Madras High Court
M/S.Chennai Metro Rail vs Transtonnelstroy Limited on 31 January, 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 31-01-2025
CORAM
THE HONOURABLE MR JUSTICE P.B. BALAJI
OP Nos. 530 & 531 of 2017
& A.No.3818 of 2017
M/s.Chennai Metro Rail
Limited, Admin.Building, Chennai Metro Rail
Depot, Poonamalle High Road, Koyambedu,
Chennai-600 107.
Petitioner(s)
Vs
Transtonnelstroy Limited
4/1, Luganskaya Str, Moscow, 115583, Russia.
and another
Respondent(s)
For Petitioner(s):
Arjun Suresh
B.Kishore
Raghavendra Ross Divakar
R.Sinduja
M/s.Dua Associates
Palani Centre, No.32,
Venkatnarayana Road, T.Nagar,
Chennai-600 017.
For Respondent(s):
Mr.D. Balaraman
ORDER
Subsequent to the order being pronounced today i.e., 31.01.2025, the
learned counsel for the respondent would submit that the bank guarantee has
been furnished for 75% on the amount received and in view of the decision
in this original petition, it is likely that the petitioner may invoke the bank
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guarantee. Hence, he would seek for interim protection.
2.In view of the above, the order dated 31.01.2025 is suspended for a
period of four weeks.
31-01-2025
ata
OP Nos. 530 & 531 of 2017
& A.No.3818 of 2017
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 09.12.2024
Pronounced on : 31.01.2025
CORAM
THE HONOURABLE MR.JUSTICE P.B.BALAJI
O.P.Nos.530 & 531 of 2017
M/s.Chennai Metro Rail Limited,
Administration Building,
Chennai Metro Rail Depot,
Poonamalle High Road,
Koyambedu, Chennai – 600 107. ... Petitioner
in both OPs
vs.
M/s.Transtonnelstroy – Afcons JV
Represented by Afcons Infrastructure Limited and
comrpmising:
1.Transtonnelstroy Limited,
4/1 Luganskaya Str,
Moscow, 115583,
Russia.
2.Afcons Infrastructure Limited,
Afcons House,
16, Shah Industrial Estate,
Veera Desai Road, Azad Nagar (P.O),
Post Box No.11878, Andheri (W)
Mumbai – 400 053. ... Respondent in both
OPs.
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PRAYER in O.P.No.530 of 2017: Arbitration Original Petition filed under
Sections 34 of the Arbitration and Conciliation Act, 1996, to set aside the
impugned award dated 03.06.2017 by the majority of the Arbitral Tribunal,
insofar as it allows the claim of Rs.9,35,47,080/- with interest at 12% p.a
from 09.04.2015, until the date of the impugned award and 14% p.a on the
aforesaid sum (principal + interest) from the date of the impugned award
until realization, by allowing this petition with costs throughout.
PRAYER in O.P.No.531 of 2017: Arbitration Original Petition filed under
Sections 34 of the Arbitration and Conciliation Act, 1996, to set aside the
impugned award dated 28.04.2017 by the majority of the Arbitral Tribunal,
insofar as it allows the claim of Rs.4,81,36,049/- with interest at 12% p.a
from 06.01.2015, until the date of the impugned award and 14% p.a on the
aforesaid sum (principal + interest) from the date of the impugned award
until realization, by allowing this petition with costs throughout.
For Petitioner : Mr.Yashodh Vardhan
Senior Counsel
for Mr.Arjun Suresh (O.P.No.530 of 2017)
Mr.Arjun Suresh (O.P.No.531 of 2017)
For Respondents : D.Balaraman (In both OPs.)
**********
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COMMON ORDER
These Original Petitions are filed at the instance of the Chennai Metro
Rail Limited (CMRL) which has suffered an award before the learned
Arbitrator.
2.The brief facts relating to the above Original Petitions are as
hereunder:
The petitioner was formed as a Special Purpose Vehicle with an equal
50% shareholding of the Central Government and State Government of
Tamil Nadu. The petitioner invited tenders for design and construction of
underground stations in the city of Chennai together with associated tunnels
of Corridors 1 and 2 on a working basis. A Letter of Acceptance was issued
by the petitioner to the respondent on 28.12.2010, followed by a Contract
Agreement being executed on 31.01.2011, with a commencement date of
07.02.2011, for a total contract value of Rs.1566.81 and Rs.1031 crores. The
execution of the work was to be completed within 50 months, on or before
07.04.2015. It is not in dispute that the contract was completed, however not
within the time contemplated under the Contract Agreement.
3.According to the petitioner, the contract was a fixed price contract
subject to changes in costs which were permissible only when there is
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change in legislation. The respondents made a price adjustment claim under
the Conditions of Particular Applications (CPA 32).
4.It is the specific case of the petitioner that the respondent was
already paid with price variation in respect of labour component by adopting
price variation formula under CPA 32 to the tune of Rs.166,21,76,679/- in
O.P.No.130 of 2017 and Rs.130.07 crores in O.P.No.131 of 2017. However,
the respondent, contending that the rates of minimum wages were revised
with effect from 16.07.2014 vide G.O.(2D).No.27, Labour & Employment
dated 18.06.2014, claimed additional costs. Initially, the respondents had
made a claim, however the details of which are as follows:
Amended statement of claims
In O.P.530 of 2017 In O.P.No.531 of 2017
Local Daily Rs.7,78,20,224/- Local Daily Rs.3,97,61,939/-
Local Monthly Rs.1,73,20,056/- Local Monthly Rs.95,64,123/-
Labour Supply Rs.4,76,75,753/- Labour Supply Rs.2,15,31,633/-
Total Rs.14,28,16,033/- Total 7,08,57,695/-
The respondents made their respective claims citing changes in law,
relating to revision of minimum wages payable.
5.The defence raised by the petitioner was that the claims itself were
not maintainable as it stood waived by the respondent under clause 20.1 of
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the General Conditions of Contract (GCC). That apart, according to the
petitioner, the claims were not substantiated and on a proper reading of
clauses 13.16.1 to 13.16.5 as amended by CPA 37, the respondent cannot
claim additional costs, citing change in law, when the respondent has
already benefited from price adjustment under CPA 32. However, the
Arbitral Tribunal, in and by an award dated 03.06.2017, by a majority of 2:1
partly allowed the claims of the respondents. The said awards in favour of
the respondent are under challenge in the above Original Petitions.
6.I have heard Mr.Yashodh Vardhan, learned Senior Counsel, for
Mr.Arjun Suresh, learned counsel for the petitioner in O.P.No.530 of 2017,
Mr.Arjun Suresh, learned counsel for the petitioner in O.P.531 of 2017 and
Mr.D.Balaraman, learned counsel for the respondents in both the original
petitions. I have also gone through the documents filed by way of typed set
of papers and also the impugned award, besides considering the submissions
advanced by the learned counsel on either side, including the decisions on
which reliance has been placed upon by the learned counsel on both sides.
7.The learned Senior Counsel, Mr.Yashoth Vardhan and Mr.Arjun
Suresh, appearing for the petitioners in the above Original Petitions would
mainly attack the award on the ground of patent illegality under Section
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34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996 and being contrary
to the public policy of India under Section 34(2)(b)(ii), besides also being
contrary to Section 28(3) of the Arbitration and Conciliation Act, 1996.
According to the learned counsel for the petitioners, they would primarily
contend that the interpretation of the vital and relevant clauses 13.16.1 and
13.16.5 by the Arbitral Tribunal is neither a possible nor a plausible view
and on the other hand, the interpretation given by the Tribunal is patently
illegal and contrary to public policy.
8.Further, according to the learned counsel for the petitioners, the
award has virtually rewritten the change in law, clause CPA 37 in the
contract and has imposed revised commercial terms on the petitioners by
awarding additional costs in view of the revision in minimum wages which
has according to the petitioners resulted in unlawful and unjust enrichment
to the respondent. The learned counsel for the petitioners would state that the
Tribunal has ignored essential terms of contract and when the respondent
had not even pleaded, leave alone prove that its performance was impacted
because of the change in law, the Tribunal ought not to have awarded the
claim citing change in law. Therefore, the award is patently illegal according
to the petitioners. The learned counsel would also submit that the Tribunal
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has not given any reasons for holding that the claims were maintainable in
the light of clause 20.1 of the GCC and on this ground also the award has to
be set aside, being patently illegal.
9.The learned counsel for the petitioners relied on the following
decisions in support of their contentions:
1.National Highways Authority of India Vs. M/s.ITD
Cementation India Limited ((2015) 14 SCC 21).
2.Union of India and Others Vs. Bharat Enterpricse
(2023 SCC Online SC 369).
3.Trivenibai & Another Vs. Smt.Lilabai (AIR 1959
SC 6200.
4.Commissioner of Central Excise, Bhavnagar Vs.
Saurashtra Chemicals Limited ((2007) 10 SCC 352).
5.Ssangyong Engineering and Construction Company
Limited Vs. National Highways Authority of India ((2019)
15 SCC 131).
6.Delhi Metro Rail Corporation Limited Vs. Delhi
Airport Metro Express Private Limited ((2024) 6 SCC 357).
10.Per contra, the learned counsel for the respondent,
Mr.D.Balaraman, would support the findings of the Arbitral Tribunal and
contend that in view of the mandate of Section 5 of the Arbitration and
Conciliation Act, the award cannot be interfered with unless as provided in
Section 34 of the Act. According to the learned counsel for the respondents,
the petitioners had not mentioned specifically under which subsection of
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Section 34, the challenge to the award is being laid. In this regard, the
learned counsel for the respondent relied on the following decisions:
1.Associate Builders Vs. Delhi Development
Authority ((2015) 3 SCC 49).
2.Parsa Kente Collieries Limited Vs. Rajasthan
Rajya Vidyut Utpadan Nigam Limited ((2019) 7 SCC 236).
3.S.V.Samudram Vs. State of Karnataka ((2024 3
SCC 623).
4.National Highways Authority of India Vs.
Hindustan Construction Company ((2024) 6 SCC 809).
11.Relying on the above decisions, the learned counsel for the
respondents would state that if the Arbitral Tribunal has taken a particular
view on the interpretation of a contract, the Court cannot sit over the same in
appeal and over turn the findings of the Arbitrator as long as the construction
of the contract by the Arbitrator is not something that no fair minded or
reasonable person could do. He would further state that the respondent was
clearly entitled to additional costs due to change in law pertaining to the
works as provided in clause 13.16.2. According to the respondent, proper
interpretation of clauses 13.16.2 to 13.16.5 was that clause 13.16.5 allows
additional costs only to the extent not covered by price variation formula and
therefore, the respondent was entitled to claim additional costs in view of the
change in law and therefore, such a view being rightly adopted by the
Tribunal, no interference is warranted with the award.
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12.I have carefully considered the submissions advanced by the
learned counsel on either side.
13.The short question which arises in these Original Petitions is as to
whether the change in law would enable the respondents to compensation
under clause 13.16.5 adopting CPA 32 or change in law would entitle the
respondents to compensation under clause 13.16.2 to 13.16.4 when CPA is
not adopted. In fact, the learned counsel for the respondent would also raise
an objection that this contention that has been argued before me was neither
raised before the Arbitral Tribunal nor in the memorandum of grounds of
challenge to the award under Section 34 before this Court, but raised for the
first time in the oral arguments. The primordial defence of the petitioners
before the Tribunal was that when the respondents were already
compensated for price variation adopting CPA 32, whether the petitioner
was entitled to claim further additional costs owing to change in law in view
of proper interpretation of CPA 37 (clause 13.16.1 to 13.16.5).
14.With regard to the lack of challenge, as contended by the learned
counsel for the respondents, I have gone through the memorandum of
grounds in both the original petitions. The substantial challenge to the award
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is only citing contravention of CPA 37 prohibiting the respondents from
making any claim towards additional costs, once price variation formula in
CPA 32 is already been adopted. Therefore, it may not be correct on the part
of the learned counsel for the respondents to contend that such grounds were
not taken in the original petitions. Relevant clauses in the GCC are
reproduced hereunder:
GCC – FIDIC Conditions
GCC 13.1 (b) GCC 13.16
The Contract Price 13.1 The Contract Price shall be adjusted to
take account of any increase or decrease
in Cost resulting from changes in
Unless otherwise stated in Part II legislation of the Country, made after
the Base Date. Such legislation means
any law, order, regulation or by- law
having the force of law, including
(b) the Contract Price shall not be currency restrictions, which affects the
adjusted for changes in cost of labour, Contractor in the performance of his
obligations.
materials or other matters
If the Contractor suffers (or will suffer)
delay and/or incurs (or will incur)
additional Cost resulting from such
changes in legislation made after Base
Date, the Contractor shall give notice to
the Employer’s Representative. After
receipt of such notice the Employer's
Representative shall proceed in
accordance with Sub-Clause 3.5 to
agree or determine:
(a) any extension of time to which the
Contractor is entitled under Sub-Clause
8.3, and
(b) the amount of such Cost, which shall
be added to the Contract Price, and
shall notify the Contractor, accordingly.
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The modified clauses under CPA are as hereunder:
Modified clauses under CPA
CPA 32 (Replaces Sub-clause 13.1 (b) CPA 37 (Replaces Sub-clause 13.16 of
of GCC) GCC)
13.1 (b) I) Price Variation Formula 13.16.1 The contract shall be governed
by the laws for the time being in force in
(a)Prices payable to the Contractor, in
India
accordance with the Contract shall be
subject to adjustment during 13.16.2 “Changes in law” means the
performance of Contract to reflect occurrence or coming into force of any
changes in cost of labour and material of the following, at any time after the
components and other inputs to the base date.
Works, in accordance with the following 1. Any new tax which is imposed
general formula for each currency after the due date of submission
specified: of tender and which impacts the
performance of the contractor
with increased cost or which
[Pn = a +b(Ln/Lo) + c(Sn/So) +
results in extra financial gains to
d(Cn/Co) ± e(Fn/Fo)]
the contractor due to decreased
cost in execution of works; and
“Pn” is the adjustment factor to be 2. Change in any law pertaining to
applied to the estimated value of work work having the above said
done in a month, determined by the ER. impact
“b”, “c”, “d”, ‘e” are coefficients Then such additional or reduced cost
representing the estimated proportion of shall be certified by the employers
each cost element (labour, steel, cement representative after examining records
and fuel) in the Works or section thereof, provided by the contractor and shall be
as specified in Appendix FT-1 of the paid by or credited to the employer,
Form of Tender in the Instructions to
subject to sub-clause 13.16.5 below
Tenderers (“ITT”)
13.16.3 Any change in the rate of any
existing tax will be considered a change
“Ln”, “Sn”, “Cn” and “Fn”are the in law , if so related to work.
current cost indices or reference prices
for month “n’ determined to Item 38 of
Appendix FT-1 of the Form of Tender in 13.16.4 Notwithstanding the forgoing,
the ITT,applicable to each cost element. such additional or reduced cost shall
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Modified clauses under CPA
not be separately paid or credited, the
same shall have been taken into
“Lo”, “So”, “Co” and “Fo” are the
account under any other clause under
current cost indices or reference prices the contract.
for month “n” determined to Item 38 of
Appendix FT-1 of the Form of Tender in
the ITT, applicable to each cost element. 13.16.5 If the price variation formula in
CPA 32 is adopted by the contractor,
then no addition or reduction in cost
due to changes in law will be allowed
except for changes to i) Customs Duties
and ii) Excise Duties , iii) Output TN
VAT which shall be to the employers
account , to the extent that it is not
covered by the price variation formula.
15.It is not in dispute that CPA 32 was invoked and price adjustment
claim was made by the respondents in both the cases. In terms of the
amended CPA 37, if CPA 32 is adopted and price variation is claimed by the
contractor, then no addition or reduction in costs due to changes in law will
be allowed, except in three scenarios, namely i) changes in custom duties ii)
changes in excise duties and iii) changes in output TN VAT. As seen from
clause 13.1(b) of GCC, the contract price was not subject to adjustment in
view of the changes in cost of labour, materials or other matters. However,
under CPA 32, the parties agreed for providing price escalation on a
particular formula being adopted.
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16.It is again not disputed that the respondents claimed substantial
monies towards price escalation and the same was also paid by the
petitioners. As rightly pointed out by the learned counsel for the petitioners,
but for CPA 32, if parties were governed only by the original terms of GCC,
then the respondent would not have become entitled to the price escalation
amounts also.
17.The moot question that is required to be dealt with and answered in
these original petitions is as to whether the change in law would entitle the
respondents to compensation under clause 13.16.5 (CPA 37), when CPA 32
had already been adopted. A plain reading of clause 13.16.5 shows that if the
price variation formula in CPA 32 is adopted, then the respondent or the
petitioner for that matter would not be entitled to any addition or reduction
in the costs on account of changes in law/legislation. However, three
exceptions have been carved out, namely customs duty, excise duty and
output TN VAT which shall be to the account of the petitioner in these
original petitions subject to not being covered by the price variation formula.
18.It is the case of the petitioners that CPA 37, post agreement
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replacing sub clause 13.16 of the GCC does not provide for additional costs
for change in law and it is subject to application of two scenarios, namely if
CPA 32 is applied, payment for change in law would be available only in
respect of three events, namely change in customs duties, excise duties and
output TN VAT. Secondly, when there is an unrestricted change in law
which is subject to application of the first scenario, if applied, then second
scenario would not be available. The Arbitral Tribunal has found that the
modification of clause 13.16 of GCC vide CPA 37 was only to avoid
duplication in payment. The Tribunal has failed to see that both CPA 32 and
CPA 37 apply in different contexts, namely price escalation and change in
law. Clause 13.16.4 takes care of double payment by clearly stating that
additional or reduced costs shall not be separately paid if the same has
already been taken into account under any other clauses under the contract.
19.A proper reading of CPA 37 would indicate that the respondent
would be entitled to additional costs for change in law either under
subsection 13.16.5 when CPA 32 has been adopted or under subsection
13.16.2 to 13.16.4 when CPA 32 is not adopted. In fact, clause 13.16.2
referring to changes in law sets out various scenarios, viz., coming into force
of any new tax imposed on the due date, impacting the performance of the
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contractor and increasing the costs, resulting in extra financial gains to the
contractor due to decreased costs, then such additional or reduced costs shall
have to be certified by the petitioner's representative and shall be paid or
credited, subject to clause 13.16.5. Clause 13.16.1 to 13.16.5 have to be read
not only harmoniously but together.
20.Clause 13.16.2 is clearly subject to 13.16.5. Therefore, when price
variation formula in CPA 32 is adopted, then the respondents cannot be
entitled to claim any additional costs, unless there is a claim falling under
the three exceptions, namely customs duty, excise duty and output TN VAT
which also is again subject to the rider that it will be paid to the extent that it
is not covered by the price variation formula. Therefore, the employment of
the words in 13.16.5 that 'to the extent that it is not covered by the price
variation formula' only reinforces that there would be no duplication in
payment. The Tribunal has misread the clauses and erroneously proceeded to
hold that clause 13.16 of GCC entitles the respondent for price adjustment
because of change in legislation after the base date. However, the express
modifications made by CPA 37, replacing sub clause 13.16 of GCC have not
been factored or looked into by the Tribunal.
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21.The omnibus entitlement for price adjustment under clause 13.16
was watered down in CPA 37 to a great extent, entitling the respondents to
seek additional costs on account of change in law, only if the respondent has
not adopted the price variation formula in CPA 32, unless under three
exceptions carved out, namely customs duty, excise duty and output
TNVAT. Therefore, the only possible interpretation that can be given to
13.16.5 is that if the contractor has already claimed the price variation
invoking CPA 32 which provides for a formula, then the contractor cannot
claim any additional costs citing change in law, except where the change in
law is pertaining to customs duties, excise duties and TNVAT. However,
this only possible and right interpretation of the clauses has not been adopted
by the Tribunal and the Tribunal erroneously held that irrespective of being
compensated under CPA 32, the respondents would still be entitled to claim
additional costs due to change in law which is clearly patently illegal and the
Tribunal erroneously held that there is a mandatory requirement for the price
adjustment on account of change in law which is contrary to the terms and
conditions, especially after the modifications ushered in by CPA 37. The
interpretation of clause 13.16.5 by the Tribunal is not in consonance with
Section 28(3) of the Arbitration and Conciliation Act and if the
interpretation given by the Tribunal is accepted, then it would in fact amount
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to rewriting the contract, especially clause 13.16.5.
22.Apparently, the Tribunal has not harmoniously read clauses
13.16.2 to 13.16.5 of CPA 37 which replaced 13.16 of the GCC. Therefore,
the Tribunal, in my considered opinion, has ignored the vital material terms
of contract and has violated the mandate of Section 28(3) of the Arbitration
and Conciliation Act.
23.Yet another reason for the Tribunal to have taken such a view was
clause 13.16.2.2, which according to the Tribunal, if the petitioner's
argument was accepted then there would be no meaning to 13.16.2.2. Clause
13.16.2.2 provides for change in law pertaining to work having the above
said impact i.e., there must be a change in law which has impacted the
performance of the contractor because of increased costs which again has
been clearly subjected to sub clause 13.16.5. Therefore, the interpretation
arrived at by the Tribunal ignoring the specific clauses and the words
employed thereunder has certainly resulted in the patently illegal award,
ignoring the very contractual terms between the parties.
24.Even insofar as the Tribunal's reliance on clause 70.8 of the
judgment of the Hon'ble Supreme Court in National Highways Authority of
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India Vs. ITD Cementation India Limited reported in (2015) 14 SCC 21, as
rightly pointed out by the learned counsel for the petitioners, clause 70.8 in
the contract which is subject matter of the said judgment is not pari materia
with sub clause 13.16.5 of CPA 37 and therefore, basing the award on the
decision of the Hon'ble Supreme Court with this specific reference to clause
70.8 of the said judgment was clearly erroneous.
25.Yet another argument of the learned counsel for the petitioners
which finds force is that the respondents have not even pleaded, leave alone
proved that the change in law had impacted the performance. The claim
statement filed by the respondents does not plead anything with regard to the
revision in the minimum wages impacting the performance of the
respondents. The petitioner in his statement of defence has specifically
pleaded that the revision in minimum wages had no impact on the contract.
Though while amending the claim statement on 08.10.2016, the respondents
have averred that the amendment to minimum wages had an impact, it is not
substantiated or proved by leading any evidence during the arbitral
proceedings. The Tribunal has also not considered this aspect and rendered
any finding that the increase in minimum wages had impacted the
performance of the contract at the hands of the respondent. As rightly
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pointed by the learned counsel for the petitioners, clause 13.16.2 as modified
by CPA 37 entitles the contractor to additional costs owing to change in law
only when such new tax imposed after the base date impacts the
performance of the contractor with increased costs. Therefore, even
assuming that the respondents were entitled to interpretation of the contract
as understood by the Tribunal, even then without pleading and proving any
impact and the consequences of such new tax on the contract, the respondent
cannot succeed in its claim for additional costs.
26.I have already discussed the ratio laid down by the Hon'ble
Supreme Court in National Highways Authority of India's case, and no
doubt in the decisions relied on by the learned counsel for the respondent,
the principles laid down are that the construction of terms of the contract are
primarily for the Tribunal to decide and the Court while considering
challenge to the award cannot sit in appeal over the findings. However, in all
the decisions which have been relied on even by the learned counsel for the
respondents, the Courts have always carved out an exception that if the
Tribunal construes the contract in a manner that no fair minded or
reasonable person would do, then the award is subject to inference under
Section 34 of the Arbitration and Conciliation Act.
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27.Yet another argument placed by the learned counsel for the
petitioners is with reference to clause 20.1 of GCC which is extracted
hereunder for easy reference.
“Procedure for 20.1 Claims
20.1 If the Contractor intends to claim any
additional payment under any Clause of these Conditions
or otherwise, the Contractor shall give notice to the
Employer's Representative a soon as possible and in any
event within 28 days of the start of the event giving rise to
the claim.
The Contractor shall keep such contemporary
records as may be necessary to substantiate any claim,
either on the Site or at another location acceptable to the
Employer's Representative. Without admitting the
Employer's liability the Employer's Representative shall,
on receipt of such notice, inspect such records and may
instruct the Contractor to keep further contemporary
records. The Contrary shall permit the Employer's
Representative to inspect all such records, and shall (if
instructed) submit copies to the Employer's
Representative.
Within 28 day of such notice, or such other time as
may be agreed by the Employer's Representative, the
Contractor shall send to the Employer's Representative an
account, giving detailed particulars of the amount and
basis of the claim. Where the even giving rise to the claim
has a continuing effect, such account shall be considered
as interim. The Contractor shall then, at such intervals as
the Employer's Representative may reasonably require,
send further interim accounts giving the accumulated
amount of the claim and any further particulars. Where
interim accounts are sent to the Employer's
Representative, the Contractor shall send a final account
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within 28 days of the end of the effects resulting from the
event.”
28.Though the learned counsel for the respondents also relied on the
decisions of the Hon'ble Supreme Court to fortify his contention that points
which are not pressed at the time of arguments would have to be presumed
to have been given up, having gone through the entire award, I am unable to
countenance the said submission of the learned counsel for the respondents.
It has been the consistent contention and argument of the respondent that in
view of revised / amended 13.16 by CPA 37, the respondents cannot be
entitled to any additional costs when price variation formula was already
invoked under CPA 32. Therefore, I am unable to accept the argument of the
learned counsel for the respondents that such argument has been taken
before this Court for the first time and was not raised before the Arbitral
Tribunal. I have already found that sufficient grounds have been raised in the
memorandum of grounds for challenge in the Section 34 petition as well.
29.According to the petitioners, if the contractor i.e., the respondent
intended to make any additional claim under any clause of GCC or
otherwise, then the respondent was obligated to give a notice to the
petitioners' representative within 28 days of the start of the event giving rise
to the claim. It is also made clear that if the contractor fails to comply with
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the sub clause, then he shall not be entitled to additional payment. It is the
specific contention of the petitioners that the Arbitral Tribunal has not
adverted its attention to this issue. The amendment to minimum wages was
introduced on 18.06.2015 with effect from 16.07.2014. Applying clause 20.1
of the GCC, the respondents ought to have made their claims within 28 days.
Admittedly, the same was not done and thereby the last portion of clause
20.1 would kick in, disentitling the respondents from any additional
payment.
30.In this regard, reliance has also been placed on the decision of the
Hon'ble Supreme Court in Union of India and Others Vs. Bharat Enterprise
reported 2023 SCC Online SC 369, where the Hon'ble Supreme Court has
held that if there is a waiver clause in the contract, then it would be binding
on the parties and the Tribunal cannot ignore the same. The ratio laid down
by the Hon'ble Supreme Court would squarely apply to the facts of the
present case. Even assuming the respondents were entitled to make a claim
for additional costs owing to revision of the minimum wages by the
legislature, then as required under clause 20.1 of GCC, the respondents
ought to have notified the petitioner within 28 days, at least from
16.07.2014. However, the Tribunal contrary to the above clause, has
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observed in the award that the respondents had rightly notified the claim
vide letter dated 19.09.2014, which admittedly is clearly beyond 28 days
even from 16.07.2014. Therefore, even on this score the respondents could
not have become entitled to any additional costs.
31.In view of the above and applying the ratio laid down by the
Hon'ble Supreme Court in Delhi Metro Rail Corporation Limited Vs. Delhi
Airport Metro Express Private Limited's case, when the interpretation of
contract by the Tribunal has been unreasonable and not even a possible view
is taken, then the award has to be held to be perverse. Further, the
interpretation as provided by the Tribunal is not only unreasonable but also
would frustrate the very clause 13.16.5 and therefore, the interpretation
which is neither possible nor plausible cannot be sustained by this Court.
32.Even in Ssangyong Engineering and Construction Company
Limited's case, the Hon'ble Supreme Court held that the true import of
Section 28(3) of the Arbitration and Conciliation Act is that when the
Arbitrator's view is not even a possible view to take and and the Arbitrator
wanders outside the contract and deals with matters not allotted to him, the
Arbitrator commits an error of jurisdiction which is a ground for challenge
under Section 34(2)-A. I have already found that the interpretation of
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13.16.2 to 13.16.5 is not even a possible view, especially when such view
would virtually amount to rewriting the contract terms itself.
33.Therefore, for all the above grounds, I find that the petitioners have
indeed made out a case for interference with the award of the Arbitral
Tribunal.
34.In fine, these Original Petitions are allowed and the award of the
Arbitral Tribunal dated 03.06.2017 challenged in O.P.No.530 of 2017 and
the award dated 28.04.2017 challenged in O.P.No.531 of 2017 are hereby set
aside. However, there shall be no order as to costs.
31.01.2025
ata
Index : Yes / No
Internet : Yes / No
P.B.BALAJI, J.,
ata
https://www.mhc.tn.gov.in/judis
O.P.Nos.530 & 531 of 2017
31.01.2025
https://www.mhc.tn.gov.in/judis
