O.M.P. (COMM) 337/2017 Page 1 of 82

$~J

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on: 16.12.2025

Judgment pronounced on: 09.04.2026

+ O.M.P. (COMM) 337/2017

MINISTRY OF HEALTH & FAMILY WELFARE

...Petitioner

Through: Ms. Pratima N Lakra(CGSC),

Ms. Kanchan Shakya, Mr. Shailendra

kumar Mishra, Mr. Chanakya Kene,

Ms. Mansi, Advs.

versus

NAGARJUNA CONSTRUCTION LTD. ...Respondent

Through: Dr. Amit George, Ms.

Rupam Jha, Mr. Adhishwar Suri, Ms.

Ibansara Syiemlieh, Mr. Dushyant

Kishan Kaul, Mr. Vaibhav Gandhi,

Ms. Medhavi Bhatia, Mr. Kartikay

Puneesh, Mr. Bhrighu Pamidighantam,

Advs.

CORAM:

HON'BLE MR. JUSTICE JASMEET SINGH

J U D G M E N T

1. This is a petition filed under Section 34 of the Arbitration and

Conciliation Act, 1996, (“the Act”) seeking to challenge the Arbitral

Award dated 08.05.2017 (“Award”) passed by the learned Sole

Arbitrator in the matter of “M/s Nagarjuna Construction Ltd. v. Ministry

Of Health & Family Welfare”.

O.M.P. (COMM) 337/2017 Page 2 of 82

FACTUAL BACKGROUND

2. The petitioner, namely Ministry of Health & Family Welfare (respondent

in the Arbitral Proceedings) invited bids for the execution of the works

of construction of medical college and hostel complex at AIIMS,

Bhopal.

3. The contract was awarded vide a letter of notification dated 13.04.2010,

to the respondent company namely NCC Limited, formerly known as

M/s Nagarjuna Construction Co. Ltd. (Claimant in the Arbitral

Proceedings) for the works including preparing designs and construction

of Medical College & Hostel Complex at AIIMS, Bhopal, Package-I.

4. Pursuant thereto, a contract with value of Rs. 147,89,73,233/- was

executed between the parties on 21.05.2010 (“Contract”), with

scheduled completion period of project being 15 months i.e., from

27.05.2010 to 26.08.2011.

5. During the execution of works under the Contract, some disputes arose

between the parties and the respondent company vide its letters dated

07.11.2014 and 13.12.2014 requested for appointment of Arbitrator by

invoking arbitration Clause and also filed a petition under Section 11 of

the Act on 07.04.2015 before this Court. However, during the pendency

of the proceedings, the Director (PMSSY), Ministry of Health and

Family Welfare PMSSY Division vide its order dated 29.05.2015

appointed Dr. Y.P.C. Dangay as the Sole Arbitrator to adjudicate

disputes between the parties.

6. The respondent filed its Statement of Claim (“SOC”) before the

Arbitrator on 06.07.2015, to which the petitioner filed its written

statement along with counter claim on 18.02.2016. Thereafter, on

04.04.2016, the respondent filed rejoinder to the written statement and

counter claim.

O.M.P. (COMM) 337/2017 Page 3 of 82

7. During the Arbitral proceedings, the Arbitrator also visited the site for

assessment of the status of work on 27.08.2016, 28.08.2016, 26.11.2016,

27.11.2016 and 16.04.2017.

8. The Arbitrator passed an interim award dated 30.12.2016, directing the

release of amount of Rs. 2,95,79,465/- for the Claim No. 1 in favour of

the respondent and also, directing the respondent to complete the

remaining works by the end of the year.

9. Thereafter, the Arbitrator passed a final Award dated 08.05.2017,

allowing most of the claims as raised by the respondent except Claim No.

11, and rejecting all the counter claims filed by the petitioner. The

petitioner being aggrieved by the Award has filed the present petition.

SUBMISSIONS ON BEHALF OF THE PETITIONER

General Contentions

10. Ms. Lakra, learned CGSC for the petitioner, submits that the Award is in

violation of the public policy of India and is patently illegal for reasons

apparent on the face of record. The scope of public policy is wide in

nature and cannot be restricted in its interpretation. Reliance is placed on

DDA v. Manohar Lal

1

and Oil & Natural Gas Corporation Ltd. v. SAW

pipes Ltd.

2

11. It is submitted by the learned counsel that the Arbitrator has failed to take

into consideration, the deficiency/delays on part of the respondent by

failing to comply with the directions issued by the Arbitrator during

hearings. Despite this non-compliance by the respondent, the Arbitrator

failed to observe this fact in his Award that there existed wilful delays on

part of the respondent. These kinds of awards are not only perverse but

also against the public policy of India, and against the interest of

1

2006 SCC OnLine Del 46.

2

AIR 2003 SC 2629.

O.M.P. (COMM) 337/2017 Page 4 of 82

Government of India as they will encourage contractors to raise fake

claims by quoting extremely low rates for getting government projects

and then attempt to get unfair advantage by placing reliance on such

awards.

12. The Arbitrator has exceeded the jurisdiction conferred to it, has acted in

violation of the terms of the Contract, and has not taken into

consideration vital evidence and contentions. Thus, it is liable to be set

aside under Section 34(2)(a)(iv) and Section 34(2)(b)(ii).

Attribution of Delays and associated claims for prolongation.

13. The Arbitrator has failed to correctly appreciate the issue of delay

attribution as it has not taken into consideration a vital report dated

21.04.2017 prepared by the superintending engineer, wherein the

incomplete status of work was clearly stated. The respondent was bound

by Section 37 of the Indian Contract Act, 1872 (“Contract Act”), to

perform its promise or to offer to perform the same, however in the view

of this report it is clear that the respondent violated section 37 of the

Contract act and the Arbitrator has failed to take into consideration this

material evidence. Reliance is placed on Aboobker Latif v. Reception

Committee of the 48

th

INC

3

.

14. It is also submitted that the Arbitrator failed to read the contract as a

whole, leading to an erroneous interpretation of the relationship between

the parties to the contract and the non-application of principle laid down

in Ramnath International Construction Pvt. Ltd. v. Union of India

4

concerning employer-contractor agreements, wherein it was held that if

the contractor sought and obtained extensions for delay attributable to

either party, he would not be entitled to claim any compensation for such

3

AIR 1937 BOM 410.

4

(2007) 2 SCC 453.

O.M.P. (COMM) 337/2017 Page 5 of 82

delay. Reliance is also placed on Unity Realty and Developers Ltd. v. BW

Highway Star Pvt. Ltd.

5

15. The Arbitrator had awarded the claim Nos. 6, 7, 8, and 9 by exceeding

his jurisdiction and in ignorance of the terms of the Contract, which

clearly stipulated that compensation is not payable on account of delay.

Reliance is placed on Ramnath International Construction Pvt.

Ltd.(Supra). It is also submitted that the respondent filed inflated claims

as the respondent claimed Rs. 35.09 crores under this head, but only Rs.

3.2 crores were held admissible by the Arbitrator. Additionally, the delay

in project was attributable to the respondent only.

16. The Arbitrator awarded compensation under Claim Nos. 5, 6, 7, 8, 9, and

12 in ignorance of the terms of the Contract, i.e. Clause No. 6(a), 6(b),

40(h), 40(p)(ix) of the special conditions of the contract. Thus, the Award

is in clear violation of the statutory mandate as encapsulated under

Section 28(3) of the Act, whereby the Arbitrator is required to take into

consideration the terms of the contract and trade usages as well. The

Arbitrator has clearly acted beyond its jurisdiction conferred by the terms

of the Contract. Reliance is placed on Associated Engineering Co. vs.

Govt. of Andhra Pradesh

6

.

Claim No. 1: Release of wrongfully withheld amount from RA Bill-33

& 34.

17. Ms. Lakra, further states that the Arbitrator did not properly distinguish

between regular extension of time (“EOT”) and provisional EOT. In

construction contracts, as a regular trade practice provisional extensions

are given to keep the contract running and avoid major disruptions.

However these provisional EOT‟s do not imply that the delay is

5

2009 SCC Online Bom 1509.

6

(1991) 4 SCC 93.

O.M.P. (COMM) 337/2017 Page 6 of 82

condoned/admitted. In the instant case, even after regular extensions up

to 12.10.2012, the petitioner issued provisional extensions to keep the

contract alive and explicitly reserved the petitioner‟s right to claim

compensation under Clause No. 2 of the GCC for the respondent‟s

delays. The Arbitrator while awarding this Claim No. 1 in the interim

Award ignored this standard practice of granting provisional EOT‟s and

acted in non-compliance of Section 28(3) of the Act.

18. Additionally, the rescheduling of milestones were not required as

rescheduling is only required up to the regular extension period i.e.

ending on 12.10.2012. However, the recovery of withheld amount was

made in March 2013 because the respondent defaulted in achieving

milestone Nos. 4 and 5. The Arbitrator substantiated his Award on the

ground that milestones were not rescheduled in accordance with the new

timeline after grating of EOT‟s, and overlooked the fact that delays

beyond 12.10.2012 were attributable to the respondent only.

Claim No. 2: Reimbursement of increase in taxes and duties under

Clause 38 of GCC of contract (VAT, Entry Tax and Central Excise).

19. With respect to Claim No. 2, it is submitted that the finding of the

Arbitrator is based on wrong interpretation of Clause No. 38 of the

General Conditions of Contract (“GCC”). The reasoning of the

Arbitrator is patently illegal as the Arbitrator held that non-compliance

with the provision for notice does not mean that the statutory increase in

taxes duly paid by the petitioner will not be reimbursed. When a

contractual term stipulated that a claim needed to be lodged within a

specific time, non-compliance should lead to an adverse inference. Thus,

the Arbitrator by allowing this claim despite non-compliance by the

respondent has favoured the respondent in an unjust manner.

Claim No. 3: Reimbursement of increase in taxes and duties under

O.M.P. (COMM) 337/2017 Page 7 of 82

Clause 20 and 19B iv (b) of GCC of contract (Minimum Wages Act).

20. It is submitted that the Arbitrator erred in applying the provision

contained in Clause No. 38 of the GCC while adjudicating the Claim No.

3, as the respondent itself has not substantiated this claim under Clause

No. 38 of the GCC.

21. Further, the Arbitrator has erred in holding that the present contract is

similar to the CPWD contracts and that the respondent has rightly

quantified its claim as per Clause No. 10 CC of the CPWD contract in

which labour component for escalation is fixed at 25%. However, in the

present case Clause No. 10CC of the CPWD was inapplicable as the

stipulated completion period for the project was 15 months only, and

Schedule F provided that Clause No. 10CC is only applicable when the

stipulated period extends beyond 24 months.

Claim No. 4: Extra items of work claimed under Clause 12 of GCC

and Clause 22, 23 of SCC.

22. Learned Counsel, apropos the Claim No. 4 submits, that the Arbitrator

has not considered the contention of the petitioner that the dispute qua

Claim No. 4 i.e. extra items, survives only for ready mix concrete (RMC)

item, as the issue concerning grit plaster was already discussed during the

site visit on 26.11.2016 and was duly approved by the petitioner. Thus,

the Arbitrator has erred in again awarding the claimed amount without

discussing the detailed breakup and the basis of the rates claimed by the

petitioner.

23. She further submits that the Arbitrator has wrongly interpreted agreement

item No. 3.8 and DSR Item No. 5.33, wherein it was clear that the cost of

making and placing concrete were included in the quoted rates. The extra

claim raised by the respondent was false because in this project, the

concrete was made directly at the site and this fact was admitted by the

O.M.P. (COMM) 337/2017 Page 8 of 82

respondent during arbitral proceedings. The Arbitrator still compared and

relied upon DSR Item No. 5.37 on the ground that the respondent also

executed the work having scope similar to DSR Item No. 5.37, which is

item for ready-mix concrete made in fully automatic plant somewhere

else and then transported to the site in transit mixture for a lead of about

10 kms. This “upto 10 km lead” is a substantial cost factor, it assumes

extra cost for making and transportation to the site. The same was not

applicable in the present case, as the concrete was made on site. Thus, the

finding of the Arbitrator had allowed undue benefits to the respondent on

the basis of this misinterpretation and has disregarded the scope of

agreement item No. 3.8 and DSR item No. 5.33.

24. Additionally, the Arbitrator has ignored the contention of the petitioner

that these specific claims for extra items were not raised in terms and

compliance of Clause No. 12 of the GCC during the execution of those

items.

Claim No. 5: Revised rates for individual items of work the quantities

of which had exceeded beyond limit.

25. She further contends that with respect to the Claim No. 5, the Arbitrator

has misinterpreted the terms of the contract and in an unjustified manner

awarded market rates for items deviating more than 30% of the BOQ

quantity because the respondent was well aware of the fact that Clause

Nos. 12.2 and 12.3 applies only after deviation exceeds the threshold of

30% of trade work or 100% of foundation work as the case may be, and

still the respondent did not claim this amount under Clause No. 12.4.

Thus, directly raising this claim before the Arbitrator is unjustified. Also,

there are inherent inconsistencies in findings of the Arbitrator as at one

specific section of the Award, the Arbitrator used the word “Trade” to

mean “building trade” and while allowing claim No. 5 he stated the same

O.M.P. (COMM) 337/2017 Page 9 of 82

word to be vague and proceeded to award rates applicable to individual

BOQ items instead of BOQ subheads as contended by the petitioner

during the arbitral proceedings.

26. Schedule F (Package-I), provides for deviation limit of 30% of the trade

upto which the BOQ rates were payable and were already paid with

respect to several deviated items, yet the Arbitrator failed to consider

these contractual provisions and the petitioner‟s specific submissions.

The petitioner further submits that the respondent‟s quantification was

erroneous and unsupported by proper justification and did not even take

into consideration the Bhopal cost index. For the sake of argument, even

if any claim was maintainable, the Arbitrator did not scrutinise itemwise

rates or the petitioner‟s objections, thereby vitiating the entire

quantification process. In these circumstances, by effectively

disregarding and rewriting the terms of the contract beyond the scope of

reference, the Award is liable to be set aside in the interest of justice.

Claim No. 10: Loss on locked up deposits Bank Guarantees due to

Prolongation of Contract.

27. Ms. Lakra, submits that with respect to Claim No. 10, the Arbitrator has

acted in violation of Clause No. 1(ii) of the GCC which provides that the

petitioner is not liable to pay any interest/charge on account of the

performance guarantee.

Claim No. 12: Escalation Amount on material payable due to

prolongation ofcontract.

28. The Arbitrator with respect to Claim No. 12 has acted in violation of the

terms of the Contract as the respondent has preferred the claim because

of escalation of materials, being fully aware of the fact that contract does

not allow such escalation claims.

O.M.P. (COMM) 337/2017 Page 10 of 82

29. It is also submitted that the Arbitrator in the Claim Nos. 13 and 14

awarded loss of interest on the amounts claimed under Claim Nos. 2, 3,

4, 5, 10 & 12 at the rate of 10% per annum, the same is in violation of

law as settled by the Hon‟ble Supreme Court in the case of Union of

India v. M/s Krafters Engineering & Leasing Pvt Ltd.

7

, and the terms of

the contract as the contract does not provide for grant of interest.

SUBMISSIONS ON BEHALF OF THE RESPONDENT

30. Dr. George, learned counsel for the respondent, submits that the delays in

execution of the Contract are not attributable to the respondent as the

Arbitrator has returned categorical findings by placing reliance on the

records i.e. hindrance register maintained and signed by the petitioner

itself. Reliance is placed on Delhi Agricultural Marketing Board v. HR

Builders.

8

31. It is also submitted that the contents of the hindrance register were

neither challenged by the petitioner in the present petition nor in the

defence before the Arbitrator. It was only at the stage of oral arguments

that this objection was raised by the petitioner.

32. He further submits that the Claim No. 2 concerning the reimbursement of

Rs. 38,10,057/- towards increase in taxes and duties under Clause No. 38

of the GCC was rightly adjudicated by the Arbitrator. The petitioner

raised the identical contention of absence of notice in terms of Clause

No. 38 (iii) of the GCC before the Arbitrator as well and the same was

rejected by the Arbitrator on the ground that the clause provided for the

notice to be given but default of such notice is not in itself a ground to

attract adverse consequences so as to reject a claim otherwise due.

7

(2011) 7 SCC 279.

8

2019 SCC Online Del 8538.

O.M.P. (COMM) 337/2017 Page 11 of 82

Reliance is placed on Mahesh Bansal v. Executive Engineer

9

and Union

of India v. Associated Construction Co.

10

to state that the decision of the

Arbitrator is in consonance with the settled position of law.

33. With respect to Claim No. 3, it is submitted that the challenge of the

petitioner is baseless as the Arbitrator had adjudicated the claim in

consonance with Clause Nos. 20 and 38 of the GCC. Clause No. 20 of

the GCC provided that the respondent was bound to comply with the

Minimum Wages Act, 1948 and Clause No. 38 states that any further tax

or levy imposed by the statute and duly paid by the respondent shall be

reimbursed to it. The Arbitrator rightly allowed this claim of the

respondent with respect to the additional expenditure towards payment of

minimum wages as amended from time to time. Reliance is placed on

Union of India v. Saraswat Trading Agency and Ors.

11

and Associated

Construction Co. (Supra) to submit that the stand of the Arbitrator is in

consonance with the settled position of law.

34. Apropos the Claim Nos. 6, 7, 8, and 9, it is submitted that the Arbitrator

has awarded these claims with detailed reasoning on fact and law. The

petitioner has challenged these claims on the ground that the terms of the

contract does not provide for compensation, in fact the special conditions

of contract specifically preclude grant of compensation. However, as per

the provisions of the Contract Act more particularly Section 53, 54, 55

and 73, in case of failure of performance, promises, and breach, the party

at fault is liable for compensation for the losses suffered by the other

party. In a judgment of this Court titled Union of India v. Vishva Shanti

Builders (India) Pvt. Ltd.

12

, it was held that despite a clear condition

9

1995 SCC Online Del 333.

10

2016 SCC Online Del 4679.

11

(2009) 16 SCC 504.

12

(2024) SCC Online Del 5018.

O.M.P. (COMM) 337/2017 Page 12 of 82

under the contract barring compensation, the compensation cannot be

said to be barred when the extensions were granted due to fault of the

other party. Reliance is also placed on K.N. Sathyapalan v. State Of

Kerala & Anr.

13

ANALYSIS AND FINDINGS

35. I have heard the learned counsels for the parties and perused the material

and documents placed on record.

Scope of Interference Under Section 34 Of The Act

36. The scope of interference under Section 34 of the Act is now clearly

established. The Court is not required to sit in appeal as an Appellate

Court over the Award, and it can neither reappreciate the evidence nor

reinterpret the terms of the contract, when the view already taken by the

Arbitrator is a probable and possible one. Judicial intervention with the

Award is permissible only on limited and specific grounds, as

encapsulated under Section 34 of the Act. The Court is not

required/empowered to reappreciate evidence or substitute its own view

with that of the Arbitral Tribunal. It is a settled position of law that

Section 34 of the Act, embodies the principle of minimal judicial

interference, thereby preserving the foundational precept of the Act, the

finality and efficacy of Arbitral Awards. The Hon‟ble Supreme Court has

recently observed this scope of interference in the judgment of

Consolidated Construction Consortium Ltd. v. Software Technology

Parks of India

14

, the relevant paragraphs of which reads as under:

“46. Scope of Section 34 of the 1996 Act is now well

crystallised by a plethora of judgments of this Court.

Section 34 is not in the nature of an appellate provision. It

13

(2007) 13 SCC 43.

14

(2025) 7 SCC 757.

O.M.P. (COMM) 337/2017 Page 13 of 82

provides for setting aside an arbitral award that too only on

very limited grounds i.e. as those contained in sub-sections

(2) and (2-A) of Section 34. It is the only remedy for setting

aside an arbitral award. An arbitral award is not liable to

be interfered with only on the ground that the award is

illegal or is erroneous in law which would require re-

appraisal of the evidence adduced before the Arbitral

Tribunal. If two views are possible, there is no scope for the

court to re-appraise the evidence and to take the view other

than the one taken by the Arbitrator. The view taken by the

Arbitral Tribunal is ordinarily to be accepted and allowed

to prevail. Thus, the scope of interference in arbitral

matters is only confined to the extent envisaged under

Section 34 of the Act. The court exercising powers under

Section 34 has per force to limit its jurisdiction within the

four corners of Section 34. It cannot travel beyond Section

34. Thus, proceedings under Section 34 are summary in

nature and not like a full-fledged civil suit or a civil appeal.

The award as such cannot be touched unless it is contrary

to the substantive provisions of law or Section 34 of the

1996 Act or the terms of the agreement.”

37. At the outset, Dr. George, learned counsel for the respondent, states that

the present petition is sans merit as the petitioner has failed to plead or

establish any specific permissible ground under Section 34 of the Act.

The Award is a detailed Award substantiated by the evidence available

on record and the same does not suffer from any vices as enumerated

under Section 34 of the Act warranting interference by this Court. The

findings of the Arbitrator are plausible and therefore cannot be interfered

O.M.P. (COMM) 337/2017 Page 14 of 82

with under the Section 34 jurisdiction. Reliance is placed on Associate

Builders v. DDA

15

and Delhi Airport Metro Express (P) Ltd. v. DMRC

16

.

38. With the above scope of Section 34 of the Act in mind, I shall now deal

with the rival contentions.

Attribution of Delays

39. The petitioner‟s challenge to the Award with regards to several claims

can be distilled into one core controversy i.e. the findings on attribution

of delays and prolongation of contract, which are pertinent for the entire

Award and especially for decisions on Claim Nos. 6, 7, 8, and 9.

40. It is the case of the petitioner that the Arbitrator has erred in attributing

the delays in execution of works under the contract to the petitioner. The

Arbitrator has failed to take into consideration the pertinent facts and

evidence which show that in fact the delays were attributable to the

respondent.

41. It is contended by the petitioner that despite recording the objection of

the petitioner in page No. 13 of the Award that the respondent had not

completed the work by December 2016 as directed by the interim Award,

the Arbitrator has ignored this contention and also a vital report dated

21.04.2017 of the superintending engineer, wherein the status of work

was shown as incomplete. The Arbitrator also visited the site on many

instances and directed the respondent to complete certain works before

31.12.2016. Despite, all these contentions and evidence pertaining to the

attribution of the delay on part of the respondent, the Arbitrator did not

give any findings on these arguments in the Award. It is also stated that

the Award is passed without taking terms of the contract into

consideration and these kind of awards confer undue benefits on

15

(2015) 3 SCC 49.

16

(2022) 1 SCC 131.

O.M.P. (COMM) 337/2017 Page 15 of 82

contractors from government department and consequently the Award is

against public policy and the interest of the Country.

42. Per contra, the respondent contends that the Arbitrator has correctly

relied on hindrance registers in giving his findings on the issue of delay.

The specific delays mentioned in the hindrance register are attributable to

the petitioner for several reasons as stated therein including the delays

duly noted at Serial Nos. 20 and 21 of the Hindrance register on the

ground of delay in receipt of drawing for stone flooring over terrace and

works being carried out by other agencies engaged by the petitioner. The

respondent has also drawn my attention to the paragraph Nos. 17 and 18

of the judgment of the Hon‟ble Division Bench of this court in the case

of Delhi Agricultural Marketing Board (Supra), which read as under:

“17. The Hindrance Register is a document which is

maintained at the work site and is signed by the officers of

the employer and the contractor. It records the events which

occur contemporaneously in relation to the hindrances that

may be faced by the contractor from time to time in the

execution of the work. It is a document which is a log of the

communications which take place between the employer and

the contractor in relation to the events leading to hindrance

in the execution of the work.

18. The extension of time that may be considered by the

Engineer-in-Charge necessarily would have to rely upon

records, such as the hindrance register: In the present case,

the Arbitrator has found that the Hindrance Register

recorded hindrances for as many as 563 days, whereas the

actual delay in completion of the work was only 502 days.

That being the position, the finding returned by the learned

O.M.P. (COMM) 337/2017 Page 16 of 82

Arbitrator fixing the responsibility for delay in completion

of work, in our view, is completely justified.”

(Emphasis Supplied)

43. The Arbitrator apropos this issue has critically examined the multiple

EOT‟s duly approved by the petitioner and also noted that many extra

items pending since 2013 were only settled after directions from the

Arbitrator, and because of many pending issues the time for contract was

delayed by almost three times of the scheduled completion time. The

Arbitrator duly considered the submissions of the petitioner and observed

that the petitioner was directed to produce the hindrance register despite

which the petitioner never disputed the entries in this register. The

Arbitrator went on to observe that the hindrance register is maintained at

site by the petitioner, duly signed by the engineers of the petitioner and

by the consultants engaged by the petitioner only. The relevant portions

of the Award reads as under:

“14.3.2 Many pending extra items were pending since 2013

which were settled and paid on the directions of this Tribunal

during the proceedings. As is ascertained barring two extra items

for rest of the items the rates were settled during the Arbitration

proceedings. Because of many pending issues, the project

execution, as it appears had lost the track for long. Though the

time stipulation of 15 months was made, with the prolongation of

the Contract by more than three times of the stipulated period,

the time has been set at large by various defaults of the

Respondent.

14.3.3 The written submissions made by the Respondent latest on

10-4-2017 were carefully examined. The Charts produced do not

have any material significance to the issue on delays since both

O.M.P. (COMM) 337/2017 Page 17 of 82

the parties have argued and admitted that there are delays and

when the work is incomplete the value executed on comparison

with the original period will be less.

14.3.4 The Tribunal has asked the Respondent to produce the

hindrance register maintained at the site by the Respondent

which has been relied by the parties. The Respondent has not

made any allegation either in arguments or written submissions

of possibility of forging of the register which itself is produced by

Respondent during the proceedings.

14.3.5 The Respondent pointed out few discrepancies in the

written submissions made dt: 21.4.2017 in the hindrance

register. As can be seen the hindrance register is the record

maintained by the Respondent signed by the Respondent

Engineers and the Consultants engaged by the Respondent.

Neither during the pleadings nor during the arguments, the

discrepancies alleged are pointed out which appear an

afterthought. Moreover, the hindrance register is Respondent's

document which is admitted by them.

14.3.6 The Claimant had in fact pointed out few factual

discrepancies in actual dates of removal of hindrances as

recorded in the Hindrance register produced by the Respondent

during the proceedings. This was by way of filing a written

statement submitted by the Claimant which was not challenged

by the Respondent.

14.3.7 Considering the material evidence on record, the Tribunal

is of the opinion that the delays are not attributable to the

Claimant and the reasons mentioned in various EOT

applications are legitimate as found from records.”

O.M.P. (COMM) 337/2017 Page 18 of 82

(Emphasis Supplied)

44. I am of the view that the reliance placed by the Arbitrator on hindrance

register is well founded, and reasoned, as the petitioner has never

disputed the contents of the hindrance register before the Arbitrator or

even before this court until the stage of oral arguments. The petitioner

only pointed out few discrepancies before the Arbitrator which were

categorically dismissed by the Arbitrator by terming them as an

afterthought. Again raising such crucial objection at such a belated stage

of oral arguments of Section 34 proceedings is nothing but an

afterthought. A perusal of the hindrance register shows that it is a

contemporaneous record maintained at site and duly signed by the

representatives of the petitioner and the consultant engaged by them, thus

it can be said that the petitioner had knowledge of the delays, and its

causes and the same cannot be attributed to the respondent for no

reason/fault on its part. The relevant portions of the hindrance register

(Typed Copy) showing signature of consultant and engineers are

reproduced as under:-

O.M.P. (COMM) 337/2017 Page 19 of 82

O.M.P. (COMM) 337/2017 Page 20 of 82

S.

No.

Nature of

hindrance

Item of work

which could not

be executed due

to this hindrance

Date of start

of hindrance

Date of

removal of

hindrance

Overlapping if

any

Net

hindrance

in days

Sign of

A.E.

Weightage

of this

hindrance

Net

affected

days

Sign of

PM/EE

Remarks

of

residing

officer

18 Details of cold

rooms and

kitchens in

hostels

Due to non-

availability of

the details of

provisions to be

left in the dining

halls and

kitchens for the

services and

equipments,

these portions

cannot be

finished and so

the completion

of hostels is

affected

Affected areas –

all hostels

07.12.2011 31.03.2012

and cont.

114 days 114 days

Nil

19 Extended

development

Due to existence

of sewer pond

07.12.2011 31.03.2012

and cont.

114 days 114 days Nil

O.M.P. (COMM) 337/2017 Page 21 of 82

and work of

services around

the building

and non

channelization of

nallas passing

around the

building, the

work of

sewer/water

supply and other

services were in

the limits and

scope of

package-1

cannot be

completed and so

the progress is

affected.

Affected areas –

Medical college

and college of

Nursing

20 Delay in receipt

of drawing for

kota stone

Delay in water

proofing work.

23.11.2011 04.05.2012 163 days 163 days

Nil

O.M.P. (COMM) 337/2017 Page 22 of 82

flooring and

terrace water

proofing

Affected area

Medical College,

College of

Nursing Ayush

block and

Library Building

21 Delay of civil

work due to

work of other

agencies in main

service building

& library.

Delay in

complete work

of block „A‟ of

service building

as well as

Ground floor and

terrace of library

Affected area :

Service building

and library

building

27.01.2012 30.09.2011

and cont.

613 days

613 days

22 Delay of civil

work due to

work of other

agencies near

hostels and

Delay in civil

work and

finishing work

near hostel and

other buildings.

14.03.2012 30.09.2013

and cont.

565 days 565 days

Nil

O.M.P. (COMM) 337/2017 Page 23 of 82

other buildings

Affected area: -

Hostel and other

building

23 Details of cold

rooms and

kitchen in

hostels

Due to non

availability of

the details of

provisions to be

left in the dining

halls and

kitchens for the

services and

equipments,

these portions

cannot be

finished and so

the completion

of hostels is

affected.

Affected area: all

hostels

24.05.2012

30.09.2013

and cont.

494 days 494 days

Nil

24 Heavy rains Delay in civil 06.06.2012 24.09.12 88 days 88 days Nil

O.M.P. (COMM) 337/2017 Page 24 of 82

during 2012 work and

finishing was

due to the heavy

rains

Affected area:

hostels and other

buildings

(Rain

effected

days only)

25 Modifications

desired by the

Director in O.T

room Autoclave

room and

flooring in

Ayush building.

Delay in final

finishing work

in Ayush block

Affected area:

Ayush block.

01.07.2012 30.09.2013

and cont.

456 days 456 days

Nil

26 Delay in receipt

GFC drawings

for work of

atrium and

mumty in

nursing college

Finishing work

of first floor

elevation on

atrium side

Affected area:

Nursing college.

01.07.2012 30.09.2013

and cont.

456 days 456 days

Nil

O.M.P. (COMM) 337/2017 Page 25 of 82

45. The objections of the petitioner qua the non-consideration of report of

superintending engineer dated 21.04.2017, site visits and status of

incomplete work, were considered by the Arbitrator and were found

irrelevant in view of better evidence in the form of hindrance register.

The same is evident from the paragraph Nos. 14.3.2, 14.3.3 and 14.3.4 as

reproduced above.

46. The respondent has correctly relied on Delhi Agricultural Marketing

Board (Supra) highlighting the significance of hindrance registers. Also,

a Coordinate Bench of this Court in a recent judgment titled as Airport

Authority of India v. URC Construction

17

, reiterated the position that

hindrance registers hold substantial evidentiary value in construction

contract disputes. The relevant paragraph No. 89 of the aforesaid

judgment reads as under:

“89. It is a settled principle that site records i.e. Hindrance

Registers often hold greater evidentiary value regarding the

actual impact of weather on specific construction activities

like concreting or earthwork than general meteorological

data.”

(Emphasis Supplied)

47. Additionally, the Arbitrator is the master of quality and quantity of

evidence and his reasoning when substantiated by the material evidence

cannot be said to be perverse, patently illegal or against public policy,

just because another view is plausible.

48. Therefore, on the issue of attribution of delays, the reasoning and

findings of the Arbitrator rests on legitimate contemporaneous evidence

17

2026 SCC OnLine Del 534.

O.M.P. (COMM) 337/2017 Page 26 of 82

and the said Award cannot be said to be vitiated on the grounds under

Section 34 of the act merely because a report or some contentions of the

petitioner are not discussed in detail in the Award. This court under

Section 34 of the act cannot weigh evidence or reappreciate the same.

Claim Nos. 6, 7, 8, AND 9: Additional expenses due to prolongation of

contract for various reasons.

49. Claim Nos. 6, 7, 8, and 9 pertain to the claims raised by the respondent

before the Arbitrator for compensation arising from prolongation of the

Contract period, covering idling of resources such as plant, machinery,

labour, etc. These claims collectively forms a substantial portion of the

relief sought by the respondent i.e. an amount of about Rs. 35.08 crore,

out of which an amount of about Rs. 3.2 crores was awarded vide the

Award. These claims are predicated on the arbitral finding that the delays

are primarily attributable to the petitioner, justifying damages.

50. The primary contention raised by the petitioner, apropos these claims is

that the Arbitrator exceeded its jurisdiction by granting compensation

despite clear bar contained in the terms and conditions of the Contract. It

is contended by the petitioner that the respondent in terms and conditions

of the Contract is only entitled to extensions and not compensation. The

petitioner has relied on Ramnath International Construction Pvt. Ltd.

(Supra) to support its contention that when there is a contractual

stipulation prohibiting compensation in case of extension of time, the

same cannot be awarded by the Arbitrator.

51. The Award of these claims is contended by the petitioner to be in

violation of Clause Nos. 6(a), (b) and 40(h), (p)(ix) of the Special

Conditions of the Contract, as they bar any claims for delays and only

allows remedy of extension of time. The relevant clauses read as under:

“Clause 6: Disruption of Progress

O.M.P. (COMM) 337/2017 Page 27 of 82

(a) The Contractor shall give adequate but not less than 4

weeks written notice to the PC whenever planning or

progress of the works is likely to be delayed or disrupted

unless any further drawing or order, including a direction,

instruction or approval, is required to be issued by the PC.

The notice shall include details of the drawing or order

required explaining why and by when it is required and of

any delay or disruption likely to be suffered if it is late .

(b) If by any reason of any failure or inability of the PC to

issue within 4 weeks any drawing or instruction for which

notice has been given by the Contractor in accordance with

Sub-clause 1 and the Contractor suffers delay when the PC

shall after due consultation with the Contractor recommend

to the Client any extension of time under respective clause.

Notwithstanding anything stated above, the Contractor shall

not be eligible for any financial compensation arising out of

the above.

Clause 40 Miscellaneous

(h) Delay in starting the work

No compensation shall be allowed for any delay caused in

the starting of the work on account of acquisition of land,

encroachment or in the case of clearance of works, on

account of any delay in according sanction to estimates in

issue of drawings, decisions etc. however, the extension of

time shall be granted as per relevant conditions of Contract.

….

(p) Miscellaneous

O.M.P. (COMM) 337/2017 Page 28 of 82

(ix) No idling charges or compensation shall be paid for

idling of the Contractor's labour, staff or P&M etc. on any

ground or due to any reason whatsoever.”

52. The respondent contends that these claims awarded under several heads

for additional expenses during the period of prolongation, are based on

detailed reasoning and despite presence of the aforesaid clauses, where

the delays are attributable to one party i.e. the petitioner, the respondent

is entitled to compensation/damages under Section 53, 54, 55 and 73 of

the Contract Act. The respondent to support his contention has placed

reliance on Vishwa Shanti Builders (India) Pvt. Ltd. (Supra) and K.N.

Sathyapalan (Supra).

53. The Arbitrator in the Award has categorically observed that the

principles of compensation apply in case of prolongation of Contract

arising due to breach as the delays were attributable to the petitioner

only. The relevant portions of the Award read as under:

“6.1.6 The Claimant submitted that, as per section 53,54,55

and 73 of the Indian Contract Act, 1872, under

circumstances of failure in performance, promises and

breach on part of the Respondent, the Respondent is liable

for compensation for the losses suffered by Claimant as a

consequence of the said lapses of the Respondent. The

Claimant argued that as per sections of Indian Contract

Act, 1872 which clearly provides that when one party who

has been compelled to incur loss due to the failure of the

other party, such party is entitled for compensation.

6.1.7 The Claimant cited following case laws in support of

this claim:

O.M.P. (COMM) 337/2017 Page 29 of 82

i. The Hon'ble Supreme Court in the case of K.N.

Sathyapalan (Dead) by LRs. Vs. State of Kerala and

Anr. (2007) 13 SCC 43

ii. The Hon'ble High Court of Delhi in National

Highways Authority of India Vs. Hindustan

Construction Company Ltd. 2016 (2) Arb. LR 1 (Delhi)

(DB).

6.1.8 The Claimant submitted that ordinarily parties would

be bound by the terms agreed upon in the Contract but in

the event of one of the parties is unable to fulfill its

obligations under the Contract which has direct bearing,

the Arbitrator is vested with the authority to compensate the

injured party for the extra cost incurred by him as a result

of failure of the other party. The Claimant has also

submitted that in the light of various Court Judgments, the

aggrieved party needs to be compensated on account of

delay in completion of work due to breaches committed by

the other party.

….

6.2.1 The Respondent referred Contract Clauses 6 of SCC,

Clause 40(a),(b),(h),(p) of SCC and submitted that various

reasons like delays due to rainfall, cold weather etc. for

which holding Respondent liable is beyond any logical

sense. The Respondent had argued that despite clearance of

the said hindrances, the Claimant has miserably failed to

complete the works within the justified extension granted to

it. This irresponsible act of the Claimant has resulted in

delay in creation of required infrastructure for this

O.M.P. (COMM) 337/2017 Page 30 of 82

prestigious institute, as argued by Respondent. It is clarified

also that after considering all hindrances the competent

authority has decided to grant interim regular extension of

time for completion of work up to 18

th

July 2012 only. The

Respondent argued that as the rest of the delay up to point

of consideration lies on part of the Claimant, the burden of

delay should also be borne by the Claimant only.

….

6.3.2 The Claimant has worked out the expenses on actual

audited account basis for showing the costs incurred as per

their books of accounts on machinery, manpower and

various overheads. These costs were claimed in the

prolonged period extending from contractual completion

from August 2011 to till May 2015 for nearly 60 months.

6.3.3 In Construction Contracts, the Courts have also

upheld the principles of compensation in case of

prolongation of contracts arising due to breach. For

quantification of overheads application of formula is also

recognized by Indian courts and Hudson's formula is more

popular having judicial acceptability. This formula is based

on the practice that contractors do add the overheads as

percentage loaded to the direct costs to arrive at bid costs.

As per CPWD standard practice, 15% is allowed towards

Contractor's profit & overheads on the analysis of rates for

the items. In building trade, the site, general office & other

overheads may be to the tune of at least 5 to 8% even as per

the CPWD practice. Generally the contractor recovers the

O.M.P. (COMM) 337/2017 Page 31 of 82

costs incurred on resources deployed including overhead

costs from the turn over achieved.

Award:

Towards Claims No. 6, 7, 8 and 9, the claimant has totally

claimed of Rs. 35,08,71,374/- under various heads of

machinery hire charges, manpower costs, site overheads &

establishment costs and head office, regional office

expenses in the prolongation period.

The average monthly turnover which is lost due to

prolongation of work is assessed as Rs. 7.5 Cr. in above. An

under recovery of 1% expenses per month on lost turnover

summing up all types of overheads and expenses claimed

under Claims number 6,7,8 and 9 is judged genuine and

reasonable. Thus for 43 months prolongation from

Sept.2011 to up to March2015, a compensation of Rs. 7.5

Lakhs per month that is 1% of Rs. 7.5 Crores is awarded.

Thus a total of Rs. 3,22,50,000/-, is awarded towards claim

numbers 6, 7, 8 and 9.”

(Emphasis Supplied)

54. A perusal of the arbitral Award and written statement dated 18.02.2016

filed by the petitioner before the Arbitrator, makes it clear that the

petitioner raised this identical contention even before the Arbitrator as

well. Raising this contention again in a Section 34 jurisdiction is nothing

but reiteration of the same pleadings before this Court. The Award is well

reasoned, based on correct application of principle of law, and passed

after taking into consideration all the material evidence placed on record.

Thus, the Arbitrator has rightly adopted a plausible view by making a

categorical finding that in construction contracts the courts have applied

O.M.P. (COMM) 337/2017 Page 32 of 82

principles of compensation in cases of breach of contract. The Arbitrator

has not awarded these claims in lump sum rather the Arbitrator has also

made categorical formula based technical finding.

55. The reliance placed by the petitioner on Ramnath International

Construction Pvt. Ltd. (Supra) is misconceived and unfounded, as that

decision was based on a very widely worded condition of the contract,

namely Clause No. 11, which reads as under:

“11. Clause 11 of the General Conditions of Contract

relates to time, delay and extension. We extract below the

portions of clause 11 relevant for our purpose:

11. Time, delay and extension.—(A) Time is of the essence

of the contract and is specified in the contract documents or

in each individual works order.

As soon as possible, after contract is let or any substantial

work order is placed and before work under it is begun, the

GE and the contractor shall agree upon the time and

progress chart. The chart shall be prepared in direct

relation to the time stated in the contract documents or the

works order for completion of the individual items thereof

and/or the contract or works order as a whole. It shall

include the forecast of the dates for commencement and

completion of the various trades, processes or sections of

the work, and shall be amended as may be required by

agreement between the GE and the contractor within the

limitation of time imposed in the contract documents or

works order. If the work be delayed:

(i) by force majeure, or

O.M.P. (COMM) 337/2017 Page 33 of 82

(ii) by reason of abnormally bad weather, or

(iii) by reason of serious loss or damage by fire, or

(iv) by reason of civil commotion, local combination of

workmen, strike or lockout, affecting any of the tradesmen

employed on the work, or

(v) by reason of delay on part of nominated sub-contractors,

or nominated suppliers which the contractor has, in the

opinion of GE, taken all practicable steps to avoid, or

reduce, or

(vi) by reason of delay on the part of contractors or

tradesmen engaged by the Government in executing work

not forming part of the contract, or

***

(viii) by reason of any other cause, which in the absolute

discretion of the accepting officer is beyond the contractor's

control;

then in any such case the officer hereinafter mentioned may

make fair and reasonable extension in the completion dates

of individual items or groups of items of works for which

separate periods of completion are mentioned in the

contract documents or works order, as applicable.

***

(B) If the works be delayed:

(a) by reason of non-availability of government stores in

Schedule B or

O.M.P. (COMM) 337/2017 Page 34 of 82

(b) by reason of non-availability or breakdown of

government tools and plant listed in Schedule C;

then, in any such event, notwithstanding the provisions

hereinbefore contained, the accepting officer may in his

discretion, grant such extension of time as may appear

reasonable to him and the same shall be communicated to

the contractor by the GE in writing. The decision so

communicated shall be final and binding and the contractor

shall be bound to complete the works within such extended

time.

(C) No claim in respect of compensation or otherwise,

howsoever arising, as a result of extensions granted under

Conditions (A) and (B) above shall be admitted.”

(Emphasis Supplied)

56. The Hon‟ble Supreme Court treated the above stated Clause as a specific

consent by the contractor to accept only extension of time in full

satisfaction of any delay claims. The relevant paragraph of the judgment

reads as under:

“18. In spite of having held that both were responsible for

the delay and having noticed the arguments based on clause

11(C) of the General Conditions of Contract, the Arbitrator

proceeded to award damages on the ground of delay on the

reasoning that the contractor is entitled to compensation,

unless the employer establishes that the contractor has

consented to accept the extension of time alone in

satisfaction of his claim for delay. As rightly held by the

O.M.P. (COMM) 337/2017 Page 35 of 82

High Court, which decision we have affirmed while

considering Question (i), clause 11(C) of the General

Conditions of Contract is a clear bar to any claim for

compensation for delays, in respect of which extensions

have been sought and obtained. Clause 11(C) amounts to a

specific consent by the contractor to accept extension of

time alone in satisfaction of his claims for delay and not

claim any compensation. In view of the clear bar against

award of damages on account of delay, the Arbitrator

clearly exceeded his jurisdiction, in awarding damages,

ignoring clause 11(C).”

(Emphasis Supplied)

57. However, in the present case, the Clause Nos. 6(a), (b), 40(h) and

40(p)(ix) are narrow in nature and are not structured as comprehensive

clauses covering all prolongations caused by breach of the either party

i.e. the petitioner or respondent, the Arbitrator here has found the delays

to be attributable to the petitioner alone on the basis of hindrance

registers, and has not disregarded the contractual clauses but has

consciously reconciled them with Sections 53, 55 and 73 of the Contract

Act while awarding damages.

58. Additionally, the judgment of Ramnath International Construction Pvt.

Ltd. (Supra) is distinguishable from the factual backdrop of the present

case as from a perusal of the paragraph No. 18 of the judgment as

reproduced above, the delays were attributable to both the parties, which

was not the case in the instant petition. A Coordinate Bench of this Court

O.M.P. (COMM) 337/2017 Page 36 of 82

in Simplex Concrete Piles (India) Ltd. v. Union of India

18

, also made

the following observations:

“19. In my opinion, if I look at the issue from both the micro

and macro positions, keeping in focus the intendment of

legislation called the Contract Act, then, the judgment in the

case of Asian Techs Ltd. can be said to laying down a law

which would further the object and purpose of the Contract

Act. I must hasten to add that I am still doubtful whether I

am entitled to decide the aspect that out of two decisions of

Supreme Court, which one is to prevail, therefore, my

observations are strictly in terms of the limited parameters

of the facts of the present case required to decide the aspect

of the entitlement or the disentitlement to damages in view

of the provisions of Section 55 and 73 of the Contract Act. I

would with all due respect to the learned senior counsel for

the petitioner, would not venture further and would leave it

finally for a larger Bench of this court or the Supreme Court

itself to consider whether at all there is any conflict between

the judgments of Ram Nath International and Asian Techs

Ltd and if there is a conflict, the ratio of which of the two

judgments ought to prevail. I am therefore, deciding this

case, to make things very clear, only on the basis of the

decision that contractual clauses which prohibit the

entitlement to rightful damages of a person is clearly hit and

are void by virtue of Section 23 of the Contract Act.”

18

2010 SCC OnLine Del 821.

O.M.P. (COMM) 337/2017 Page 37 of 82

59. For the said reasons, the findings of the Arbitrator are sound, reasonable

and based on a plausible view. Hence, no interference with the same is

warranted under Section 34 of the Act.

Claim No. 1: Release of wrongfully withheld amount from RA Bill-33

& 34.

60. The Arbitrator vide interim award dated 30.12.2016 has awarded Rs.

2,95,79,465/- apropos the Claim No. 1 towards the amount withheld

from the respondent‟s running account bills, without interest which was

decided later by the Arbitrator at the time of final Award. The Award is

based on the finding that the withholding of amount for non-achievement

of milestone Nos. 4 and 5, was wrong as pursuant to the EOT‟S

milestone Nos. 4 and 5 also needed to be rescheduled. It was further held

by the Arbitrator that milestone Nos. 1, 2, and 3 were rescheduled

pursuant to the EOT‟s and hence there was no reason for not

rescheduling milestone Nos. 4 and 5.

61. Notably, the findings of the Arbitrator in award of Claim No. 1 in the

final Award is a reproduction of the findings made in the interim award

dated 30.12.2016 wherein the claim was adjudicated except the interest

component which was adjudicated to be paid in the final Award.

62. The petitioner raises two fold contentions with respect to Claim No. 1,

firstly that the Arbitrator failed to distinguish between a regular

extension and a provisional extension. In construction contracts,

provisional extensions, are granted merely to keep the contract alive and

does not mean that the delay of the contractor is condoned or admitted.

In the present case despite regular extensions, provisional extensions

were granted while explicitly reserving the right to levy compensation

for delays under Clause No. 2 of the GCC. Secondly, rescheduling of

milestone applied only upto regular EOT i.e. granted upto 12.10.2012

O.M.P. (COMM) 337/2017 Page 38 of 82

and recovery in March 2013 for persistent non-achievement of milestone

Nos. 4 and 5 was valid, rendering this claim of the Award violative of

Section 28(3) of the Act.

63. The Arbitrator apropos this Claim observed that as per Clause No. 5 of

the GCC, Schedule F, the original milestones in the Contract were meant

to be mutually decided between the parties and as per Clause No. 5.4 of

the GCC, the milestones were required to be adjusted by the Engineer in

Charge when extensions of time were granted. However, in the instant

factual matrix, the petitioner granted several EOT‟s but never

rescheduled milestone Nos. 4 and 5 in accordance with the new

timelines. The Arbitrator categorically went on to hold that the amount

was withheld by the petitioner based on the originally agreed milestones,

which are irrelevant in light of the several EOT‟s granted by the

petitioner without rescheduling the said milestones. Additionally, the

Arbitrator held that the delays were attributable to the petitioner even

beyond the period of regular EOT. The relevant portions of the Award

read as under:

“Finding of the Tribunal:

1.6 I have carefully considered the above arguments of both

the parties, the documents and evidence produced before

me.

1.7 In clause 5 of GCC, Schedule 'F' Page 107 of the

Contract, (Page 85 of CV -1) it is stipulated that Mile

stone(s) will be mutually decided on award of work. Also as

per clause 5.4 of GCC Engineer-in-charge has to determine

the EOT and reschedule the Milestones for completion of

work. In the instant case though the Engineer-in-charge

O.M.P. (COMM) 337/2017 Page 39 of 82

granted EOT but had not rescheduled the milestones. From

the records placed before me it is seen that the Respondents

had withheld sum of amount Rs.2,95,79,465/- from the RA

Bills of 33 & 34 of the Claimants. Also it is evident from the

hindrance register filed by the Respondents that some of the

hindrances which were persisting beyond the period of

regular EOT i.e. 18.07.2012. Such hindrances were

continuing all along.

1.8 As can be seen from the records, withholding of above

referred amount was initiated based on originally agreed

mile stones stipulated in the agreement well before the

determination of EOT. It was imperative upon the parties to

agree on rescheduling the milestones on granting of EOT.

Because of this the original agreed schedule for milestones

have lost their relevance. Furthermore the dispute between

the parties is only regarding non achievement of 4

th

, 5

th

milestones. Since milestones 1

st

, 2

nd

, 3

rd

were achieved

within the extended period, which is not denied by the

Respondents. Hence, there is no dispute between the parties

on achieving the first three milestones.

AWARD:-

After deliberating in detail and considering all the

submissions of parties, documents and evidence filed, the

Tribunal awards that the withheld amount of Rs.

2,95,79,465/- on account of non achievement of milestones

from the Claimants bill shall be refunded to the Claimants.

O.M.P. (COMM) 337/2017 Page 40 of 82

The Claimants have claimed interest @ 15 % P A for the

above claim amount separately under Claim no.13. From

the records placed before me I find that the amount was

withheld while releasing payments for 33,34

th

RA bills on

18-2-2014.

The Tribunal Awards the simple interest at a rate 12% per

annum on the above amount to be refunded from the date of

recovery i.e.l8.2.2014 to the date of the award.”

64. The relevant Clause No. 5 of the GCC reads as under:

“Clause No. 5.1 of GCC

As soon as possible after the contract is concluded, the

contractor shall submit a Time and Progress Chart for each

mile stone and get it approved by the Department. The

Chart shall be prepared in direct relation to the time stated

in the contract documents for completion of items of the

works. It shall indicate the forecast of the dates of

commencement and completion of agreement between the

Engineer-in-Charge and the Contractor within the

limitations of time imposed in the Contract documents, and

further to ensure good progress during the execution of the

work, the contract shall in all cases in which the time

allowed for any work, exceeds one month (Save for special

jobs for which a separate programme has been agreed

upon) complete the work as per mile stones given in

Schedule 'F'.

O.M.P. (COMM) 337/2017 Page 41 of 82

Sl. No. 13 amendment no 1 to tender document:

Five (5) Mile Stone(s) will be mutually decided on award of

work based on the work programme submitted by

contractor. The amount to be withheld for non-achievement

of each mile stone· will be 1% of the tendered value.

Clause No. 5.4 of GCC

In any such case the Engineer-In-charge may give a fair

and reasonable extension of time and reschedule the

milestones for completion of work. Such extension shall be

communicated to the Contractor by the Engineer-in-charge

in writing within 3 months of the date of receipt of such

request. Non application by the Contractor for Extension of

time shall not be a bar for giving a fair and reasonable

extension by the Engineer-in-charge and this shall be

binding on the contractor.”

65. I am in full agreement with the view of the Arbitrator that once extension

is granted in view of Clause No. 5, the originally fixed milestone

becomes irrelevant and any withholding cannot be allowed on the basis

of not achieving the earlier fixed milestones. The reasoning adopted by

the Arbitrator is cogent, correct and based on interpretation of Clause

No. 5 of the GCC, which mandates rescheduling of the milestones in

cases of grant of EOT. The view taken by the Arbitrator is not only a

plausible view but also a reasonable one which is substantiated by

contractual terms and evidence available on record.

66. The findings of the Arbitrator are based on plausible interpretation of

O.M.P. (COMM) 337/2017 Page 42 of 82

Clause No. 5 of the GCC, which cannot be reinterpreted/reappreciated

by this Court under Section 34 of the Act. Thus, no ground warranting

interference by this Court is established.

Claim No. 2: Reimbursement of increase in taxes and duties under

Clause 38 of GCC of contract (VAT, Entry Tax and Central Excise).

67. Claim No. 2 pertains to reimbursement of a sum of Rs. 38,10,057/‑

towards increase in taxes and duties during the currency of the Contract,

claimed by the respondent under Clause No. 38 of the GCC. The

Arbitrator has allowed this claim, holding that once the statutory levies

were in fact increased and duly paid by the respondent (contractor) in

relation to the works, the petitioner (employer) was bound, under the

Contract, to reimburse the same.

68. The petitioner has challenged the findings of the Arbitrator apropos the

Claim No. 2 only on the ground that the respondent failed to lodge the

claim within 30 days time period as stipulated under Clause No. 38 of the

GCC. The same contention was also raised by the petitioner before the

Arbitrator. The findings of the Arbitrator in favour of the respondent on

this contention are stated to be patently illegal, perverse and unjust.

Clause No. 38 of the GCC reads as under:

“Clause 38: Conditions for reimbursement of levy/taxes if

levied after receipt of tenders

i. All tendered rate shall be inclusive of all taxes and levies

payable under respective statutes. However, pursuant to the

constitution (46th amendment Act, 1982), if any further tax

or levy is imposed by statute, after the last stipulated date

for the receipt of tender including extensions if any and the

contractor thereupon necessarily and properly pays such

taxes/levies, the contractor shall be reimbursed the amount

O.M.P. (COMM) 337/2017 Page 43 of 82

so paid, provided such payments, if any, is not, in the

opinion of the superintending engineer (whose decision

shall be final and binding on the contractor) attributable to

delay in execution of work within the control of the

contractor.

ii. The contractor shall keep necessary books of accounts

and other documents for the purpose of this condition as

may be necessary and shall allow inspection of the same by

a duly authorized representative of the Government and/or

the Engineer-in-charge and further shall furnish such other

information/document as the Engineer-in-charge may

require from time to time.

iii. The contractor shall, within a period of 30 days of the

imposition of any such further tax or levy, pursuant to the

constitution (Forty Sixth Amendment) Act 1982, give a

written notice thereof to the Engineer-in-charge that the

same is given pursuant to this condition, together with all

necessary information relating thereto.”

(Emphasis Supplied)

69. Per contra, the respondent argues that the petitioner has only reiterated

the same contentions as raised before the Arbitrator, and the Arbitrator

has already in a detailed and reasoned manner adjudicated these

contentions of the petitioner. The respondent to substantiate the decision

of the Arbitrator has placed reliance on Mahesh Bansal (Supra) and

Associated Construction Co. (Supra), where courts have upheld

reimbursement of statutory levies despite procedural lapse of furnishing

notice, so long as the substantive liability under the contract stood

established.

O.M.P. (COMM) 337/2017 Page 44 of 82

70. The Arbitrator with regards to the Claim No. 2 has noted that the

petitioner has neither disputed the admissibility of the claim nor the

quantification of it, but has only raised a defence limited to the ground

that the claim was not lodged within 30 days. The Arbitrator referred to

the Clause No. 38 of the GCC to hold that the said Clause provides for

the notice to be given, but it does not stipulate that if notice is not given,

the otherwise legitimate dues will not be reimbursed. Thus, in absence of

any specific bar, the amounts paid in accordance with revised taxes are

bound to be reimbursed. The relevant operative portions of the Award

read as under:

“2.3.1 In Clause 38 of GCC it is stipulated that pursuant to

the Constitution (46th Amendment Act, 1982), if any further

tax or levy is imposed by Statute, after the last stipulated

date of receipt of tender including extensions if any and the

contractor thereupon necessarily and properly pays such

taxes/levies, the contractor shall be reimbursed the amount

so paid. Further the contractor is required to keep the

necessary records for the purpose of seeking

reimbursement.

….

2.3.3 From the records placed before me it is seen that the

Claimant had paid such increase in taxes time to time

during execution of work and requested the Respondent for

reimbursement of the same as per the provisions of the

Contract and based on the supporting documents provided

to it.

2.3.4 As can be seen from the record, the Respondent

neither disputed the admissibility of claim under this clause

O.M.P. (COMM) 337/2017 Page 45 of 82

nor the quantification of the reimbursement of the taxes

filed by the Claimant. But only submitted and argued in

their submissions that the claim was not lodged within 30

days. Furthermore, the dispute between the parties is only

regarding limitation of claim and the only objection taken

by the Respondent is that notice as required under Clause

38 of GCC had not been served on the Respondent before

making this claim. As can be seen the above Clause

provides that notice had to be given but that by itself is no

ground to reject the claim if otherwise found due. Clause 38

of GCC does not stipulate that if notice is not given then

statutory increase in taxes paid by the contractor would not

be reimbursed. However, the work is in progress and the

Claim is of progressive in nature. In the absence of any bar

that the Claimant having paid the revised taxes which is

calculated based on the actual paid challans, this claim

appears justified.

Award: An amount of Rs. 38,10,057/- is awarded to the

Claimant against this Claim towards reimbursement of

taxes and duties paid.”

(Emphasis Supplied)

71. In this view of the matter, the line of reasoning followed by the

Arbitrator cannot be characterised as perverse or patently illegal. Clause

No. 38 (iii) of the GCC as reproduced undoubtedly embodies a

stipulation regarding notice within a certain period, but the same Clause

does not in any possible way provide that failure to comply with the

provision concerning notice within 30 days shall result in nullifying that

right of reimbursement or the same will render the claim for otherwise

O.M.P. (COMM) 337/2017 Page 46 of 82

legitimate dues as non-maintainable. Treating such a stipulation of notice

as directory rather than mandatory and in the absence of an express

stipulation, the interpretation of the Arbitrator is a plausible construction

of the Contract. It cannot, therefore, be said that the Arbitrator has

ignored the terms of the Contract or exceeded the jurisdiction. The

Arbitrator has interpreted Clause No. 38 and has made a finding which is

also in consonance of the judgments of this Court.

72. The respondent to substantiate the decision of the Arbitrator has correctly

placed reliance on Associated Construction Co. (Supra), wherein a

Coordinate Bench of this Court relied on Mahesh Bansal (Supra), to

hold that mere non-compliance with provision for notice is not in itself a

ground to invalidate a claim otherwise valid and when the Arbitrator

bases his decision on evidence based formula/methodology/admitted

amount, the same should not be interfered under Section 34 jurisdiction.

The relevant paragraphs of Associated Construction Co. (Supra) read as

under:

“31. It is not disputed by the petitioner that almost a similar

controversy has already been adjudicated upon by this

Court in the case titled as Mahesh Bansal v. Executive

Engineer (FCD. 1) (1995) 34 DRJ 249. Single Judge of this

Court in the said case was concerned with a similar claim

for labour escalation under a similar clause as in the

present case, and proceeded to deal with the objections to

the arbitral award in the said case as under:

“8. So far as Claim No. 3 is concerned, the claimant had

claimed increase in the cost of labor due to increase in

labor wages on account of Delhi Administration

O.M.P. (COMM) 337/2017 Page 47 of 82

Notification. Minimum labor rates were quoted at the time

the lenders were submitted. These rates were revised w.e.f.

1

st

June, 1984 by Delhi Administration. Hence the petitioner

was duly bound to pay the revised wages to his labor. The

only objection taken by the respondent is that notice as

required under Clause 10(c) had not been served on the

respondent before making this claim. Secondly record had

not been produced to substantiate the same. Both these

objections have been turned down by the Arbitrator

primarily on the ground that the respondent submitted a

statement showing the amount of work done after 1

st

June

1984 i.e. exhibit „R-11‟. He also look into consideration the

labor component from exhibit „R11‟ which worked out to be

23.5% as per the norms of C.P.W.D. Therefore, he

concluded that the petitioner would be justified to claim

escalation as worked out on the basis of exhibit „R-11‟ while

absorbing 10% and, therefore, concluded that award of Rs.

3,620.00 would be just as against the claim of Rs.

20,700.00. So far as serving of notice is concerned,

admittedly Clause 10(c) provides that notice had to be given

but that by itself is no ground to reject the claim if otherwise

found due. Clause 10(c) does not stipulate that if notice is

not given than statutory increase in labor wages paid by the

contractor would not be given. In the absence of any bar,

the Arbitrator was within his right to conclude that the

contractor having paid the revised wages which he

calculated on the assumed labor component of 23.5%; as

per the norms of the C.P.W.D. and therefore, relying on the

O.M.P. (COMM) 337/2017 Page 48 of 82

document filed by the respondent exhibit „R-11” he

calculated the escalation of the labor component and

awarded the amount. I see no reason to interfere in the

same.”

32. A reading of the aforesaid judgment would show that

similar objections to the award have been raised by the

petitioner in the present case have been repelled. The

approach taken by the Arbitrator in the present case is

similar to the approach that has been upheld by this Court

in the aforesaid case.

33. It appears from the record that the Arbitrator has

gone strictly by the admitted amount of work done in the

present contract by the petitioner and extracted the labor

component from the same. As already noted hereinabove,

the Arbitrator has thus based his formula/methodology only

on the relevant statutory notifications evidencing the

increase in minimum wages and RAR bills, to evidence the

work actually executed, which have admittedly been

certified by the petitioner itself at different stages of the

work.

34. It is not the case of the petitioner that the subject

contract provide for a different formula to be applied in

order to arrive at the quantification of the escalation due. It

is the petitioner who had appointed the Arbitrator, who is

not only a technical person but is also incidentally a serving

officer of the petitioner. The very purpose behind the

appointment of technical persons as Arbitrators is that they

O.M.P. (COMM) 337/2017 Page 49 of 82

may use their expertise and experience in the field to be able

to resolve technical and trade-specific disputes between the

parties. Once such a technical and factual determination

has been carried out, it is not open to the petitioner to make

a grievance about the same merely because the said

determination was not to its liking. Single Judge of this

Court in the case of P.C. Sharma and Co. v. Delhi

Development Authority in CS(OS) No. 2057A/1996 decided

on 2

nd

July, 2010 in this regard has opined as under:

“…The respondent DDA had the choice to appoint an

Arbitrator and appointed a technical person rather than a

legal person. The sole purpose of appointment of a technical

rather than a legal person as an Arbitrator is to take benefit

of the special knowledge of the Arbitrator relating to the

matters in dispute.”

35. In light of the above, the challenge by the petitioner

to the findings of the Arbitrator under Claim No. 5 has no

force and this Court is not inclined to interfere with the said

findings.”

(Emphasis Supplied)

73. The Arbitrator‟s view is both possible and reasonable and interference is

unwarranted. Accordingly, the award on Claim No. 2, granting

reimbursement of increased taxes and duties under Clause No. 38 of the

GCC, rests on a tenable interpretation of the Contract.

Claim No. 3: Reimbursement of increase in taxes and duties under

Clause 20 and 19B iv (b) of GCC of Contract (Minimum Wages Act).

74. The Claim No. 3 pertains to reimbursement of additional expenditure

O.M.P. (COMM) 337/2017 Page 50 of 82

incurred by the respondent on account of increases in statutory payments

of minimum wages and other statutory obligations. The respondent has

substantiated this claim by relying on Clause No. 20 of the GCC, which

obliges the respondent to comply with the Minimum Wages Act, 1948,

and other labour laws, read with Clause No. 19B(iv)(b) of the GCC. The

Arbitrator accepted the contentions of the respondent and allowed the

claim.

75. Apropos this Claim, the petitioner has raised two-fold contentions.

Firstly, the Arbitrator has committed grave error by basing his decision

on Clause No. 38 of the GCC, despite the fact that the respondent itself

has not claimed the amount under Clause No. 38 of the GCC. Secondly,

the respondent relied on Clause 10CC of CPWD contracts for

quantification and the same was treated as correct by the Arbitrator.

76. Additionally, the petitioner also relies upon paragraph No. 3, Volume IV

of “Preamble to Bill of Quantities” to contend that the rates quoted are

not amenable to change for any reason, the paragraph No. 3 reads as

under:

“3. Rates quoted shall be firm and shall not be subject to

any price variation due to increase in labour wages, cost of

material etc., or any other price variations due to any

reason whatsoever whether during the stipulated period of

execution or during the extended period of completion if

any.”

77. At this stage, it is pertinent to see Clause No. 20 and 19B(iv)(b) of the

GCC and the same read as under:

“ Clause 19B Payment of wages:

Payment of wages:

…

O.M.P. (COMM) 337/2017 Page 51 of 82

(iv.)...

(b). Under the provision of Minimum Wages (Central)

Rules, 1950, the contractor is bound to allow to the labours

directly or indirectly employed in the works one day rest for

6 days continuous work and pay wages at the same rate as

for duty. In the event of default, the Engineer-in-Charge

shall have the right to deduct the sum or sums not paid on

account of wages for weekly holidays to any labours and

pay the same to the persons entitled thereto from any money

due to the contractor by the Engineer-in-Charge

Concerned.

In the case of Union Territory of Delhi, however, as the all

inclusive minimum daily wages fixed under Notification of

the Delhi Administration No. F. 12(162) MWO/

DAB/43884-91, dated 31.12.1979 as amended from time to

time are inclusive of wages for the weekly day of rest, the

question of extra payment for weekly holiday would not

arise.

….

CLAUSE 20 Minimum Wages Act to be complied with

The Contractor Shall comply with all the provisions of the

Minimum Wages Act, 1948 and Contract Labour

(Regulation and Abolition) Act, 1970, amended from time to

time and rules framed thereunder and other labour laws

affecting contract labour that may be brought into force

from time to time.”

(Emphasis Supplied)

O.M.P. (COMM) 337/2017 Page 52 of 82

78. From a perusal of the Clause Nos. 19B(iv)(b) and 20 of the GCC, it is

clear that together both of these clauses cast a mandatory and a

continuing obligation on the respondent to comply with the payment of

statutory wages as revised from time to time.

79. The Arbitrator while dealing with this claim has relied on the Clause No.

38 of the GCC, which provides that if any tax or levy is imposed after the

last stipulated date of receipt of tenders, and the respondent has duly paid

the same, the respondent shall be reimbursed the amount so paid.

80. The Arbitrator in this regard made a factual observation that the claimant

had in fact paid minimum wages increased from time to time to the

labour engaged, and had claimed reimbursement from the petitioner. The

respondent had produced supporting documents evidencing such

payments. He further noted that the claimant had quantified its claim by

adopting the labour component and formula analogous to Clause No.

10CC of the CPWD contract, treating the present Contract as similar in

structure. The Arbitrator granted actual expenditure incurred/actual

payments made to labour in this Claim. The relevant portions of the

Award read as under:

“3.3.1 In Clause 38 of GCC it is stipulated that pursuant to

the Constitution (46th amendment Act, 1982), if any further

tax or levy is imposed by Statute, after the last stipulated

date of receipt of tender including extensions if any and the

contractor thereupon necessarily and properly pays such

tax/levies, the contractor shall be reimbursed the amount so

paid. From the records placed before me it is seen that the

Claimant had paid properly such increase in Minimum

Wages to labour engaged from time to time during

execution of work and requested the Respondent for

O.M.P. (COMM) 337/2017 Page 53 of 82

reimbursement of the same as per the provisions of the

Contract and based on the supporting documents provided

to it.

3.3.2 As can be seen from the record, the Claimant had

quantified its claim as per Clause 10 CC of the CPWD

contract as the present contract is also similar to CPWD

contracts in which the labour component for escalation is

adopted as 25%. The Claimant has submitted the actual

expenditure incurred/ actual payments made to labours in

support of above claim. These are the records maintained

during execution and certified. Further the subject contract

was also prolonged for reasons not attributable to the

Claimant and grant of extension of time by the Respondent

to this effect was also in place. In the light of above

judgments cited the court held that when the state has

agreed to reimburse the increased wages than those

prescribed or notified at the time of inviting tenders, it is

obligatory to reimburse such costs.

Award:

In view of the above findings, an amount of Rs.

1,44,71,999/- as against the claim of Rs. 6,98,63,141/- is

awarded on this Claim towards reimbursement of minimum

wages of labour, based on records produced .”

(Emphasis Supplied)

81. The first objection of the petitioner that the Arbitrator has substantiated

the Award on Clause No. 38 without jurisdiction is misconceived and

unfounded. The fact that the respondent, in its SOC, stressed on Clause

Nos. 20 and 19B(iv)(b) rather than Clause No. 38 does not mean that the

O.M.P. (COMM) 337/2017 Page 54 of 82

Arbitrator was barred from referring to Clause No. 38 as the more

specific reimbursement provision while giving its findings. The

Arbitrator has not granted the claim by relying on something alien to the

Contract, it has merely located the correct clause that gives effect to the

same substantive right as the respondent claimed. Moreover, the

Arbitrator while noting the submissions of the respondent has also noted

a reference to Clause No. 38 of the GCC, the relevant portion of the

Award reads as under:

“3.1 Claimant's Submissions:

3.1.1 The Claimant submitted that as per Clause 20 of GCC,

the Claimant should comply with all the provisions of the

Minimum Wages Act, 1948 and the Contract Labour Act,

1970 during execution of contract.

3.1.2 The Claimant submitted that as per Clause 38 (iii) of

GCC if any further tax or levy is imposed by statute after the

last stipulated date of receipt of tender including extensions

if any, and the Contractor thereupon necessarily and

properly pays such taxes/levies, the Contractor shall be

reimbursed the amount so paid.”

(Emphasis Supplied)

82. Be that as it may, the Arbitrator being the master of the quality and

quantity of the evidence, the appreciation of the terms of the contract is

the sole prerogative of the Arbitrator.

83. The second objection raised by the petitioner qua this claim is the

quantification of claim as per Clause No. 10CC of CPWD despite the

subject Contract not being same as CPWD contract. This objection is a

mere reiteration of the objection already raised before the Arbitrator and

duly adjudicated by him. The Arbitrator in the present case has only

O.M.P. (COMM) 337/2017 Page 55 of 82

made a reference to the Clause 10CC of CPWD but has not relied on it,

the Arbitrator relied on the actual records for the purpose of allowing and

awarding the claim.

84. Third objection as regards to amenability of quoted rates to change in

view of paragraph 3 of the Preamble to BOQ, this particular objection

was also raised before the Arbitrator. I am of the view that this Clause

cannot be read in isolation and the same requires a comprehensive

reading along with other provisions of the Contract. Merely because

Arbitrator did not refer this particular Clause of the Contract in his

Award, the same cannot be used as a ground to assail the Award, when

the view taken by the Arbitrator is plausible view and based on cogent

reasons and evidence.

85. Moreover, the reliance placed by the respondent on the judgment of

Associated Construction Co. (Supra) is also well founded, as the dispute

adjudicated in that matter squarely substantiates the decision of the

Arbitrator in the present matter. The findings of the Arbitrator with

respect to quantum of the Claim are based on actual expenditure

incurred. Thus, the same does not warrant any interference by this Court.

The relevant paragraphs of the aforesaid judgment are already

reproduced in the paragraph No. 72 of this judgment.

86. To my mind, the view taken by the Arbitrator is a correct view based on

appreciation facts, which cannot be reappreciated by this Court under

Section 34 of the Act. Thus, there is no ground established by the

petitioner for warranting interference with the Award.

Claim No. 4: Extra items of work claimed under Clause 12 of GCC and

Clause 22, 23 of SCC.

87. The Claim No. 4 pertains to the additional items/substituted items

executed during the execution of works by the respondent, in accordance

O.M.P. (COMM) 337/2017 Page 56 of 82

with the instructions of the petitioner. These extra items of work were

claimed under Clause No. 12 of the GCC and Clause Nos. 22 and 23 of

the Special Conditions of the Contract.

88. The Claim No. 4 majorly relates to the payment for two extra executed

items, the first one being washed stone grit plaster with marble chips and

the second one being laying in position the ready-mix concrete (RMC),

and the petitioner has assailed the Award on three broad grounds:

i. That the extra items must be claimed in strict compliance of

Clause 12, more specifically Clause No. 12.2 of the GCC.

ii. That the dispute survived only with respect to the RMC as the grit

plaster issue had already been approved during the site visit on

26.11.2016 and paid. The same fact had already been conveyed to

the Arbitrator vide petitioner‟s written arguments submitted during

the arbitral proceedings.

iii. That the RMC was already covered by agreement item No.

3.8/DSR item No. 5.33, and the Arbitrator has erred in relying

upon item No. 5.37 of the DSR.

89. From a bare perusal of the submissions and findings recorded by the

Arbitrator, it is clear that the petitioner has only reiterated its arguments

which were contended before the Arbitrator. The relevant portions of the

Award read as under:

“4.1 Claimant's Submissions:

4.1.1 The Claimant submitted that during the execution of

works there were additional items/ substituted items which

were executed as per the directions/Instructions of the

Respondent. The Claimant submitted that for these extra

items of works it had submitted its rates along with detailed

rate analysis in accordance to contract clause 12 of GCC.

O.M.P. (COMM) 337/2017 Page 57 of 82

The list of extra item for which the rates are not finalized by

the Respondent are listed at page 93 of SOC.

4.1.2 The Claimant submitted that during the proceedings

as per the directions of AT, the Respondent finalized the

rates for almost all aforesaid extra items except for only two

items pending/disputed. One such item is Washed stone grit

plaster at sl.no.6 of the list of extra items at page 93 of SOC

and the other is Providing and laying in position Ready Mix

Concrete (RMC) at Sl.no.7 of the list of extra items at same

page.

4.1.3 The Claimant submitted that the external plaster is to

be washed stone grit plaster with ordinary stone chips of 10

mm nominal size. But the Claimant has executed the work

as per the drawings/ details for finishing works issued by

the Respondent at a later date during execution of work,

which envisages that the grit plaster with marble chips

instead of ordinary stone chips. As the marble chips are

much costlier in comparison to ordinary stone chips the

Claimant has submitted the extra item along with rate

analysis for extra costs towards costlier marble chips,

which is a substituted item.

4.1.4 The Claimant pleaded that the difference in market

rates for ordinary-stone and marble is huge. The Claimant

also argued that the rate quoted at the time of submission of

bid was based on stone chips only as per item nomenclature

intender. The Claimant argued that during execution the

claimant was asked to execute the item with marble chips

O.M.P. (COMM) 337/2017 Page 58 of 82

and hence it is legitimately entitled for above claim of extra

item of grit plastering using marble chips.

4.1.5 The Claimant during arguments on 21.11.2016

submitted a revised rate analysis as per then prevailing

market rate for the above extra item along with copy of

invoices to support the actual procurement rate of marble

chips and other materials for finalization of rates. The

Claimant submitted that the revised rate is Rs. 398.81 per

sqm. whereas it is being paid a rate of Rs. 266.66 per sqm.

And it is entitled for difference of rate of Rs.l32.15.

4.1.6 The Claimant submitted that another extra item

beyond the scope of work executed was of Ready Mixed

Concrete (RMC) which was not covered under BOQ item

provided in the contract. The Claimant argued that the

Respondent had wrongly incorporated the item from DSR

(Delhi Schedule of Rates) which does not cover the scope of

RMC. The DSR item under which the scope of work

executed for RMC is covered under DSR item no. 5.37.

4.1.7 The Claimant submitted that the Claimant has used

Ready Mixed Concrete manufactured in fully automatic

Batching plant and transported the same to job site by

transit mixers in accordance to contract clause 40, para

P(ii) of Special conditions of contract (SCC). For such an

item the rate is catered against item no.5.37 of DSR. The

Claimant argued that the item in BOQ under which this was

being paid which does not cover the scope of RMC.

4.1.8 The Claimant submitted that the scope of work for

RMC also includes transit mixer for transporting RMC to

O.M.P. (COMM) 337/2017 Page 59 of 82

site of work, having continuous agitated mixer which was

not covered under the scope of BOQ item 3.8. The Claimant

submitted that as the work was executed by the Claimant in

accordance to contract clause 40(P)(ii) of SCC and with

similar description of work as per DSR item 5.37, the

Claimant has claimed the RMC as substituted item. Hence

the Claimant as rightly claimed the aforesaid substituted

item as per the terms of the agreement as pleaded by

Claimant. The Claimant has submitted the photographs as

evidence of deploying RMC plant and Transit mixers for

executing concrete by RMC against the Respondent's

arguments that no RMC plant was deployed. The Claimant

submitted that it submitted a rate analysis for substituted

item of RMC for Rs. 4932.69 per Cu.m. and the payment

with BOQ rate of Rs. 4695.94 per Cu.m is being paid by the

Respondent. The Claimant argued that it is entitled for the

difference of these rates.

4.2 Respondent's submissions:

4.2.1 The Respondent submitted that as per Clause 12 of

GCC the Contractor may seek extra rate within fifteen days

of receipt of order or occurrence of items claim rates,

supported by proper analysis for the work. But the Claimant

was neither serious in raising the claims or submitting the

required details within 15 days of occurrence as per

contract clause and taken his own arbitrary time in

submitting the claims in the arbitrary format.

4.2.2 The Respondent submitted that the valid claims are

being scrutinized and processed soon after receiving the

O.M.P. (COMM) 337/2017 Page 60 of 82

desired supporting details from the Claimants and valid

claims are approved by the competent authority. But the

Claimant has unnecessarily pressurizing the Respondents by

claiming arbitrary claims in terms of extra items like using

RMC plants instead of BMC plants and extra payments of

sand stone cladding on DSR items against BOQ rates etc.

4.2.3 The Respondent submitted that the major part of the

claimed extra item consists of use of marble chips in Grit

plaster amounting to Rs.62.17 lac and use of RMC plants in

RCC work amounting to Rs. 84.17 lac. It is mentioned that

these claims were raised much after the occurrence of these

items at site and also without any supporting base.

4.2.4 The Respondent submitted that the item of grit plaster

is always done in a particular combination using various

type and colour of stone chippings in particular grading.

The work is being executed based on approved design and

colour combination of stone chippings which includes

marble chips also. The Claimants claim for additional

amount for using marble chips is denied as the same is also

covered under broad category of stone chips as per

agreement item no 11.13 which states "top layer 15mm

cement plaster 1:0.5:2 (1 cement : 0.5 coarse sand : 2 stone

chipping 10 mm nominal size)".

4.2.5 On the extra rate for RMC, the Respondent submitted

that the concrete was actually prepared using automatic

Batch Mix Concrete Plants and shifted to various location

of work sites using transit mixers in lieu of direct pumping

as specified in agreement item. The Respondent argued that

O.M.P. (COMM) 337/2017 Page 61 of 82

the Claimant used the transit mixer for his own convenience

and that was neither forced by the Respondents nor

beneficial for the progress of work. Also the Respondent

argued that the Claimant executed the RCC work using this

system and the Respondent allowed this to avoid any

hindrance in work. The extra claim is based on another

DSR item in which concrete is brought from fully automatic

RMC plants being owned by third party and approved for

construction by the Client.

4.2.6 The Respondent vide its written submissions of

arguments dt: 10-4-2017 sent few invoice copies of which

are already submitted by Claimant and on record.

4.2.7 The Respondent submitted that as there is no deviation

from agreement items there should not be any extra claim

permitted and hence the claim of the claimant is denied.

4.3 Findings of the AT:

4.3.1 This Arbitral Tribunal observes that the BOQ item

no.13. 72 for "washed stone grit plaster" consist of ordinary

stone chips of 10 mm nominal size and not with marble

stone chips. On being questioned it is ascertained that

nowhere in the tender documents usage of marble chips in

the grit plaster was mentioned. Obviously the bidders do

quote for this BOQ item is considering stone chips only. The

Respondent's instruction to use marble chips in place of

stone chips on the later date of execution of work is a

deviation to this BOQ item and hence a new rate to be

decided as per the terms of the contract. The Claimant is

entitled for above claim of extra item of grit plastering using

O.M.P. (COMM) 337/2017 Page 62 of 82

marble chips. The Claimant on 21.11.2016 submitted a

revised rate analysis based on the actual procurement of

marble chips and other materials. The copy of the same has

been received by the Respondent. The quantity is not

disputed as it is being paid under BOQ item.

4.3.2 With regards to other item of Ready Mix Concrete, the

Tribunal observers that in the given BOQ item of contract

the nomenclature of BOQ does not includes transit mixer

for transporting concrete to site of work, having continuous

agitated mixer. The Contract BOQ item stipulates as

follows:

"Providing and laying in position machine hatched,

machine mixed and machine vibrated design mix cement

concrete of specified grade for reinforced cement concrete

work including pumping of concrete to site of laying but

excluding the cost of centering...... as per IS: 9103 ....... as

per direction of Engineer-in-charge".

4.3.3 The DSR item under which the scope of work executed

for RMC is covered under DSR item no. 5.37 which

stipulates as follows:

"DSR item no. 5.37 Providing and laying in position ready

mixed M-25 grade concrete for reinforced cement concrete

work, using cement content as per approved design mix,

manufactured in fully automatic hatching plant and

transported to site of work in transit mixer for all leads,

having continuous agitated mixer, manufactured as per mix

design of specified grade for reinforced cement concrete

work including pumping of R.MC. from transit mixer to site

O.M.P. (COMM) 337/2017 Page 63 of 82

of laying, excluding the cost of centering........ as per IS:

9103 ...... . as per direction of Engineer-in-charge. "

4.3.4 Since the Claimant executed the work of scope similar

to DSR item no. 5.37 using automatic batching plant and

transit mixer having continuous agitated mixer for

transporting the RMC to site , the Claimant is entitled for

the rate as per DSR item no. 5.37 as claimed . The quantity

is not disputed as it is being paid under BOQ item.

4.3.5 The quantification based on the revised rates is

presented in pages 9109 and 9110 of Claimant's

submissions. This is amounting to total of Rs.1,18,89,226/-.

Award:

In the light of above findings the Claimant is entitled to

payment for these extra items. In the considered opinion of

Tribunal the Claim of the Claimant for payment ofthese

extra items is justified. Accordingly I award

Rs.1,18,89,226/- on this claim.”

(Emphasis Supplied)

90. The petitioner‟s challenge on the ground of non-compliance of Clause

No. 12.2 of the GCC stating the claims as “afterthought” is misplaced.

Most of the extra items were finalised during the proceedings, and that

only these two items were pending. For approval of grit plaster, the

respondent submitted revised analysis with invoices dated 21.11.2016.

For RMC, a detailed rate analysis for the substituted item was submitted

and considered but the same was disputed. Clause No. 12.2 of the GCC

prescribes that, for substituted/extra items exceeding the specified limits,

the contractor “may within fifteen days” claim revision of rates supported

O.M.P. (COMM) 337/2017 Page 64 of 82

by proper analysis, whereafter the Engineer‑in‑Charge is to fix rates on

the basis of market rates. Clause No. 12.2 of the GCC reads as under:

“12.2 Deviation, Extra Items and Pricing

In the case of extra item (s), the contractor may within

fifteen days of receipt of order or occurrence of the item(s)

claim rates, supported by proper analysis, for the work and

the Engineer-in-Charge shall within one month of the

receipt of the claims supported by analysis, after giving

consideration to the analysis of the rates submitted by the

contractor, determine the rates on the basis of the market

rates and the contractor shall be paid in accordance with

the rates so determined…”

91. The Arbitrator has considered similar Clause of the Contract namely

Clause No. 38 of the GCC and held that these kind of Clauses are

directory as no consequences for non-compliance are prescribed.

Additionally, the invoices, were duly submitted by the respondent and

there were no dispute to their authenticity. Thus, such non-compliance of

a procedural requirement cannot render a valid claim wrong.

92. Apropos the second ground i.e. the issue with regards to the grit plaster

component already being approved and paid, is misconceived and cannot

be used to assail the Award.

93. The Arbitrator‟s reasoning qua the issue of grit plaster is that the

Contract rate for “washed stone grit plaster” covered plaster using

ordinary stone chips, and everyone bid on that basis, but later the

department asked the respondent to use much costlier marble chips

instead, which changed the item into a different, higher specification job.

Since this was a deviation ordered by the petitioner, the Contract required

a fresh rate to be fixed, and the respondent did submit a revised rate

O.M.P. (COMM) 337/2017 Page 65 of 82

analysis on 21.11.2016 with invoices for marble chips, which the

department received, while the quantity of work itself was never

disputed, so the Arbitrator treated the marble chip work as an extra item

and granted the claim accordingly.

94. Therefore, the challenge of the petitioner does not shake the reasoning of

the Arbitrator, because what the Award has approved is the existence and

quantum of a substituted item (marble chips) with a documented rate

analysis, and not a second payment for work already compensated at

BOQ. Moreover, the petitioner failed to place on record any evidence

that the payment for the said item has been made twice. Hence, this Court

cannot reappreciate the cogent quantification and analysis which is

undertaken by the Arbitrator.

95. The petitioner‟s challenge with respect to the RMC is also unfounded,

misconceived and a mere reiteration of the contentions as raised before

the Arbitrator, the Arbitrator followed a clear, stepwise analysis for

adjudication, he first looked at the BOQ concrete item, which only covers

normal machine mixed concrete pumped to the site and says nothing

about using transit mixers. He then compared this with DSR 5.37, which

specifically covers ready mix concrete made in an automatic plant and

brought to site in transit mixers. Based on evidence such as photos and

the respondent‟s explanation, he held that the respondent had actually

used an RMC plant and transit mixers, so the work matched DSR 5.37

rather than the simpler BOQ item. On that basis, he applied the DSR 5.37

rate as a substituted rate but kept the quantity the same, as it was not in

dispute. Thus, the Arbitrator has relied on evidence placed on record to

conclude that the scope of work executed by the respondent is that which

is covered by DSR 5.37. The view of the Arbitrator is plausible and

based on reasons.

O.M.P. (COMM) 337/2017 Page 66 of 82

96. In these circumstances, the Award on Claim No. 4 is reasoned and

evidence based. It does not disclose any perversity, patent illegality or

disregard of the contractual terms, and accordingly, no interference is

warranted under Section 34 of the Act.

Claim No. 5: Revised rates for individual items of work the quantities

of which had exceeded beyond limit.

97. The Claim No. 5 pertains to the payment at revised rates for certain items

where the executed quantities exceeded the contractual deviation limits

prescribed under Clause No. 12 of GCC, which is 30% of the trade, and

beyond this limit the respondent is entitled to seek revision of rates for

particular trade/items i.e. the prevailing market rates. Under this

mechanism, the original BOQ rate ceases to apply and the respondent can

seek revision of the rates (market rates) for that particular item/trade.

98. In this backdrop, the petitioner has challenged the Award of the

Arbitrator apropos this claim on the ground that revised rates apply only

for deviation of quantities beyond the deviation limit and the same needs

to be claimed strictly as per the Clause No. 12.4, which was not claimed

by the respondent despite being fully aware of the scheme of clause 12.

Further, the Award apropos this claim is also assailed on the ground that

the Arbitrator has inconsistently first used the word “trade” to mean

“building trade” and then stated the word to be vague, to proceed to

award the claim on flawed quantification without scrutinizing each item

or applying the Bhopal Cost Index. The petitioner has relied upon a

similar arbitral proceeding qua Package-1 of AIIMS Rishikesh to buttress

its submission that the term “trade” refers to the subhead for allowing the

market rate under clause 12 of the agreement. The relevant Clause No.

12.4 reads as under:

O.M.P. (COMM) 337/2017 Page 67 of 82

“12.4 GCC: The Contractor shall send to the Engineer-in-

Charge once in every three months, an upto date account

giving complete details of all claims for additional payments

to which the contractor may consider himself entitled and of

all additional work ordered by the Engineer in Charge

which he has executed during the preceding quarter failing

which the contractor shall be deemed to have waived his

right. However, the Superintending Engineer may authorize

consideration of such claims on merits. "

99. At this stage it is important to peruse the relevant portions of the Award

and findings, which read as under:

“5.3 Findings of the AT:

5.3.1 In the contract the Clause -12 is on

"Deviations/Variations Extent and Pricing ".Under this sub

Clause 12.2 is on "Deviation, Extra items and Pricing ". In

this the terms and conditions are stipulated in subhead

clause "Deviation, Deviated Quantities, Pricing". This

clause stipulates that in case the contract items exceed the

limits laid down in Schedule - F, the contractor can claim

revision of rates supported by the proper analysis of rates

for the work in excess of the above mentioned limits. 5.3.2

The Arbitral Tribunal observers that the provisions in the

contract agreement for deviation limit under Clause -12 of

Schedule F which reads as below: Clause 12:

12.2 & 12.3

Deviation Limit beyond which clauses

12.2 & 12.3 shall apply for building work. 30% of

trade

O.M.P. (COMM) 337/2017 Page 68 of 82

5.3.3 The word trade has a meaning based on the context of

usage. The Dictionary meaning of trade refers to

commercial activity. In general practice it relates to the

business. For instance, when a phrase like "trade practice"

is used, it refers to the practice prevailing in a particular

kind of industry or trade.

5.3.4 Looking from the said angle, the reference to "Trade"

can only be construed as a reference to the construction

work as a whole that is involved in the subject contract.

What it matters most is how the parties understood and

meant by the word "Trade" while entering in to contract

with respect to deviation limits specified in schedule-F for

operation of Clause -12. There is no definition of the word

'Trade' in the contract agreement or how it is structured for

deviation in quantities. The Claimant's arguments are that

the deviation limit is on individual item quantities while the

Respondent during arguments stated that the limit is

applicable for group of subhead items in BOQ. It is clear

that the issue is of interpretation. When any word/phrase

built in any clause gives scope for multiple interpretations

there seems to be an ambiguity which needs to be

interpreted.

Award:

After carefully considering the facts, contractual provisions,

evidence on record and the legal principles, the Arbitral

Tribunal is of the view that deviation limit needs to be

applied on item quantities individually. Hence this Claim is

awarded in favour of the Claimant.

O.M.P. (COMM) 337/2017 Page 69 of 82

The abstract quantification of claim presented is for Rs.

4,23,76,331/-in pages 863 to 875 of Claimant's submissions

CV-6 . The item quantities are not disputed. As can be seen

from quantification details presented, for most of the

deviated items beyond the limits, the rates are claimed

based on DSR schedule rates pertaining to 2012, the period

of execution of work. For some items of deviated quantities,

market rates claimed for deviated quantities. Since there is

no evidence submitted for market rates (MR), the revised

rates cannot be considered for such items. Deleting such

MR items, the quantification works out to Rs.4,10,11,761 /-.

Hence an amount ofRs.4,10,11,761/- is awarded on this

Claim.”

(Emphasis Supplied)

100. The first ground to assail this claim of the Award i.e. non-compliance of

the Clause No. 12.4 of the GCC, is misconceived as the Arbitrator has

already held similar Clause No. 38 of the GCC to be directory, the Clause

No. 12.4 being similar in nature is also directory. Hence, the same cannot

be used as a ground to defeat an otherwise substantive and legitimate

claim.

101. In the second ground regarding the interpretation of the term “trade”, the

respondent argued that the term should be interpreted to mean individual

BOQ items, while the petitioner wanted it to be interpreted as broader

BOQ sub-heads. The Arbitrator categorically observed that the term is

not defined in the contract and is ambiguous and both interpretations are

tenable. However, the Arbitrator proceeded to apply it to individual item

quantities by relying on facts, contractual provisions, evidence on record

and the legal principles. The Arbitrator deduced this interpretation by

O.M.P. (COMM) 337/2017 Page 70 of 82

relying on evidence and making a finding as to how the parties

understood the term before and during the execution of the Contract.

102. To my mind, this reasoning of the Arbitrator strongly rooted in

appreciation of evidence by the Arbitrator himself. The view of the

Arbitrator is a plausible one supported by evidence and the same cannot

be reappreciated by this court under Section 34 of the Act.

103. The findings of the Arbitrator qua the quantification of the Claim are also

cogent and reasonable. The respondent‟s computation was of Rs.

4,23,76,331/‑, supported by detailed tables, and importantly the item

quantities themselves were not disputed by the petitioner. For most of the

excess quantities beyond the 30% limit, the respondent had based its

revised rates on the DSR schedule for 2012. For some items it had

claimed market rates without submitting corroborating evidence. The

Arbitrator expressly refused to accept these unsupported market rates,

and removed those items from the computation and arrived at Rs.

4,10,11,761/‑, which it awarded.

104. In this view of the matter, the quantification of claim by the Arbitrator by

applying DSR 2012, is not merely approval of the claim as filed by the

petitioner but there is proper application of mind on part of the Arbitrator

thereby, rejecting the unsubstantiated market rates. The Arbitrator has

made categorical cogent findings and the petitioner by way of raising this

challenge to the Award more particularly this claim is trying to persuade

this court for reappreciation of its evidence, which is not permissible

under Section 34 of the Act.

Claim No. 10: Loss on locked up deposits Bank Guarantees due to

Prolongation of Contract.

105. Claim No. 10 pertains to the loss caused due to locked up performance

bank guarantee due to the prolongation of the Contract. The respondent

O.M.P. (COMM) 337/2017 Page 71 of 82

claimed that since the delay in execution is not attributable to it, the loss

sustained by it like loss of interest, cost incurred on extension, etc. was

payable.

106. The petitioner‟s objection is that the Clause No. 1, specifically Clause

No. 1(ii) of the GCC provides that the performance bank guarantee

needed to be kept valid up to the stipulated date of completion plus 60

days and thereafter the same needed to be returned without any interest.

Thus, the petitioner is not liable to pay any interest/charges. The Clause

No. 1(ii) of the GCC reads as under:

“The Performance Guarantee shall be initially valid up to

the stipulated date of completion plus 60 days beyond that.

In case the time for completion of work gets enlarged the

contractor shall get the validity of Performance Guarantee

extended to cover such enlarged time for completion of

work. After recording of the completion certificate for the

work by the client, the Performance guarantee shall be

returned to the contractor, without any interest.”

107. The operative portions of the Award with respect to Claim No. 10 reads

as under:

“10.3 Findings of the AT

10.3.1 ….

10.3.2 As per the above provision in the contract the

Claimant has to keep the Performance Guarantee valid till

the completion of work plus 60days beyond that.

I0.3.3 Since the contract period got prolonged due to

reasons not attributable to Claimant against stipulated

period of 15months,the Claimant is to be compensated for

O.M.P. (COMM) 337/2017 Page 72 of 82

the additional expenditure incurred on account of extension

of BG in the extended period of contract as claimed.

Award:

After deliberating in detail and considering all the

submissions of the parties, I am of the view that the

Claimant is entitled for reimbursement of additional

expenditure incurred on account of commission charges for

extension of Performance BG in the extended period of

contract.”

108. The Award, notes that the bank guarantee was in fact kept alive beyond

the contractually contemplated period solely because of prolongation not

attributable to the respondent. In treating those additional charges as a

compensable component for the delay in execution, the Arbitrator has

only made a logical/reasonable/lawful conclusion. The same is supported

by the observations made in the above sections of this judgment that

compensation is not barred unless clearly prohibited by the contractual

term. Therefore, the reasoning of the Arbitrator is well founded and does

not disclose any patent illegality or any other ground warranting

interference under Section 34 of the Act.

Claim No. 12: Escalation Amount on material payable due to

prolongation of Contract.

109. This claim pertains to price escalation due to the prolonged period of the

Contract. The respondent claimed that it is entitled to such price

escalation because there is substantial increase in burden due to the

increased cost of construction material.

110. The petitioner assails the Award of this claim on the ground that the

claim is in violation of the terms of the Contract. Paragraph No. 3 of

“preamble to the bill of quantities” stipulates that the quoted rates shall

O.M.P. (COMM) 337/2017 Page 73 of 82

not be subject to any variation whatsoever including the extended period,

the relevant paragraph reads as under:

“Rates quoted shall be firm and shall not be subject to any

price variation due to increase in labour wages, cost of

materials, etc., or any other price variations due to any

reason whatsoever whether during the stipulated period of

execution or during the extended period of completion if

any.”

111. The relevant portions of the Award with respect to Claim No. 12, read as

under:

“12.3 Findings of the AT :

12.3.1 I have carefully considered the above arguments of

both the parties, the documents and evidence produced

before me.

12.3.2 The date of commencement of the work was on

27.05.2010. The time for completion was 15months and the

schedule date of completion was 26.08.2011. In the Award

against Claim no. 1, it has been held that the delay causes

are not attributable to Claimant.

12.3.3 This claim is for escalation amount on material due

to prolongation of contract worked out in the prolonged

period up to 42nd RA bill submitted (March 2015). The

detail of claim has been given by the Claimant in CV -27 of

the Statement of Claims.

12.3.4 As can be seen from the records, as per terms of the

contract Schedule F Clause 10CC is not applicable since

the contract stipulated duration is 15 months. The Hon'ble

Supreme Court in the case of Union of India Vs. Saraswat

O.M.P. (COMM) 337/2017 Page 74 of 82

Trading Agency and Ors. (2009) 16 SCC 504 has

categorically held that escalation is a normal incidence in a

prolonged contract and even in the absence of an escalation

clause, such escalation is payable. The Claimant has

worked out price escalation for materials following the

formulae based methodology as per Clause 10(CC) of

CPWD with base price and current indices of whole sale

price indices published.

12.3.5 It is a general industry practice that formula based

price escalation provisions are commonly adopted in

construction contracts to compensate for increase for rise in

prices in materials. Generally for building contracts CPWD

and such public departments provide formulae based price

adjustment provisions popularly referred as escalation

clauses. The formula based methodology do consist of

component wise weightage for materials, labour based on

the type of construction. For building works for the cement ,

steel the escalation is considered separately and for rest of

the construction materials under the head 'other materials'

a component of 30% to 40% provided for and around 25%

considered as labour component.

But the Claimant has claimed 75% component stating that

for cement, steel he did not claim such escalation separately

and included in this weightage component. Considering the

facts on record 40% component for all materials portion put

together is found genuine and justified. The quantification

of formulae based escalation with 75% component

weightage is not disputed. Thus the amount payable with

O.M.P. (COMM) 337/2017 Page 75 of 82

40% component weightage for materials can be calculated

proportionately.

Award:

After deliberating in detail and considering all the

submissions of the parties, I am of the view that the

Claimant is entitled for price escalation on materials due to

prolongation of contract. The Claim on escalation of

materials is awarded with a component of 40% weightage

in the formula exhibited. Thus the amount payable to

Claimant towards price escalation on materials works out

to Rs.6,21,69,860/-.”

112. The Arbitrator recorded that the causes of delay were not attributable to

the respondent, and that Claim No. 12 is confined to escalation in

material costs during the prolonged period up to the 42

nd

RA bill i.e.

March 2015. Thereafter, relying on the Hon‟ble Supreme Court‟s

decision in Saraswat Trading Agency (Supra), the Arbitrator noted that

escalation is a normal incident of a prolonged contract and that, even in

the absence of a formal escalation Clause, a respondent can in principle

be compensated where the contract period stands substantially extended

for reasons not attributable to it.

113. The petitioner‟s challenge to the quantification of claim by application of

10CC of CPWD, is also misconceived. Despite, the scheduled timeline

for execution of the Contract i.e. 15 months rendering Clause 10CC of

CPWD inapplicable, the Arbitrator used this relevant formula based

methodology as a fair quantification method for escalation for materials

during the prolonged period, wherein delays were not attributable to the

respondent. Additionally, the reduction of claimed 75% component to

40% reflects reasoned approach which is based on industry practice.

O.M.P. (COMM) 337/2017 Page 76 of 82

Thus, no interference is warranted with this cogent reasoning of the

Arbitrator.

114. The reasoning of the Arbitrator is not in violation of the terms of the

Contract and is supported by law. The Award of this claim is not

suffering from any vice enumerated under Section 34 of the Act, thereby

warranting interference.

Claim No. 13 and 14: Interest on delay in payment of RA bills and

Claim Nos. 2 to 12.

115. The Claim No. 13 pertains to the interest on delayed payments of RA

bills and the same was adjudicated by the Arbitrator with Claim No. 1 in

the final Award. The relevant findings of the Arbitrator read as under:

“AWARD:-

After deliberating in detail and considering all the

submissions of parties, documents and evidence filed, the

Tribunal awards that the withheld amount of Rs.

2,95,79,465/- on account of non achievement of milestones

from the Claimants bill shall be refunded to the Claimants.

The Claimants have claimed interest @ 15 % P A for the

above claim amount separately under Claim no.13. From

the records placed before me I find that the amount was

withheld while releasing payments for 33,34 th RA bills on

18-2-2014. The Tribunal Awards the simple interest at a

rate 12% per annum on the above amount to be refunded

from the date of recovery i.e.l8.2.20 14 to the date of the

award.”

116. The Claim No. 14 pertains to the payment of pendente lite interest on

the claims raised by the claimant and adjudicated in the final Award

O.M.P. (COMM) 337/2017 Page 77 of 82

i.e., from Claim Nos. 2 to 12 at the rate of 10% per annum. In this

regard the relevant portions of the Award read as under:

“Claim No. 14:

Loss of Interest on the Claimed amounts for Claims no.2

to 12@ 10% per annum:

14.1 Claimant's Submissions: The Claimant submitted

that it had been deprived of legitimate entitlements which

were due to it at appropriate time. According to the law,

any party which is deprived of the use of money has a

right to be compensated for deprivation. The Claimant

submitted that the Section 31 (7) of the Arbitration act

empowers the Arbitrator to award past , pendent-lite and

future interest also. The Claimant cited the case law of

Indian Hume Pipe Co. Ltd Vs State of Rajasthan (2009),

10 SCC 187 on the issue. The Claimant submitted that it

claimed 10% interest on Claims no. 2 to I2 @ 10% PA

from cause of action and future interest 18% P A.

14.2 Respondent's Submissions:

The Respondent submitted that this claim is not

admissible in view of the specific reference to the terms

and conditions of the contract which have been referred

by Respondent in refuting the Claims in SOD. Further the

Respondent submitted that the interest claim is not

justified and not agreed to.

Award:

I. A simple interest of 10% per annum, pendent-lite i.e.

from date of invocation of arbitration, 13.I2.20I4 to the

O.M.P. (COMM) 337/2017 Page 78 of 82

date of the Award is awarded on the awarded amounts for

Claims no. 2, 3,4,5, 10 and I2.”

(Emphasis Supplied)

117. The petitioner assails the award of pendente lite interest for Claim No. 2,

3, 4, 5, 10, and 12 under Claim No. 14 and interest awarded on delay in

payments of RA bills adjudicated under Claim No. 13, on the ground that

the same is in violation of the judgment delivered by the Hon‟ble

Supreme Court in the case of M/S Krafters Engineering & Leasing Pvt.

Ltd. (Supra), and also in violation of the conditions of the Contract. The

Contract does not contemplate award of interest and the same is liable to

be set aside.

118. It is pertinent to note that Section 31(7)(a) of the Act empowers an

arbitral tribunal, unless otherwise agreed by the parties, to award interest

at such rate as it deems reasonable, on the whole or any part of the

amounts due, for the whole or any part of the period between the date on

which the cause of action arose and the date of the award. Section

31(7)(b) then provides that, unless the award otherwise directs, the sum

directed to be paid by the award shall carry interest from the date of the

Award to the date of payment. The relevant portions of Section 31(7) of

the Act read as under:

“(7) (a) Unless otherwise agreed by the parties, where and

in so far as an arbitral award is for the payment of money,

the arbitral tribunal may include in the sum for which the

award is made interest, at such rate as it deems reasonable,

on the whole or any part of the money, for the whole or any

part of the period between the date on which the cause of

action arose and the date on which the award is made.

O.M.P. (COMM) 337/2017 Page 79 of 82

(b) A sum directed to be paid by an arbitral award shall,

unless the award otherwise directs, carry interest at the

rate of two per cent. higher than the current rate of interest

prevalent on the date of award, from the date of award to

the date of payment.

Explanation.—The expression “current rate of interest

shall have the same meaning as assigned to it under clause

(b) of section 2 of the Interest Act, 1978 (14 of 1978).”

119. The decision of the Hon‟ble Supreme Court in UHL Power Company

Ltd. v. State of Himachal Pradesh

19

reinforces the scope of arbitral

discretion on interest and the limited scope for judicial interference. The

arbitral tribunal there had granted pre-claim compound interest and future

interest on the awarded amount, which the Division Bench of the High

Court modified relying on State of Haryana v. S.L. Arora & Co

20

., the

Hon‟ble Supreme Court relied on Hyder Consulting (UK) Ltd. v. State of

Orissa

21

, to hold that the High Court‟s approach was erroneous and then

restored the Arbitrator‟s award on interest expressly recognising that,

unless prohibited by contract, an arbitral tribunal may grant compound

interest. It is a settled position of law that a court cannot substitute its

own view for that of the Arbitrator, so long as the Arbitrator‟s view is a

plausible one. Also, the Hon‟ble Supreme Court in the case of Ferro

Concrete Construction (India) (P) Ltd. v. State of Rajasthan

22

, traced

down the changes in the power of the Arbitrator to award interest from

the 1940 act and went on to summarise the current position of this power

in the following words:

19

(2022) 4 SCC 116.

20

(2010) 3 SCC 690.

21

(2015) 2 SCC 189.

22

2025 SCC OnLine SC 708.

O.M.P. (COMM) 337/2017 Page 80 of 82

“13. From the above extracted paragraphs, the decision of

the 3-judge bench in the First Ambica case (supra) can be

stated as follows. The Arbitrator's power to grant interest

would depend on the contractual clause in each case, and

whether it expressly takes away the Arbitrator's power to

grant pendente lite interest. This would have to be

determined based on the phraseology of the agreement,

clauses conferring powers relating to arbitration, the nature

of claim and dispute referred to the Arbitrator, and on what

items the power to award interest is contractually barred

and for which period. Further, a bar on award of interest for

delayed payment would not be readily inferred as an express

bar to the award of pendente lite interest by the Arbitrator.

14. We find that the position of law laid down in paragraph

24 of Reliance Cellulose (supra) is in line with the position

of law laid down in the First Ambica case. Both decisions

emphasise the need for an express contractual bar on the

payment of pendente lite interest to create a bar on the

Arbitrator from awarding interest. They also emphasise that

a bar on the Arbitrator's power would depend on the

phraseology of the contractual clause in that case….”

120. It is a settled position of law that the Arbitrator being a creation of an

agreement cannot exceed the limits of the agreement. Thus, if there is

any provision contained in the contract which prohibits the award of

interest then the Arbitrator cannot exceed its jurisdiction and go beyond

the terms of the contract to award interest.

O.M.P. (COMM) 337/2017 Page 81 of 82

121. The petitioner however in the present case has challenged the Award of

this claim without specifying any contractual Clause which specifically

prohibits the award of interest by the Arbitrator.

122. Therefore, the award of interest by the Arbitrator under this claim is well

founded and in exercise of the statutory powers conferred upon the

Arbitrator by the Act itself.

Counter Claim Nos. 1 to 4

123. The petitioner‟s challenge to the adjudication of its counter claims by the

Arbitrator is bereft of reasoning and unsubstantiated by cogent evidence.

The petitioner has not made any submissions before this Court so as to

warrant interference on the limited grounds enumerated under Section 34

of the Act and has merely made a fleeting contention that the counter

claims were erroneously rejected by the Arbitrator. At this stage, it is

pertinent to note that the counter claims raised by the petitioner are of the

following description:

Counter Claim

No. 1

Establishment cost for prolonged execution of works:

Rs. 19.32 Cr.

Counter Claim

No. 2

Cost due to Alternate accommodation for Nursing

students due to non-completion of Nursing Hostel: Rs.

0.32 Cr.

Counter Claim

No. 3

Establishment cost for HVAC commissioning due to

delay in Package-I works: Rs. 1.40 Cr.

Counter Claim

No. 4

Escalation being paid to other agencies due to delay in

completion of Buildings Rs. 2.47 Cr.

124. Since, the delays leading to the prolongation of Contract were clearly

held attributable to the petitioner, these co-related counter claims flowing

from the same cause were rejected by the Arbitrator. This Court finds no

O.M.P. (COMM) 337/2017 Page 82 of 82

reason to interfere with the findings of the Arbitrator regarding

attribution of delays in execution of works under the Contract and

consequently, the findings of the Arbitrator qua the aforesaid

counterclaims also deserves to be upheld. Moreover, the Arbitrator in its

Award has recorded the submissions of both the parties with respect to

counter claims and then made relevant findings. Additionally the

Arbitrator also held that none of the counter claims were supported by

any documentary evidence. Thus, no interference by this court is

warranted.

CONCLUSION

125. For all the aforesaid reasons, and having found no ground within the

confines of Section 34 of the Act to set aside the reasoned findings of the

Learned Sole Arbitrator, I hold that the impugned Award does not suffer

from perversity, patent illegality or any other recognised vice warranting

interference.

126. The petition is dismissed in the aforesaid terms, along with pending

applications, if any.

JASMEET SINGH, J

APRIL 09

th

, 2026/SS