National Highways Authority Of ... vs Gammon Atlanta (Jv)
2017 Latest Caselaw 977 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                   Judgment Reserved on: 20.01.2017
                                    Judgment delivered on: 20.02.2017
+       FAO(OS) 21/2017

NATIONAL HIGHWAYS AUTHORITY OF INDIA ..... Appellant
                           versus

GAMMON ATLANTA (JV)                                  ..... Respondent
Advocates who appeared in this case:
For the Appellant         : Mr Ramesh Kumar.
For the Respondent        : Mr Sumit Goel with Mr Akash Jindal &
                            Ms Raveena Rai.
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE ASHUTOSH KUMAR
                               JUDGMENT

ASHUTOSH KUMAR, J

CM 2336/2017 (Exemption) Allowed, subject to all just exceptions.

FAO(OS) 21/2017

1. The appellant, NHAI, has challenged the judgment of the learned

single Judge dated 15.11.2016 whereby the two OMPs, one filed by the

appellant (OMP No.107/2008) and the other by the respondent (OMP

No.99/2008) was disposed of by a common judgment.

2. The appellant had put up a challenge to the award with respect to

the claim Nos.1.1, 1.4, 1.5, 1.9, 2.1 and 2.2, all of which have been

upheld by the learned single Judge

3. The appellant, in October, 2000 had invited bids on International

Competitive bidding basis for a contract package OR-1 for widening of

4/6 lanes and strengthening of existing 2 lane carriageway of NH-5 in the

State of Orissa from 387.700 Kms to 414.00 kms (Khurda-Bhubneshwar).

4. The respondent namely Gammon Atlanta JV was held to be

successful in its bid and the contract of agreement between the appellant

and respondent was signed on 20.12.2000.

5. The contract contained "Conditions for Particular Application

(hereinafter called as COPA) and Technical Specifications (TS)"

whereunder some general conditions of the contract were amended. The

term of the contract was for 36 months beginning from 15.01.2001 to

14.01.2004. The total contract price was Rs.118,90,10,112/-.

6. Because of certain disputes having arisen between the parties, the

arbitration clause was invoked by the respondent; whereupon the disputes

were referred to a three member Arbitration Tribunal (AT).

7. We are concerned, in the present appeal, with the award given on

claims No.1.1, 1.4, 1.5, 1.9, 2.1 and 2.2.

8. Claim No.1.1 pertained to payments which were made by the

respondent as hiring charges for site office for the engineer which,

according to the appellant was not reimbursable. The claim of the

respondent was based on the fact that Bill of Quantities (BoQ) item

Nos.8.15 and 8.16 required the respondent to provide for site office for

engineer including furnishing the office as per drawing and technical

specifications. Because the land was not made available for such

construction, an alternative arrangement was made by the respondent by

hiring a building and which arrangement was accepted by the appellant.

The respondent, therefore, sought payment for the aforesaid work with

price adjustment as also the interest for delayed period for Rs.7,92,670/-

by way of declaratory award. Maintenance charges were also claimed for

subsequent period till completion of work.

9. The aforesaid claim was contested by the appellant on the ground

that such claim was not covered under BoQ items Nos.8.15 and 8.16 and

construction and maintenance of field lab at PIU by the respondent was

only incidental to the work and therefore, no separate payment was

admissible as per general TS and supplementary TS (Clause 121.1).

10. The Arbitral Tribunal directed for filing of a copy of the lease

agreement dated 14.02.2001 of the office building which disclosed that a

monthly rental of Rs.18,000/- was paid by the respondent along with an

interest free deposit of Rs.54,000/-. The lease was renewable on mutually

agreed terms. The rent was paid for more than four years. The respondent

(claimant) did not place any other document regarding enhancement of

the rent. The Arbitral Tribunal accepted and allowed the claim of the

respondent with respect to the rent paid for the site office as well as

towards maintenance. The learned single Judge did not find any

perversity in the decision arrived at by the Arbitral Tribunal. We do not

find any fault with the assessment of the learned single Judge.

11. Claim No.1.9 of the respondent related to payment of cost for

reinforcement in crash barrier and friction slab. BoQ item No.8.29

required construction of RCC crash barrier monolithic with friction slab

M-30 as per approved drawing and technical specification and included

the cost of necessary material, framework and reinforcement. The unit for

payment was linear metre. However, the relevant drawing tendered at the

time of the pre-bid meeting did not show any reinforcement in the crash

barrier but only friction slab was shown without reinforcement. The

respondent (claimant) contended that reinforcement in the concrete crash

barrier and friction slabs were provided on the instructions of the

engineer. Since at the time of tendering, no reinforcement was shown in

the relevant drawing for the crash barrier, the same was not included in

the quoted rate and it was only imperative for the appellant to have paid

for the same. The appellant, had countered before the Arbitral Tribunal

that since the wordings of BoQ item No.8.29 and the drawings provided

to the respondent did not include any reinforcement or friction slab,

therefore, the same was not payable separately. It was also canvassed that

technical specifications in clause 809.6 stipulated for minimum

reinforcement conforming to IRC-21.

12. The AT directed the parties to furnish rate analysis of BoQ No.8.29

at the time of tendering as also at the time of detailed project report stage.

The AT found that sub clause 5.2.2 of COPA, the terms of the bid,

appendix to the bid and addenda had a preference over technical

specifications, drawings and the priced BoQ. IRC 21 (Clause 305.19) laid

down minimum reinforcement to be provided. The AT therefore, was of

the view that even though the drawing at the time of tendering did not

show any reinforcement in the crash barrier, the claimant was duty bound

to include at least minimum reinforcement in the crash barrier and was

justified in quoting the rate for the same accordingly. Even with respect

to payment, the AT devised a formula of making payments separately in

addition to the payment released under BoQ item No.8.29 towards

reinforcement used in the crash barrier in excess of 0.8% of all the weight

of concrete in crash barrier.

13. The learned single Judge rejected the argument of the appellant that

the respondent was wrongly compensated and at best over compensated

and upheld the award of the AT. We do not feel inclined to disturb the

findings of either the Arbitral Tribunal or the learned single Judge for the

reasoning accorded appears to be just and in tune with the requirements

of tendered document.

14. The appellant had challenged the award with respect to claim

No.1.4 which related to payment of additional cost of GSB (Granular Sub

Base) and WMM (Wet Mix Macadam) in Profile Corrective Course. The

relevant BoQ item No.4.04 reads as follows:-

"Providing and laying profile corrective course with dense bituminous macadam complete as per drawing and technical specification Clauses 501 & 507."

The appellant had directed the respondent to lay down profile

corrective course using GSB and WMM in certain stretches. However,

the payments were only made in terms of rates mentioned in BoQ item

Nos.3.01 and 3.02. It was argued by the respondent that the rates for

profile corrective work in GSB/WMM could not be the same as the rates

in BoQ item Nos.3.01 and 3.02 which was for the work done in normal

course. Profile correction required different rates of GSB and WMM. On

the contrary the appellant insisted upon the same being covered under

BoQ item Nos.3.01 and 3.02. The Arbitral Tribunal rejected the

contention of the appellant and held that the work of GSB/WMM in

profile correction are not covered under BoQ item Nos.3.01 and 3.02 and

required to be paid separately. Considering the nature of work of profile

correction in GSB and WMM layers, the Arbitral Tribunal awarded 10%

extra over the rates of item Nos.3.01 and 3.02. The learned single Judge

rightly rejected the contention of the appellant and upheld the award with

respect to the aforesaid claim.

15. The challenge to the award with respect to claim No.1.5 (payment

at revised rates for the construction of additional flyover No.5 at Jaydev

Vihar at Km 418) could also not succeed before the learned single Judge.

The engineer had recommended for revised rates with detailed rate

analysis. The Appellate Tribunal, on going through the contract clause 52

regarding valuation of variations was of the view that it was Engineer's

prerogative to fix the rates after consultation with the employer and the

contractor. The engineer had actually fixed the rates which was accepted

by the appellant. The Arbitral Tribunal found that since the engineer's

rate analysis was a detailed one and was not faulty, the same ought to be

relied upon.

16. The learned single Judge rightly affirmed the award and we do not

wish to interfere on that count as well.

17. Claim Nos.2.1 and 2.2 dealt with compensation for losses incurred

on account of overheads and expected profits for reduced productivity of

machinery and equipment deployed. The tendered rates included

provision for overheads and profits at 27.28% of the tendered cost. It also

included a provision for 14.28% towards overheads. The claim of the

respondent was not challenged seriously and, therefore, the Arbitral

Tribunal, as held by the learned single Judge, rightly accepted the

overheads at 14.28%. Thus on the count of overhead, Rs.37 crores was

awarded and for delay in handing over the site, Rs.5.28 crores was

awarded.

18. With respect to claim for loss of profit, the Arbitral Tribunal

rightly observed that even though the details regarding deployment of

machinery and equipment showed that machinery and equipment were

deployed as per approved programme but the respondents also were

responsible, in some measure for under utilization of machinery which

was occasioned because of various factors namely repairs, non

availability of complementary units, inadequate supply of basic materials

etc. In the opinion of the Arbitral Tribunal, work to the extent of Rs.37

crores was not completed due to default of the appellant in handing over

the site but the respondent could not be compensated on this account to

the extent of 10% as machinery component. The AT, therefore, awarded

5% as machinery component. The aforementioned award has not been

found to be perverse or contrary to record by the learned single Judge.

We also do not find any anomaly in the reasonings given by the Arbitral

Tribunal and the assessment by the learned single Judge.

19. The argument of the learned counsel for the appellant that the

learned single Judge completely overlooked the errors committed by

Arbitral Tribunal has only been noted to be rejected. The paramaters for

interfering with an award of the AT is ingrained in Sections 5 and 34 of

the Arbitration and Conciliation Act, 1996. Section 34 clearly stipulates

that an arbitral award could be set aside under certain conditions

enumerated in the section and no other; those conditions being primarily

with respect to process through which the award is delivered and not

actually on the merits of the award. As stated earlier Section 5 of the Act

which deals with the extent of judicial intervention clearly mandates that

no judicial authority shall intervene except where so provided in the Act.

The aforesaid provisions of the Act are aimed at ensuring that the AT

operates within its jurisdictional limits and provides reasons for the

arbitral award. This, in turn, would pave way for minimum judicial

intervention. The only area where the merits of an arbitral award could be

gone into is Section 2(b)(ii) of Section 34 of the Arbitration and

Conciliation Act, 1996 which contemplates assessment of an award for

being rescinded if the award is in conflict with the public policy of India.

The concept of "Public Policy" includes fundamental policy of Indian

Law, interests of India, Justice or morality and the legality of the award.

If an award is contrary to the fundamental policy of Indian law or against

the interests of India or against morality or if it is patently illegal, it could

be challenged under Section 13(5) and Section 16(6) of the Act.

20. A Court of law does not sit in appeal over an award of the Arbitral

Tribunal by reassessing or reappraising the evidence. The learned single

Judge has gone in detail and has examined each and every claim under

challenge and has found the assessment of the Arbitral Tribunal to be fair

and just.

21. We have also given our anxious consideration over the issues and

did not find any anomaly with either the award or the judgment of the

learned single Judge.

22. Thus, finding no merit in the appeal, we dismiss the same.

CM 2337/2017

1. In view of the appeal having been dismissed, the application has

become infructuous.

2. The application is disposed of accordingly.

ASHUTOSH KUMAR, J

BADAR DURREZ AHMED, J FEBRUARY 20, 2017 k