July 22,2019:

Delhi HC has expounded that,"NHAI should avoid challenging arbitral awards against it "mechanically and casually" as it derails infrastructural projects and raises the amount to be paid to contractors".

Justice Prathiba M Singh stated that,"There is an urgent need for the National Highway Authority of India (NHAI) to take a policy decision on the way to resolve its disputes with contractors".

Bench stated that,"There is a need for the NHAI not to challenge arbitral awards mechanically and casually, specially where objections to the award are not strong or substantial". Justice Pratibha added that,"challenges being raised to awards in this manner also results in derailment of infrastructural projects".

Bench stated that NHAI deprives both the contractor of timely payments as well as adds to that additional amounts payable on account of interest to the contractor.

High Court Bench directed Court's registry to communicate the order to the NHAI chairman.

High Court's order came on two separate petitions, one by NHAI and other by the contractor Gammon India Ltd, both challenging parts of same arbitral awards passed against them.

Gammon had entered into a contract with the NHAI for widening a nearly 140-km stretch NH-5 in Odisha from two lane to four/six lane and strengthening bridges and flyovers on it between Chandikhole and Baleshwar.

The stretch was part of the Golden Quadrilateral and the total value of the contract was Rs 144.56 crore. While the agreement was signed in August 2001, the project was to be completed within 33 calendar months.

Some of the claims made by the contractor were rejected by the engineer-in-charge after which the matter was taken to the Arbitral Tribunal. Out of six claims, two were awarded in favour of NHAI and four were decided in favour of contractor, prompting both to move High Court.

HIgh Court dismissed both the petitions.

High Court, in its 56-page judgement, stated that entire mechanism of Dispute Resolution Board (DRB) and Arbitral Tribunal would be set at naught if the DRB's every recommendation and every award of the Tribunal is challenged.

Bench stated that,"Large number of NHAI disputes pending before the court is evidence of the fact that most awards are challenged".

Justice Singh stated that a policy-level decision deserves to be taken at NHAI's highest level to ensure that DRB's recommendations are evaluated before matters proceed to arbitration.

Source PTI

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