Union of India & Anr v. Chenab Construction Joint Venture

S. RAVINDRA BHAT, J

DEEPA SHARMA, J OCTOBER 29, 2015

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 08.10.2015 Pronounced on: 29.10.2015 + FAO (OS) 302/2010, C.M. APPL.18098/2014 UNION OF INDIA AND ANR. …..Appellants Through: Sh. J.K. Singh, Advocate. Versus CHENAB CONSTRUCTION JOINT VENTURE ……Respondent Through: Sh. Navin Chawla with Sh. Nitin Gupta, Sh. Aditya. V. Singh and Sh. Amit Gupta, Advocates. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MS. JUSTICE DEEPA SHARMA MR. JUSTICE S.RAVINDRA BHAT % 1. The Union of India ("UOI") in this appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereafter "the Act") questions the judgment and order of the learned Single Judge dated 05.03.2010 in OMP 44/2010. 2. The brief facts are that the respondent (hereafter referred to as "the claimant") was awarded a contract of design and construction of viaduct for a Single Line BG Railway track in Zone E-18 on the Jammu-Udhampur Rail Link Project. The work included soil investigation, detailed designing and construction of foundations, piers and abutments. The formal contract Page 2 document in the form of agreement was executed on 17.02.1996. Upon completion of contract, disputes arose between the parties. The claimant demanded a sum of `498.48 lakhs. Since the dispute could not be resolved amicably, it was referred, in terms of Clause 64 of the General Conditions of Contract No.3, to the Arbitral Tribunal. The Tribunal awarded the claimant a sum of `4,28,56,537.07 and `99,73,131 (i.e. interest @ 9% from the date of final bill – which was 15.05.2006). 3. The UOI felt aggrieved and preferred objections under Section 34, being OMP 44/2010. This pertained inter alia to Claim Nos. 26 and 8; additional claims and the interest. When the objections were heard – as is evident from Para 2 of the impugned order- arguments were addressed only in respect of Claim Nos. 6, 9, 10, 26 and 8; additional Claim Nos. 1, 6 and the award of interest. The discussion in the impugned judgment reveals that the learned Single Judge considered the submissions and went into reasons recorded in the award in respect of Claim Nos. 6, 9 and 10 and was of the opinion that no fault could be found with them. Thereafter, learned Single Judge proceeded to deal with the "Price Variation" Clause embodied in Claim Nos. 26 and 8. Here, the UOI had urged firstly that these were "excepted matters" and consequently should not have been considered and award rendered by the Tribunal. On the merits, it was urged that since the specific price variation conditions allowed 15% for the work, as the variation, the award for the amount of `1,98,14,719.57 was unjustified. 4. The learned Single Judge dismissed both the submissions holding that: (a) the question itself was referred by the UOI for arbitration, and (b) that work beyond the period agreed, and upon extensions, could not be Page 3 considered as falling within the contract and that consequently the claim for price variation could not be limited to only 15%. Likewise, with respect to additional claim no.1, i.e. refund and recoveries made by the petitioner for certain equipment, learned Single Judge noted that reliance upon additional claim no.6 and upon a condition that amounts could be withheld in respect of a money payable under some other contract could not apply in the circumstances. The UOI's objection with regard to payment of interest – based upon its reliance on Clause 16(2) was rejected after due consideration of the decisions cited on its behalf. 5. Learned counsel for the UOI has urged that the findings with respect to excepted matters, are erroneous. He argued that a plain reading of the conditions of the contract would show that the disputes relating to price variation were non-arbitrable. Learned counsel relied upon the judgment of the Supreme Court in General Manager, Northern Railway v. Sarvesh Chopra AIR 2002 SC 1272. It was highlighted that like in that case, the conditions with respect to price variation were specifically excepted