On 23rd June 2020, the High Court of Delhi comprising of Justice Prathiba M. Singh in the case of Gammon Singh ltd. & Anr. v. National Highway Authority of India, issues direction in the multiplicity in Arbitral Proceedings and issued several practice directions under the Arbitration and Conciliation Act, 1996.
The factual background of the case
A contract was executed between GammonAtlanta JV, a Joint Venture of Gammon India Ltd. and Atlanta Ltd. and the National Highways Authority of India for the work of widening to 4/6 lanes and strengthening of existing 2 lane carriageway of NH-5 in the State of Orissa from km 387.700 to 414.000 Contract Pkg. OR-1 The value of the work was approximately Rs.118.9 crores. The date of commencement of the contract was fixed and the project was to be executed within 36 months The Project was not executed within the prescribed time. Extensions for completing the Project were granted. Vehicular traffic was allowed on the main carriageway and according to the Contractor, this amounted to a deemed ‘taking over’ of the carriageway by NHAI and hence completion.
Award 1
During the course of execution of the Project, disputes had arisen between the parties in respect of some claims. The same was raised both by the Contractor and by NHAI.
The Arbitral Tribunal found that the actions of NHAI either did not materially affect the progress of the work, the Claimant’s preparedness itself was inadequate, or that alternate relief is available/has been availed by the Contractor. It was therefore held that the Contractor did not deserve any compensation on these grounds.
The Arbitration Tribunal held that though work worth Rs.37 crores was affected during the initial contract period, since the Contractor itself was responsible for underutilization of machinery and equipment, compensation of only 5% i.e., Rs. 1.85/- crores, could be awarded.
Award 2
The Arbitral Tribunal held that the delay of two weeks in the appointment of the engineer and delay of five weeks, by the NHAI, in intimating the Contractor, was a short delay and did not affect the progress of the work.
Award 3
NHAI imposed liquidated damages on the Contractor for the delay caused. Seven disputes were referred to the DRB. However, dissatisfied with the recommendations of the DRB, a third arbitration was invoked by the Contractor.
The Contractor was allowed a refund of the entire amount of liquidated damages imposed. A refund was given on the ground that the Contractor was entitled to a further extension of time and hence the imposition of liquidated damages was illegal.
Submissions of Petitioner & Respondent
The Petitioner submitted that the finding in Award that NHAI was responsible for the delay would bind the present proceedings as well the delay was clearly caused by NHAI and the Contractor is entitled to escalation/compensation for the losses due to the said delays.
The respondent submits that Award is detailed. The Contractor had multiple opportunities before the Arbitral Tribunal and has lost on both counts. The minority award is of no consequence once the majority award has rejected the claims of the Contractor.
Court Observations and Findings
The High Court of Delhi held that the Thus, none of the findings in Award No. 3 can be jettisoned or incorporated into the present petition to rule in favor of the Contractor qua Award No.2 for awarding compensation/rate revision/escalation. The stand of the Contractor is thus not tenable and is liable to be rejected.
Further, the Delhi High Court issued several practice directions under the Act.:
- In every petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter, “Section 34 petition”), the parties approaching the Court ought to disclose whether there are any other proceedings pending or adjudicated in respect of the same contract or series of contracts and if so, what are the stage of the said proceedings and the forum where the said proceedings are pending or have been adjudicated.
- At the time when a Section 34 petition is being heard, parties ought to disclose as to whether any other Section 34 petition in respect of the same contract is pending and if so, seek disposal of the said petitions together in order to avoid conflicting findings.
- In petitions seeking appointment of an Arbitrator/Constitution of an Arbitral Tribunal, parties ought to disclose if any Tribunal already stands constituted for adjudication of the claims of either party arising out of the same contract or the same series of contracts. If such a Tribunal has already been constituted, an endeavor can be made by the arbitral institution or the High Court under Section 11, refer the matter to the same Tribunal or a single Tribunal in order to avoid conflicting and irreconcilable findings.
- Appointing authorities under contracts consisting of arbitration clauses ought to avoid appointment or constitution of separate Arbitrators/ Arbitral Tribunals for different claims/disputes arising from the same contract, or same series of contracts.
Further, the Court stated that the present order is sent to the Ld. Registrar General for being placed before Hon’ble the Chief Justice for considering if any modifications are required to be made in the Rules of the Delhi High Court framed under the Arbitration and Conciliation Act, 1996.
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