TMI Blog2024 (5) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... vely narrow and the jurisdiction of the Appellate Court under Section 37 of the Arbitration Act is all the more circumscribed. The Division Bench held that the imposition of a tax or upward revision of an already existing tax or levy through subsequent legislation is admittedly akin to the levy of additional royalty. The Division Bench relied upon a decision of the same Court in the case of the NATIONAL HIGHWAYS AUTHORITY OF INDIA VERSUS M/S ITD CEMENTATION INDIA LIMITED [ 2015 (4) TMI 1096 - SUPREME COURT] . The Division Bench in the impugned judgment held that the claim made on account of the increase in royalty, sales tax, forest transit fee, etc., was covered in favour of the respondent by the said decision. Whether the claim for the construction of embankment forms part of the activity of clearing and grubbing and was not payable as embankment work? - HELD THAT:- The Division Bench held that nothing is shown that indicates that the construction of the embankment can be said to have been done in a manner where the lower part of the embankment is made only by carrying out the activity of backfilling. The High Court also noted that the appellant sought to make deductions after in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arbitral Tribunal consisting of three members held that the respondent was entitled to Rs.3,47,35,522/- towards the formation of the embankment for an initial 150 mm, along with a price adjustment on the said amount in accordance with clause 70.3 of the contract, with interest and future interest at 12% per annum. The third member of the Arbitral Tribunal dissented and held that the respondent was not entitled to any amount under the said claim. Claim no.3 - The respondent was granted Rs.3,77,74,427.39/- along with interest and future interest at 12% per annum. 3. Being aggrieved by the award, the appellant filed a petition under section 34 of the Arbitration and Conciliation Act, 1996 (for short the Arbitration Act ). By the impugned judgment and order dated 30th November 2011, the learned Single Judge confirmed the award in respect of Claim no.1 and Claim no.3, relying upon the decision of the High Court in the case of National Highways Authority of India v. M/s. ITD Cementation India Limited 2008 (100) DRJ 431 . Regarding Claim no.2, the learned Single Judge held that the award was a majority decision of the Arbitral Tribunal based on an analysis of the material placed before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70.1 to 70.7. She submits that in the present case, such additional costs have been dealt with in Clause 70.3 (vii). She submitted that the sales tax was not increased based on legislation. The learned senior counsel submitted that the work of embankment construction is a part of the work of clearing and grubbing, which includes backfilling up to 150 mm. She submitted that when topsoil is removed as it is unfit for construction, this activity has to be a part of clearing and grubbing. On facts, she submitted that no evidence had been placed on record to show that the Engineer had required the respondent to remove the top 150 mm of soil in all places. She submitted that the Arbitral Tribunal and the Courts must strictly interpret the contract. Just because the respondent has incurred some expenditure, it would not amount to a liability on the appellant which is covered by clause 70.8 of the agreement. She has pointed out the factual aspects of the connecting cases. 6. The learned counsel representing the respondents in the appeals pointed out that the scope of interference in a petition under Section 34 of the Arbitration Act is narrow, and the jurisdiction of the Appellate Court u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. Ltd., (2006) 11 SCC 181] , SCC paras 112-113 and Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran [Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, (2012) 5 SCC 306] , SCC paras 43-45, it is observed and held that an Arbitral Tribunal must decide in accordance with the terms of the contract, but if an Arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. It is further observed and held that construction of the terms of a contract is primarily for an Arbitrator to decide unless the Arbitrator construes the contract in such a way that it could be said to be something that no fairminded or reasonable person could do. It is further observed by this Court in the aforesaid decision in para 33 that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the Arbitrator on facts has necessarily to pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It is further observed that thus an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Tribunal and the impugned judgments. For convenience, we refer to the impugned judgment in Civil Appeal no. 4702 of 2023. As can be seen from the impugned judgment, the present appellant confined the challenge only to two issues, which are set out in paragraph 2 of the impugned judgment. 2. Learned senior counsel for the appellant submits that there are two aspects, which are required to be examined in the present appeal : i) The allowing of the claims of the respondent on account of increase in royalty, sales tax and in the forest transit fee, stated to have been imposed by subsequent legislations; ii) The allowing of the claim for balance amount for construction of embankment which according to the appellant, formed a part of the activity of clearing and grubbing and was not payable as embankment work. 11. The Division Bench held that the imposition of a tax or upward revision of an already existing tax or levy through subsequent legislation is admittedly akin to the levy of additional royalty. The Division Bench relied upon a decision of the same Court in the case of the National Highways Authority of India v. M/s. ITD Cementation India Limited 1 . The Division Bench in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. In the backdrop of the law laid down by this court, the construction of the terms of the contract by the Arbitral Tribunal is completely consistent with the principles laid down by this court. Upon construing the terms and the material on record it concluded that the instant matter would be covered by substantive part of Sub-Clause 70.8 of COPA. It also noted that NHAI itself was of such opinion. The view so taken by the Arbitral Tribunal after considering the material on record and the terms of the contract is certainly a possible view, to say the least. We do not see any reason to interfere. The Division Bench in our considered view, was completely right and justified in dismissing the challenge. ( emphasis added ) 12. There was some controversy before the Division Bench on the issue whether there was an actual increase in the sales tax. However, after perusing the circular dated 1st December 2004, the Division Bench concluded that there was an addition of 3% in the amount of sales tax, as a result of which applicable sales tax increased from 22% to 25%. In the light of the law laid down by this Court in the case of National Highways Authority of India 2 , the contention based ..... X X X X Extracts X X X X X X X X Extracts X X X X
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