specification was not available. The requirement was requested to
be relaxed and was subsequently relaxed by the appellant at the meeting held
on 09th March, 2005. The appellant resisted the claim contending that the
rates quoted by the respondents in the bid included all leads, taxes and other
levies.
8. The Arbitral Tribunal examined the material report prepared by the
consultants at the stage of tendering and the noticed that the report did
indicate that the aggregates of most of the quarries did meet the specific
requirement and this was the information available to bidders. The minutes
of meeting held of a high-powered committee headed by the chairman of the
appellant showed that they had accepted the Respondent's contention that the
inherent property of the rock encountered could not meet the specifications
of combined index of flakiness and elongation despite various measures
taken by the Respondent. The Arbitral Tribunal found that a visual
inspection of the site could not have revealed the adverse property of the
rock.
9. The Arbitral Tribunal on a detailed analysis of the relevant clauses
and the evidence on record before it came to the conclusion that the said
amounted to a compensation event entitling the respondent to compensation.
The learned Single Judge has noticed that the Arbitral Tribunal comprised of
technical experts who were also conscious of the industry practice. The
learned Single Judge has found that the conclusion reached by the Arbitral
Tribunal that the quarries made available could not have yielded aggregates
of the required specification was a finding of fact and it was not a perverse
finding or so shocking as to require interference under Section 34 of the Act.
10. The extent of judicial scrutiny under Section 34 of the Act is limited
and scope of interference is narrow. Under Section 37, the same is further
narrower. The supervisory role of the Court in arbitration proceedings has
been kept at a minimum level. The court is not to re-appreciate evidence. If
the view taken by the Arbitral Tribunal were plausible and reasonable, the
court would not interfere with the same unless the view was so perverse that
no reasonable person could arrive at such a conclusion.
11. The Arbitral Tribunal comprising of experts, on a detailed
examination of the material before it, has returned the finding that the said
event amounted to a compensation event entitling the respondent to
compensation for the works carried out. The learned Single Judge after
examining the material has confirmed the same. We find no reason to
interfere with the finding returned by the Arbitral Tribunal and confirmed by
the learned Single Judge. The finding of the facts in our view are plausible
and reasonable and do not call for any interference.
12. The appeal is accordingly dismissed leaving the parties to bear their
own costs.
SANJEEV SACHDEVA, J
AUGUST 11, 2015 BADAR DURREZ AHMED, J
RS
