M/S B R Arora & Associates Pvt Ltd v. Airports Authority of India

PRATEEK JALAN, J

S. RAVINDRA BHAT, J MARCH 27, 2019 ‗b/pv'

* IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 31.10.2018 Pronounced on: 27.03.2019 + FAO (OS) COMM. 246/2018 & CM Appl. 45466-67/2018 M/S B R ARORA & ASSOCIATES PVT LTD ..... Appellant Through: Mr. Vaibhav Dang, Advocate. versus AIRPORTS AUTHORITY OF INDIA ..... Respondent Through: Mr. Sunil Ahuja, Advocate. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE PRATEEK JALAN MR.JUSTICE PRATEEK JALAN % 1. The appellant is aggrieved by a judgment of a learned Single Judge dated 03.7.2018, insofar as an arbitral award dated 30.07.2015 has been set aside in respect of two claims awarded in its favour. 2. The arbitration arose out of an agreement dated 04.10.2007 between the parties, by which the appellant was awarded a contract by the respondent Airports Authority of India (hereinafter, "AAI") for the 'Expansion of Apron, Construction of Additional Link Taxi Way, Helicopter Parking Bay and allied works at Bagdogra Airport'. The arbitration culminated in an award dated 30.07.2015 in favour of the appellant on various heads of claims. On AAI's petition under Section 34 of Arbitration & Conciliation Act, 1996 (hereinafter, "the Act"), the learned Single Judge has set aside the award in favour of the appellant in respect of two claims, being an award of ₹64,65,828/- on account of claim No.3 (overhead expenditure during the extended period of contract) and an award of ₹33,05,706/- on account of claim No.4 (loss of profits due to reduction in these scope of work). Facts 3. Pursuant to a notice inviting tender for the aforesaid work AAI opened the bids on 06.08.2007 and accepted the bid of the appellant in the sum of ₹18,53,20,401.33. An acceptance letter was issued on 20.09.2007 and the contract signed on 04.10.2007. The work was to commence from 30.09.2007 and be completed by 29.09.2008. There was an admitted delay of four months in handing over of the site to the appellant and time for completion of the work was extended until 19.09.2009. In the meanwhile, AAI had sent revised drawings/plan/BOQ to the appellant on 04.01.2008 which contemplated a significant reduction in the scope of the work. The appellant protested and quantified the reduction at approximately 31% of the original scope of work. By a further communication dated 20.04.2009, AAI informed the appellant about the deviation in cost and stated that the project would be valued at approximately ₹13 crores. The appellant raised a final bill which was paid on 16.09.2010, but not in full. 4. This led to the arbitral proceedings before a sole arbitrator, Sh.Pradeep Kumar Gupta, a retired Special Director of the CPWD. The appellant raised 11 claims and AAI raised five counter claims. As stated hereinabove, we are concerned with claims No.3 and 4 of the appellant's claims, which were for reimbursement of overhead expenses during the extended period of contract, and loss of profits due to the reduction in the scope of work, respectively. 5. The Arbitrator awarded ₹64,65,828/- in respect of claim no. 3 on the finding that the delay in completion of the contract was attributable to AAI. The extension of time granted by AAI for completion of the contract without any compensation, was held to be indicative of the fact that the appellant would also be entitled to the compensation sought in claim No.4 and consequently, a sum of ₹33,05,706/- was awarded on this ground. 6. In the impugned judgment, on the question of overheads, the learned Single Judge has found that the Arbitral Tribunal calculated the sum due to the appellant on the basis of the original contract value, rather than the reduced value. Although the Arbitrator had found AAI to be in breach of its contractual obligations, and thus liable to compensate the appellant for the overheads incurred by it during the extended period of contract, the learned Single Judge set aside the award on the aforesaid ground. As far as the award of loss of profit is concerned, the Award was set aside on the ground that it is co