TMI Blog2012 (11) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sr. Adv. With Ms.Padma Priya, Ms. Meenaksh Sood and Ms. Preeti Gupta, Advocates for the Appellants. Through: Mr. Pravin H Parekh, Sr. Adv. With Mr. Sameer Parekh, Mr. D.P. Mohanty, Mr. Vishal Prasad, Ms.Ritika Sethi and Ms. Suman Yadav, Advocates for the Respondents. ORDER: 1. A contract was awarded by the appellant to the respondent/contractor for construction of the Allahabad by-pass project in U.P. vide agreement dated 02.06.2004. The project stands completed. However, certain disputes arose inter se the parties qua different aspects of the contract and in view of the arbitration clause, the same were referred to arbitration. We may note that the appellant has a Dispute Resolution Board (DRB) consisting of technical experts in the field, to which matters are first referred to. Since the respondent was not satisfied with the opinion of the DRB, in terms of the agreement, the respondent could and, therefore, did invoke the arbitration. 2. The disputes in the present case culminated in a reference to arbitration of three technical persons who have made the award dated 30.03.2010. The award is unanimous on certain aspects while, on other aspects, there is a dissen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions as under: 2. The learned Single Judge has noted that the challenge to the award was primarily made in respect of Claims No. 1 3, i.e., the claim for payment of additional cost caused by subsequent notification increasing sales-tax on fuels from 2.5% to 5% and the claim for payment of additional cost caused by subsequent notification increasing royalty on soil, sand and boulders, which were allowed by the Arbitral Tribunal, apart from the grant of interest. The learned Single Judge has observed that these issues are covered by Division Bench judgments of this Court in National Highways Authority of India Vs. ITD Cementation India Limited, (2008) 100 DRJ 431 (DB), and M/s OSE-GIL J.V. Vs. National Highways Authority of India, FAO(OS) 347/2010 decided on 09.02.2011. The learned Single Judge rejected the appellant's submission that the Court should await the decision of the Supreme Court in Special Leave Petitions preferred by the NHAI against the aforesaid decisions of the Division Bench, being S.L.P. (Civil) No. 21466/2011 titled National Highways Authority of India Another Vs. M/s OSC-GIL J.V. and S.L.P. (Civil) No. 9799/2010 titled National Highways Authority of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Division Bench in National Highway Authority of India vs- ITD Cementation India Ltd. in FAO(OS) 216/2007. We are informed that the impugned Order follows this decision of the Division Bench, as the Learned Single Judge was bound to do. The contention is that since a Special Leave Petition has been preferred against the decision in FAO(OS) 216/2007, this Court ought to adjourn proceedings to await a Judgment of Their Lordships in that Appeal. Mr Nandrajog, learned Senior Counsel for the Appellant, states that Leave has been granted by the Hon'ble Supreme Court. We cannot subscribe to the submissions made by learned Senior Counsel for the Appellant. In our view the proper course is to decide the present Appeal on the parity of reasoning adopted by the Division Bench in FAO(OS) 216/2007. Taking any other approach would lead not only to multiplicity of proceedings but also to a legal anathema, which is, the likelihood of different views being expressed by co-ordinate Benches. Needless to state, the Appellant before us will not be precluded from filing a Special Leave Petition before the Hon'ble Supreme Court. In such a situation, we are in no manner of doubt that both the SLP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come to the conclusion based on facts, which aspect is not required to be interfered with. We, thus, find no merit qua this aspect of the appeal. The award of compound interest even post the award period and that too on both the principal and the interest amount: 8. Learned senior counsel for the appellant sought to make a grievance that the arbitral tribunal granted 12% compound interest for the pre- reference, pendente lite and future period. It is, however, not in dispute that there is a contractual provision for grant of compound interest and thus the appellant cannot make a grievance regarding the aspect of grant of compound interest. The contractual provision itself states that interest should be granted at 12% with monthly rates. The relevant clause in this behalf is clause 60.8(b) of the Conditions of Particular Application‟ (CoPA), which reads as under: (b) In the event of the failure of the Employer to make payment within the times stated, the Employer shall pay to the Contractor interest compounded monthly at the rate(s) stated in the Appendix to Bid upon all sums unpaid from the date upon which the same should have been paid in the currencies in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond ash being used within that casing. It is submitted that an embankment cannot be made only using ash as it would fly away when dry. 13. There is, undisputedly, a different method of calculation employed for computation of payment to be made for embankment which may be made exclusively of soil, and of both soil and pond ash. It is also pointed out to us that the cost of pond ash is much higher (being more costly to bring it to the site) than the soil. The relevant clause in this behalf is clause 2.02 of the Bill of Quantity (BoQ) dealing with Bill No.2-Earth Work, which reads as under: BILL OF QUANTITIES BILL NO.2 - EARTHWORK Item Description Unit Estimated Unit Rate (INR) Amount Quantity In words In In words In figures figures 2.02 Construction of embankment with approved material complete as per Technical Specifications Clause 305 with all leads lifts a) with soil CuM 1198000 ₹ 102 ₹ 122,196,000 one twelve hundred crore and two twenty one only lakhs ninety six thousand only b) with pond CuM 3252000 ₹ 252 ₹ 819,504,000 ash two eighty one hundred crore and fifty ninety five two only lakhs four thousand only 14. The controversy which has ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two possible interpretations, where the view of the arbitrators ought to prevail. 18. It is submitted before us that there could be different ratios of pond ash and soil used while making the embankment for different stretches. Thus, some areas may have a ratio of 9:1, while the others may have a ratio of soil as high as 3:1 qua pond ash vis- -vis the soil. The other aspect emphasized is as to the manner in which the contract was understood by the parties themselves inasmuch as it is the respondent who submitted the Interim Payment Certificates (IPC) for a period of 30 months on the basis of the understanding of the clause propounded by the appellant, and payments were accordingly received by them. Such IPCs were submitted after joint measurements were made, making separate quantification of the soil and pond ash used. It is thus submitted that it does not lie in the mouth of the respondent to contend that it is not possible to separately quantify the amount of soil and pond ash used in carrying out the works. 19. It is pointed out to us that reliance was placed by the respondent before the arbitrator on clause 60.9 to canvass that the IPC was not final but was only provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents and payment for item No.2.02(a). The same reads as under: Earth embankment/subgrade construction shall be measured separately by taking cross sections at intervals in the original position before the work starts and after its completion and computing the volumes of earthworks in cubic metres by the method of average end areas. 25. Clause 305.2.2.3.3 relatable to Item No.2.02(b) reads as under: Measurement for payment: Same as Clause 305.8 of MoRTH specifications. 26. Learned counsel thus submits that the methodology of measurement provides that the same be done by taking the cross sections at intervals in the original position and after its completion and, thus, whether the embankment made is only of soil, or soil and pond ash, identical methodology has to be adopted. This cross section cannot be further bifurcated into parts by measuring volumes of soil and pond ash separately. 27. Learned senior counsel for the appellant has also emphasized that the respondent realized their mistake albeit after more than two years when the issue of cash flow arose as they were receiving less amount than due to them under the contract, and the delay in raising the issue wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong time upon interpreting the terms and conditions of the contract, if pending determination of the lis, an order is passed that the parties would continue to do so, the same would not render the decision as an arbitrary one . 30. We now turn to the opinion of the learned Single Judge. We find that there is only a limited discussion in para 26 on this aspect which reads as under: 26. As regards non-payment for executed work of embankment which forms the subject matter of Disputes 2 and 4, this is purely a question of fact based on the measurement. There is no dispute in relation to the construction of the embankment that is covered under item 2.02 (a) of the BOQ. In fact NHAI has already paid HCC for the said construction. Clause 305.8 of the MORTH TS provides for measurement of the cross section of the embankment as one whole composite section and paid under item No. 2.02 (b). The decision of the majority members of the Arbitral Tribunal based on an analysis of the material before them was a possible view to take. Merely because another view as evidenced by the dissenting opinion is possible interference by this Court under Section 34 of the Act is not warranted. 31. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and can only mean that part of the embankment which is made of pond ash alone. The opening words of clause 2.02 of the BOQ which use the expression .complete as per Technical specification clause 305 with all leads and lifts only connote that the payment for this BOQ item would be due only after completion of the work of making the embankment in a given section or stretch, i.e. upon the finishing of the soil embankment (if it is only of soil) or of soil and pond ash embankment (if it is of both the substances) with all layers of soil and pond ash in place as per the technical specification. 33. It is obvious to us how clause 2.02 - which deals with the sole item of construction of embankment, has dealt with two eventualities, i.e., where only one material is used or two different kinds of materials are used. Insofar as the content/volume of soil is used, it has to be paid at a particular rate, while the quantity of pond ash has to be paid at another rate. It has also been rightly pointed out to us that the ratio of the soil and pond ash can vary and the percentage of pond ash can be high or low as the ratio varies from 9:1 to 3:1 (pond ash : soil). It would hardly be expected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stand that merely because some element of pond ash is used, the rates for the entire work would go up by about 2 times even where only soil is primarily used, irrespective of quantum of pond ash. This could never be the intent of the drafters of the contract and the parties also understood the contract in a particular manner till the respondent started having a second thought of realising extra money from the appellant. 36. We are thus of the unequivocal view that the interpretation put forth by the majority view of the arbitral tribunal, which has received the imprimatur of the learned Single Judge, is not a plausible view of the terms of the contract which are crystal clear and brook of no two views. Such a view, we feel would border on absurdity. We are conscious of the fact that it is an arbitral tribunal manned of three technical people. But then there is also a minority view of one technical person, apart from the fact that the DRB of three technical people also opined otherwise, apart from the engineer concerned. 37. We, thus, set aside the award insofar as it has granted Dispute No.4 in favour of the respondent while upholding the award in all other respects. No o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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