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TMI Blog2023 (8) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.09.2014 and 12.03.2016 respectively. Indisputably, the Project could not be completed within the stipulated period, resulting in a request for extension of time by the Contractor. The extension was granted, and the Project was finally completed on 17.01.2019. Disputes having arisen w.r.t payment of final bills and attributability of delays, arbitration was invoked. In its statement of claim, the Contractor raised claims for a total of Rs. 5,44,24,036/-, inter alia, alleging that the delay in execution of work was attributable to the petitioner. A total of 8 claims were filed, pursuant to which the petitioner filed its statement of defence, but no counter claim. 4. The details of the claims raised are as follows: i) Claim 1: Claim on account of work done not paid. Petitioner denied the claim on the ground that the cost of the initial test pile was not payable as per MORTH specification and that the pile was rejected as per the terms and conditions of the agreement, as the quantity of RMC poured in pile was less than the required quantity. Thus, nothing extra is payable ii) Claim 2: Claim on account of less payment of substituted item. Petitioner denied the claim on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . GST @12% Declaratory Award As per claim no. 7 8. 12,54,000/- 10,00,000/- Nil Total 5,44,24,036/- plus interest 3,89,87,204/- plus interest As per claim no. 6 6. During the course of submissions, Mr. Anupam Srivastava, learned counsel appearing for the petitioner has restricted the challenge to the impugned Award, to the extent that claims for escalation cost and for prolongation of Contract were allowed. He further submitted that the ground of challenge is also restricted to sub-section 2A of Section 34 of the A&C Act i.e., patent illegality. 7. Mr. Srivastava, while assailing the impugned Award, contended that the delay in completion of the Project was entirely attributable to Contractor, as while seeking extension of time, the following endorsement was made by it: 'we have not suffered any loss due to delay and extra work hence we will not claim anything extra.' 8. It was further contended that subsequent to such extension, the Contractor never claimed that the said endorsement was made under any duress. In fact, no such allegation was made in its statement of claim filed before the AT. Learned counsel has referred to the decision of the Supreme Court in Associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract." 17. A similar view, as stated above, has been taken by this Court in K. Sugumar v. Hindustan Petroleum Corpn. Ltd., where it has been observed as follows: "2. The contours of the power of the Court under Section 34 of the Act are too well established to require any reiteration. Even a bare reading of Section 34 of the Act indicates the highly constricted power of the civil court to interfere with an arbitral award. The reason for this is obvious. When parties have chosen to avail an alternate mechanism for dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that no fair minded or reasonable person could do." 12. Recently, in Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation, reported as (2022) 1 SCC 131, Supreme Court explained the expression 'patent illegality' in the following manner:- "29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression "patent illegality". Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression "patent illegality". What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as Courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair- minded or reasonable person would, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord, is mainly given as under: i. Hindrance due to pile design . ii Due to change of methodology of boring of piles . iii Hindrance due to change of level of deck slap iv Hindrance due to NGT order for closure of Hot mix plant in winter season v. Hindrance due to funds vi. Monsoon 7.5.5.6.7. Due to these admitted hindrances the work was delayed for 1041 days whereas the Claimant has claimed the delay for 1042 days and the Respondent admitted the delay for 1047 days as justified delay against the required EOT for only 1041 days. 7.5.5.6.8. The Respondent has submitted that they have granted EOT without levy. 7.5.5.6.9. It has been observed by me that all the hindrances are not attributable to the contractor. Delay is mostly due to inter departmental correspondence and factual site condition and availability of materials etc. in the market. Though, no individual can be held responsible for hindrances/delays but the systems as a whole is responsible for which the Respondent is only responsible. 7.5.5.6.10. Having regard to relevant facts as discussed above, I am of view that respondent has committed a serious breach which is of the most fundamental in nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2 If the work(s) be delayed by: (i) force majeure, or (ii) abnormally bad weather, or (iii) serious loss or damage by fire, or (iv) civil commotion, local commotion of workmen, strike or lockout, affecting any of the trades employed on the work, or (v) delay on the part of other contractors or tradesmen engaged by Engineer-in-Charge in executing work not forming part of the Contract, or (vi) non-availability of stores, which are the responsibility of Government to supply or (vii) non-availability or break down of tools and Plant to be supplied or supplied by Government or (viii) any other cause which, in the absolute discretion of the Engineer-in-Charge is beyond the Contractor's control. then upon the happening of any such event causing delay, the Contractor shall immediately give notice thereof in writing to the authority as indicated in Schedule 'F' but shall nevertheless use constantly his best endeavours to prevent or make good the delay and shall do all that may be reasonably required to the satisfaction of the Engineer-in-Charge to proceed with the works. 5.3 Request for rescheduling of Mile stones and extension of time, to be eligi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is able to establish that he is entitled to further amount for which he is having adequate materials, he is not barred from claiming such amount merely because of acceptance of the final bill by mentioning "without prejudice" or by issuing 'no-dues certificate'." 17. Issuance of NOC No Objection Certificate or other similar 'no claim' certificate by a party, in favour of another contracting party, by itself does not disentitle the party having a claim from explaining the circumstances in which NOC is issued. Reverse of the same is equally true. There is no absolute rule which outrightly negates the evidentiary value of NOC's or 'no claim' certificate. It can't be said that in every case NOC or 'no claim' certificate should be treated as unreliable evidence and the giver of the certificate enjoys some sort of immunity in law that will save his rights despite issuance of a 'no claim' certificate. Rather, issuance of 'no claim' certificate must be treated as prima facie evidence against the issuer of such certificate, and a heavy burden must be cast upon him to prove that the same was not given voluntarily or that the same was issued under compelling circumstances that wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case, it is asserted that the extension of time was granted and the arbitrator has granted 20% of the escalation cost. Escalation is a normal incident arising out of gap of time in this inflationary age in performing any contract. The arbitrator has held that there was delay, and he has further referred to this aspect in his award. The arbitrator has noted that claim No. I related to the losses caused due to increase in prices of materials and cost of labour and transport during the extended period of contract from 9/5/1980 for the work under phase I, and from 9/11/1980 for the work under phase II. The total amount shown was Rs. 5,47,618.50. After discussing the evidence and the sub- missions the arbitrator found that it was evident that there was escalation and, therefore, he came to the conclusion that it was reasonable to allow 20 per cent of the compensation under claim No. I, he has accordingly allowed the same. This was a matter which was within the jurisdiction of the arbitrator and, hence, the arbitrator had not mis-conducted himself in awarding the amount as he has done. 13. It was submitted that if the contract work was not completed within the stipulated time w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extra costs incurred by him as a result of the failure of the first party to live up to its obligations. That is the distinguishing feature of cases of this nature and Alopi Parshad's case and also Patel Engg.'s case. As was pointed out by Mr. Dave, the said principle was recognized by this Court in P.M. Paul's where a reference was made to a retired Judge of this Court to fix responsibility for the delay in construction of the building and the repercussions of such delay. Based on the findings of the learned Judge, this Court gave its approval to the excess amount awarded by the arbitrator on account of increase in price of materials and costs of labour and transport during the extended period of the contract, even in the absence of any escalation clause. The said principle was reiterated by this Court in T.P. George's case". 21. In Assam State Electricity Board & Ors. (Supra), the Supreme Court has held as under:- "13. The arbitrator has taken the view that the provision for price escalation would not bind the claimant beyond the scheduled date of completion. This view of the arbitrator is based on a construction of the provisions of the contract, the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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