Delhi Jal Board (Djb) vs M/S Mohini Electricals Ltd on 4 July, 2022

[Cites 12, Cited by 1]

Delhi High Court

Delhi Jal Board (Djb) vs M/S Mohini Electricals Ltd on 4 July, 2022

1. Delhi Jal Board (hereinafter 'the DJB') has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 O.M.P. (COMM.) 22/2020 Page 1 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 (hereinafter 'the A&C Act') impugning an arbitral award dated 02.09.2019 (hereinafter the 'impugned award') delivered by an Arbitral Tribunal comprising of Shri Anand Kumar as the Sole Arbitrator (hereinafter the 'Arbitral Tribunal').

2. The impugned award was rendered in the context of disputes that had arisen between the parties in relation to the agreement dated 28.11.2003 (hereinafter the 'Agreement').

Factual context

3. In April 2003, the DJB invited tenders from bidders for "Construction of various reservoirs at different location in TYA Areas, Delhi of Delhi Jal Board." (hereinafter 'the Project'). The construction work included civil works, supply, installation, testing and commissioning of electrical and mechanical equipment etc.

4. Pursuant to the said notice inviting tenders, a consortium of M/s Mohini Electricals Ltd. (hereinafter 'the respondent'), M/S Jes Engineering Company Pvt. Ltd. and GSJ Envo Ltd. submitted its bid for the Project with the respondent acting as the consortium leader. By a Work Order dated 30.09.2003, the work for executing the Project was awarded to the respondent on behalf of the consortium. The total O.M.P. (COMM.) 22/2020 Page 2 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 contract value was agreed at ₹28,49,72,521/-, which comprised of a sum of ₹18,63,11,936/- for civil works and a sum of ₹9,86,60,585/- for E&M works on turnkey basis.

5. Thereafter, on 28.11.2003, the parties entered into the formal Agreement. Under the terms of the Agreement, the Project was to commence from the 14th day of the issuance of the Work Order and was to be completed within eighteen months thereafter. Thus, the date of commencement was stipulated as 14.10.2003 and the date of completion was scheduled as 13.04.2005 with a further period of sixty months provided for operation and maintenance.

6. Further, the Agreement also provided that if the respondent failed to commence the Project on the scheduled date, for reasons other than those as provided in the Agreement, the DJB would be entitled to levy financing charges on advance payment till the time the Project commenced.

7. The DJB states that the respondent started civil works on selective sites on 19.11.2003. By a letter dated 03.12.2003, the DJB informed the respondent that the Project started only on one location on the scheduled date and the physical progress of the Project was negligible. Further, the respondent was required to obtain a number of O.M.P. (COMM.) 22/2020 Page 3 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 approvals before commencement of the concrete works, which had not been obtained till date.

8. Thereafter, on 10.12.2003, the respondent gave a bank guarantee dated 06.12.2003 for a sum of ₹1,86,31,194/- and on 29.01.2004, furnished another bank guarantee dated 09.12.2003, for a sum of ₹98,66,059/- against mobilization advance provided by the DJB.

9. By a letter dated 21.02.2004, the respondent alleged that the DJB had breached the Agreement. The DJB responded by a letter dated 01.04.2004, countering the said allegation and asserting that the delay was attributable to the respondent as it had submitted the bank guarantee on 10.12.2003 after a significant delay.

10. By a letter dated 20.04.2004, the DJB complained about the poor arrangement at the location sites due to which, permission to commence reinforced cement concrete works (RCC) could not be granted. It alleged that there was mismanagement on the part of the respondent along with failure to arrange the mixing unit and the concrete pump.

11. On 03.06.2004, the respondent was informed by the DJB to speed up the work in all the locations and complete the entire Project within the scheduled period. However, by a notice of delay dated 15.07.2004, O.M.P. (COMM.) 22/2020 Page 4 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 the DJB informed the respondent that the progress was still not upto the mark as only 21% of the work was completed within a period of nine months whereas, according to the DJB, 60% of the work was required to be completed within that time. The respondent was called upon to show cause as to why compensation should not be charged from it.

12. In response to the aforesaid notice dated 15.07.2004, the respondent sent a letter dated 20.12.2004, requesting the DJB for extension of time for completion of the Project. It claimed that the delay was mainly due to the increase in cost of input materials such as electrical and mechanical equipment, steel, cement, coke etc. and for reasons attributable to the DJB.

13. The DJB disputed the aforesaid assertion and sent a letter dated 09.02.2005, alleging that the delay was mainly attributable to the respondent on account of the late submission of the bank guarantees and poor management and arrangements made by the respondent.

14. By a letter dated 06.04.2005, the DJB extended the time for completion of the Project upto 30.06.2005 while reserving its right to recover liquidated damages in accordance with Clause 8.7 of the Agreement.

O.M.P. (COMM.) 22/2020 Page 5 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022

15. Thereafter, the time for completion was extended upto 30.10.2005, albeit subject to a token penalty of a sum of ₹20,000/-. The respondent, disputed the imposition of the token penalty as it claimed that the delay was mainly for reasons beyond its control and due to the prevailing market conditions.

16. By a letter dated 29.08.2005, the respondent requested the DJB for appointment of the Dispute Adjudicating Board (DAB) to adjudicate the disputes between the parties. By a letter dated 03.03.2006, the DJB informed the respondent that DAB had been appointed to adjudicate the disputes.

17. The time for completion of the Project was extended several times. By a letter dated 08.02.2013, the DJB granted the final extension of time upto 31.10.2008. However, this was subject to imposition of liquidated damages of ₹40,000/- due to the delay in completion of the works. In response to the same, the respondent sought for refund of the total amount retained by the DJB after deducting the penalty of ₹40,000/-. The DJB, however, refused to release the amount as requested and claimed that, a sum of ₹20.55 lakhs was due to the DJB along with compensation of a sum of ₹41,55,780/- on account of procuring steel from secondary resources.

O.M.P. (COMM.) 22/2020 Page 6 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022

18. Thereafter, during the years 2011-2015, the respondent sought the execution of a Dispute Adjudication Agreement (hereinafter 'DAA'). However, the DJB failed to do so. In view of the same, the respondent approached this Court and by an order dated 25.05.2015, this Court directed the DJB to sign the DAA and by an order dated 27.05.2015 directed the appointment of a new DAB member in place of the member already appointed.

19. On 05.09.2016, the DJB appointed Mr. Anand Kumar as the sole member of the DAB to adjudicate the disputes between the parties.

20. Thereafter, by a letter dated 28.10.2017, the respondent requested the DJB to close the DAB proceedings and refer the disputes to arbitration. On 05.03.2018, Mr. Anand Kumar was appointed as the Sole Arbitrator to adjudicate the disputes between the parties.

Arbitral Proceedings

21. Before the Arbitral Tribunal, the respondent filed its Statement of Claims. A tabular statement stating the claims is set out below:

Claim 1 Addition to contract price due to VAT in place of Work ₹6,26,57,780/-

Contract tax O.M.P. (COMM.) 22/2020 Page 7 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 Claim 2 Addition to contract price due to Service tax on E&C ₹27,45,053/-

works and O&M works Claim 3 Addition to contract price on account of levy of Labour ₹51,56,482/-

cess Claim 4 Excess amount retained from RA Bills ₹1,07,90,674/- (A) Claim 4 Excess retention on pretext of extension of time ₹68,35,447/- (B) Claim 4 Excess recovery of mobilisation advance beyond the ₹1,99,49,663/-

                           (C)         provision of the contract

                           Claim 5      Refund of amount wrongly recovered on the excuse of ₹60,83,918/-

use of different brand of steel, though 'ISI' marked Claim 6 Addition to contract price in wages for the labour ₹4,06,21,911/- (A) deployed for civil works and installation works for E&M Claim Addition to contract price in wages for the manpower ₹1,74,34,909/-

                           6(B)         deployed for O&M works

                           Claim 7      Addition to contract price on account of increased prices ₹4,58,54,768/-

of input materials during the stipulated period of completion Claim 8 Addition to contract price on account of increased prices ₹14,12,59,267/-

of cement, steel and other input materials after the stipulated date of completion Claim 9 Amount payable on account of non-payment of work ₹5,56,95,810/- (A) done/final bill as per the terms of the contract Claim 9 Amount payable by way of financing charges on delayed ₹12,31,39,984/-

                           (B)         payments as per the terms of the contract

                           Claim     9 Amount payable on account of financing charges due to ₹14,69,669/-
                           (C)         delay in release of mobilisation advance


                          O.M.P. (COMM.) 22/2020                                               Page 8 of 27




Signature Not Verified
Digitally Signed
By:Dushyant Rawal
Signing Date:04.07.2022

Claim 10 Addition to contract price on account of delay in ₹15,65,687/-

appointment of third party inspection agency Claim 11 On account of deferred profitability ₹10,49,68,057/-

Claim 12 On account of idling of tools, plants, machineries, ₹10,56,75,500/- (A) manpower, watch and ward etc deployed at the site of the work beyond stipulated date of completion along with financing charges with effect from February, 2005 Claim 12 On account of off-side overhead/profit of head office ₹8,03,01,789/- (B) along with financing charges with effect from February, 2005 Claim 13 On account of financing charges beyond the dates as As per actuals stated against each dispute Claim 14 Costs towards arbitration proceedings ₹30,63,000/-

22. The DJB filed its Statement of Defence, however, it did not raise any counter-claims.

23. By the impugned award, the Arbitral Tribunal allowed majority of the claims preferred by the respondent. The Arbitral Tribunal awarded a sum of ₹3,03,01,378/- and ₹25,15,696/- in respect of Claim nos. 1 and 2 respectively; an aggregate amount of ₹3,38,22,992/- in respect of Claim nos. 4(A) to 4(C); a sum of ₹58,77,332/- and ₹1,62,57,041/- towards Claim no. 5 and Claim no.6(B) relating to refund of amount wrongly recovered on the excuse of use of different O.M.P. (COMM.) 22/2020 Page 9 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 brand of steel and wages for manpower for O&M works respectively; a sum of ₹2,66,72,624/- towards Claim no. 8 relating to the escalated price of steel and cement; a sum of ₹16,09,34,213/- collectively under Claim nos.9(A) to 9(C); a sum of ₹14,26,563/- towards Claim no.10 in lieu of delay in the appointment of a third party inspection agency. The Arbitral Tribunal further, awarded a sum of ₹3,68,43,750/- and ₹1,06,03,186/- respectively towards Claim nos. 12(A) and 12(B) along with financing charges beyond the date of the impugned award till the date of payment and a sum of ₹5,48,43,184/- with respect to Claim no.13.

24. Lastly, the Arbitral Tribunal awarded simple interest at the rate of 12% per annum from the date of the impugned award till the date of payment if the awarded amount was not paid within 90 days of the date of the impugned award.

25. Aggrieved by the impugned award, the DJB has filed the present petition.

Submissions

26. Ms. Bharti, learned counsel appearing for the DJB assailed the impugned award principally on the ground that the claims were barred O.M.P. (COMM.) 22/2020 Page 10 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 by limitation. She contended that the works, in question, were to be completed on or before 13.04.2005 but were finally completed on 31.10.2008. The Arbitral Tribunal was constituted on 05.03.2018, that is, almost nine years after the work was completed. She submitted that in this view, the claims made by the respondent were barred by virtue of the Limitation Act, 1963 and the Arbitral Tribunal had erred in entertaining the claims. Further, she contended that the respondent had not issued any notice under Section 21 of the Arbitration and Conciliation Act, 1996 (hereafter 'the A&C Act') and therefore, the Arbitration Agreement has not been invoked till date.

27. Apart from the above, she also assailed the impugned award on four other grounds. First, she contended that the Arbitral Tribunal had ignored the relevant material on record and its decision that the DJB was responsible for the delay is perverse. She stated that the Arbitral Tribunal had erred in proceeding on the basis that the parties were in agreement that execution of the work was not delayed on account of the respondent. On the contrary, it was the DJB's case that the respondent was solely responsible for the inordinate delay in execution of the works. Second, she submitted that the impugned award violates the public policy of India as it is contrary to the relevant provisions of the Agreement. She referred to Clauses 4.7 and 4.8 of the Agreement and O.M.P. (COMM.) 22/2020 Page 11 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 contended that the financing charges were payable only in respect of certain specified amounts and not otherwise. Third, she contended that the Arbitral Tribunal had erred in accepting that time was not of the essence of the contract merely because the time for executing the works had been extended. However, the same could not be construed to mean that time was not of the essence of the contract. Fourth, she submitted that the impugned award was contrary to the terms of the contract and therefore, violated Section 28(3) of the A&C Act.

28. In addition to the above, she contended that the financing charges, as awarded, were in the nature of penalty and therefore, liable to be set aside.

29. Ms. Salwan, learned counsel appearing for the respondent countered the aforesaid submissions. She referred to various communications exchanged between the parties and submitted that the respondent had sought reference of the disputes to the DAB. The delay in constituting the DAB and signing the DAA was solely on account of the DJB. She referred to the orders dated 25.05.2015 and 27.05.2015 passed by this Court in JES Engineering Company Pvt. Ltd. vs. Delhi Jal Board: W.P.(C) 5337/2015 and submitted that the respondent had to approach this Court by filing a writ petition for ensuring that the DJB O.M.P. (COMM.) 22/2020 Page 12 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 proceeded with the dispute adjudication mechanism as contemplated under the Agreement. Next, she contended that the grounds urged by the DJB to assail the impugned award are unmerited. And, in any view, they relate to the merits of the disputes and do not fall within the scope of Section 34(2)(b)(2) or Section 34(2A) of the A&C Act.

Reasons and Conclusions

30. The first and foremost question to be addressed is whether the Arbitral Tribunal had erred in finding that the claims made by the respondent were within the period of limitation.

31. Clause 20 of the Agreement contemplated that, in the first instance, the disputes between the parties would be adjudicated by the DAB. Undisputedly, the respondent had sought reference of the disputes to the DAB by its letter dated 29.08.2005 addressed to the Chief Executive Officer of the DJB. At the material time, the works were being executed. After a considerable delay, the DJB unilaterally appointed Mr. Rakesh Seth, Ex-Member (Drainage, DJB) as the DAB and sought the written consent of the respondent for further formalizing the appointment. The respondent did not concur on the said appointment and by a letter dated 30.03.2006, requested that it be given an opportunity to suggest at least three names for appointment of the O.M.P. (COMM.) 22/2020 Page 13 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 DAB. In terms of the Agreement between the parties, the DAB was also required to visit the site to avoid any dispute and to act as an independent member during the currency of the contract. It is stated that the person appointed by the DJB did not sign the DAA.

32. Thereafter, to constitute the DAB, Mr. I. M. Singh - the DAB appointed by the DJB - sent a letter dated 07.01.2009 requesting the parties to sign the DAA. The respondent contends that despite the respondent actively pursuing the DJB to participate in the dispute resolution mechanism, the DJB did not sign the DAA. However, during one of the meetings held between the representatives of the DJB and the respondent, the Executive Engineer (Project) suggested that the parties may defer entering into the DAA as they were attempting to resolve the disputes amicably. However, the DJB neither made any attempt to resolve the disputes amicably nor signed the DAA.

33. By a letter dated 08.02.2013, the DJB informed the respondent that by an order dated 04.02.2013, the competent authority had granted extension of time up to 31.10.2008 for completion of works albeit subject to payment of penalty of ₹40,000/- in terms of Clause 8.7 of the Agreement.

O.M.P. (COMM.) 22/2020 Page 14 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022

34. In view of the aforesaid decision, the respondent sent a letter dated 15.02.2013 calling upon the DJB to release the balance withheld amount after deducting the penalty of ₹40,000/-.

35. In the meanwhile, the respondent pursued with the DJB and the DAB for resolution of its disputes. The respondent sent a letter dated 06.11.2013 mentioning that Mr. I. M. Singh had decided similar disputes in respect of other contracts and therefore, the decision may neither be implemented in the present case or in the alternative, a formal DAA be signed to enable the DAB to commence further proceedings.

36. The DJB claims that on 02.05.2014, its Vigilance Department reported that the respondent had obtained financial benefit to the extent of ₹20.55 lakhs by procuring steel from the secondary sources. In view of the above, the DJB took steps for recovery of the amount of ₹20.55 lakhs from the respondent and also sought further compensation of ₹41,55,780/-.

37. Mr. I. M. Singh sent a letter dated 01.09.2014 enclosing therewith a copy of the DAA entered into in respect of another works and called upon the parties to enter upon the DAA in similar forms. Despite the respondent pursuing the DJB to sign the DAA, it failed to do so. In the circumstances, JES Engineering Company Pvt. Ltd., one of the O.M.P. (COMM.) 22/2020 Page 15 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 constituent consortium members, filed a petition under Article 226 of the Constitution of India in this Court being W.P.(C) 5337/2015 captioned JES Engineering Company Pvt. Ltd. vs. Delhi Jal Board, inter alia, seeking an order directing the DJB to sign the DAA as required. The said petition was listed on 25.05.2015. On that date, this Court passed the following order.

"+ W.P.(C) 5337/2015

1. Vide the instant petition, petitioner seeks directions thereby directing the respondent to sign the Dispute Adjudicating Agreement (DAA) as required on the appointment of Sh. I.M. Singh as sole member of Dispute Adjudicating Board (DAB).

2. Notice issued.

3. Ld. Counsel named above accepts notice on behalf of the respondent and submits that let the petitioner file the required documents within a period of 3 days. The respondent will act upon on that within one week thereafter and the agreement shall be signed by the respondent within three days thereafter.

4. In view of the statement made by the counsel for the respondent, I direct the parties to act accordingly. However, I make it clear that if Sh. I.M. Singh, sole member of the Dispute Adjudicating Board is not available, respondent will be at liberty to appoint another member.

O.M.P. (COMM.) 22/2020 Page 16 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022

5. I further make it clear that if the respondent has any objection with Sh. I.M. Singh, being the member of the Dispute Adjudicating Board, they will be at liberty to appoint another member, however, the said exercise shall be completed within 10 days.

6. In view of above, the petition is disposed of."

38. The aforesaid order was subsequently modified on 27.05.2015 by recording the statement of the DJB that a DAB comprising of a sole member, would be appointed with the consent of the parties.

39. By a letter dated 05.09.2016, the DJB appointed Sh. Anand Kumar to constitute the DAB.

40. While the proceedings were pending before the DAB, a joint meeting was held between representatives of the parties on 27.10.2017. It appears that during the course of the proceedings, a consensus was arrived to withdraw the proceedings before the DAB and the disputes be referred to arbitration. Immediately thereafter, on 28.10.2017, the respondent sent a letter conveying its acceptance to the proposal of withdrawal of proceedings before the DAB and appointing Sh. Anand Kumar as the Sole Arbitrator to adjudicate the disputes between the parties.

O.M.P. (COMM.) 22/2020 Page 17 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022

41. Thereafter by a letter dated 05.03.2018, the DJB closed the DAB proceedings and appointed Sh. Anand Kumar as the Sole Arbitrator. The said letter expressly recorded that the parties had jointly agreed to close the DAB proceedings. The relevant extract of the said letter recording the aforesaid is as under: -

"No. F-( )/DJB/EE(Prj)W-1/2018341 Dated: 05.03.2018 Subject-Closing of DAB and Re-appointment as an Arbitrator.

In the matter of Arbitration between:

M/s Mohini, Electricals Ltd. .........Claimant V/S Delhi Jal Board ......... Respondent Name of Work: - Construction of Additional Reservoirs at different locations in TYA Delhi.

Ref. No.:- F2(18)/EE(PROJECT)W-1/2016/2178 DATED 29.08.2016.

Whereas the above said completed work was awarded to Ms Mohini Electrical Ltd., Consortium Members, JES Engineer Co. Put Ltd. A- 14(Commercial), Inderpuri, New Delhi-110012 vide work order No. F2(18)/EE(Project) W-1/ 2003/1049 dt.

O.M.P. (COMM.) 22/2020 Page 18 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022

30.09.2003 Contract Agreement No.1 (2003-2004) duly executed between the parties named above.

Chief Executive Officer of Delhi Jal Board, Govt. of NCT of Delhi, under the provisions of the clause in the Contract Agreement, had appointed you as Single Member DAB in above mentioned case.

Now, the Competent Authority has decided in corroborative to joint consensus with the claimant and as per Clause 20.6 of the Contract Agreement to close the Single Member DAB and has appointed you as Single Member Arbitrator in this case. The terms of fee of arbitration shall be governed by ICA Rules & provisions of Arbitration & Conciliation (Amendment) Act-2015."

42. Admittedly, the dispute resolution mechanism did not permit any of the parties to refer the disputes to arbitration till the DAB had rendered its decision or had failed to do so within the specified time. Any party dissatisfied with the decision of the DAB was required to furnish a notice of dissatisfaction. In the event no such notice was issued, the DAB's decision would become final and binding. Clause 20.5 of the Agreement further provided that the parties would endeavour to resolve the disputes amicably after such notice of dissatisfaction was issued. The arbitration proceedings would O.M.P. (COMM.) 22/2020 Page 19 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 commence on or after 56 days of the issuance of the notice of dissatisfaction.

43. In the facts of the present case, the respondent had made its claims and invoked the dispute resolution mechanism. The period of limitation in respect of the claims had stopped running once the claims had been referred to the DAB. There was inordinate delay in constituting the DAB. As noted above, this was the subject matter of protracted correspondence. Finally, one of the consortium partners of the respondent was compelled to approach this Court and the DAB was constituted thereafter. The DAB did not render its decision, however, the parties agreed to close the said proceedings and refer the disputes to arbitration.

44. The Arbitral Tribunal had referred to the aforesaid facts and concluded that the parties were involved in the resolution of the disputes through dispute redressal mechanism as contemplated under Clause 20 of the Agreement. The Arbitral Tribunal held that the limitation would not commence till the right to refer the disputes to arbitration had arisen. The said right arose on 05.03.2018 when the parties agreed to close the DAB proceedings and refer the disputes to arbitration. The Arbitral Tribunal held that even if the date on which the respondent requested O.M.P. (COMM.) 22/2020 Page 20 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 for appointment of the Arbitrator is considered (that is 17.07.2017), the claims would be within the period of limitation.

45. This Court finds no infirmity with the aforesaid decision. The period of limitation in respect of any dispute would stop running once the parties had invoked the dispute resolution mechanism. Undeniably, if there is an inordinate delay on the part of any party to implement the dispute resolution mechanism, the party seeking redressal of the disputes would require to take appropriate action within a period of three years. In the present case, the respondent (its JV partner) had taken pro-active steps for implementing the dispute resolution mechanism by approaching this Court by filing a writ petition.

46. It is also noteworthy that the final extension of time was communicated by a letter dated 08.02.2013. According to the DJB, it had thereafter initiated proceedings for recovery of amounts already paid as well as further compensation. It is, thus, clear that disputes between the parties were live even at that stage.

47. In view of the above, this Court is unable to accept that the impugned award is vitiated by patent illegality on the ground that the respondent's claims are barred by limitation.

O.M.P. (COMM.) 22/2020 Page 21 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022

48. The second question to be addressed is whether the Arbitral Tribunal's finding that the delay in completion of the works was not on account of the respondent, is manifestly erroneous.

49. The Arbitration Tribunal had examined the record and found that the delays in execution of the contract were for various reasons including handing over of site; delay in finalisation of designs and drawings; delay in approval of shop drawings; delay in release of various payments; and delay in appointment of third party inspecting agency amongst other reasons. The Arbitral Tribunal also noted that there was escalation in the prices of raw material.

50. In addition to the above, the Arbitral Tribunal noted that the DJB had granted extension of time for completion of the contract with a token penalty of ₹40,000/-. The DJB was entitled to levy liquidated damages at the rate of 0.5% of the Contract Price for every week of delay subject to a maximum of 5% of the Contract Price. Thus, the penalty levied was less than that as payable for a single day. It is in this context that the Arbitral Tribunal observed that there was consensus that delays in execution of the works were not attributable to the respondent. There would be no reason for the DJB to restrict the levy to a token O.M.P. (COMM.) 22/2020 Page 22 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 amount if the delay was wholly for reasons attributable to the respondent.

51. The inference drawn by the Arbitral Tribunal that the DJB had agreed that the delay was not attributable to the respondent is in addition to the finding on merits. As noted above, the Arbitral Tribunal had examined the record and found that the respondent was not liable for the delay in execution of the works. There is ample material on record to support the aforesaid view. It is well-settled that the Arbitral Tribunal is a final adjudicator of the quantity and quality of the evidence. It is not open for this Court to re-adjudicate the disputes by re-appreciating and re-evaluating the evidence on record. Since there is material on record to support the Arbitral Tribunal's view, it cannot be held to be implausible and its decision cannot be interfered with in these proceedings.

52. The next question to be examined is with regard to financing charges. The DJB's contentions that the financing charges are prohibited or proscribed by the contract is unpersuasive. Ms. Bharti had relied upon Clauses 14.7 and 14.8 of the Agreement. A plain reading of Clause 14.7 of the Agreement indicates that it provides for payment to O.M.P. (COMM.) 22/2020 Page 23 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 be made by the employer (DJB) to the contractor. Clauses 14.7 and 14.8 of the Agreement read as under:-

"14.7 Payment:

The Employer shall pay to the Contractor:

(a) the first instalment of the advance payment within 42 days after issuing the Letter of Acceptance or within 21 days after receiving the documents in accordance with Sub-

Clause 4.2 [Performance Security] and Sub-

Cause 14.2 [Advance Payment], whichever is later,

(b) the amount certified in each interim Payment Certificate within 50 days after the Engineer receives the Statement and supporting documents; and

(c) the amount certified in the Final Payment Certificate within 56 days after the Employer receives this Payment Certificate Payment of the amount due in each currency shall be made into the bank account nominated by the Contractor, in the payment country (for this currency) specified in the Contract.

14.8: Delayed Payment:

If the Contractor does not receive payment in accordance with Sub-Case 14.7 [Payment], the O.M.P. (COMM.) 22/2020 Page 24 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 Contractor shall be entitled to receive financing charges compounded monthly on the amount unpaid during the period of delay This period shall be deemed to commence on the date for payment specified in Sub-Clause 14.7 [Payment], irrespective (in the case of its sub-paragraph (b) of the date on which any Interim Payment Certificate issued.

Unless otherwise stated in the Particular Conditions, these financing charges shall be calculated at the annual rate of three percentage points above the discount rate of the central bank in the country of the currency of payment, and shall be paid in such currency The Contractor shall be entitled to this payment without formal notice or certification, and without prejudice to any other right or remedy."

53. A plain reading of the aforesaid clauses clearly indicates that they do not proscribe payment of interest. On the contrary, Clause 14.8 of the Agreement expressly provides for payment of financing charges compounded monthly on the amounts remaining unpaid.

54. The Arbitral Tribunal had found that the amounts due to the respondent had remained unpaid and therefore, it was entitled to financing charges computed at annual rate plus 3 percentage points compounded monthly. There is merit in the contention that the said financing charges are payable only in respect of admitted payments O.M.P. (COMM.) 22/2020 Page 25 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 (Certified Payments) that remained unpaid. However, the decision to award interest taking cue from the contractual provisions, on the amounts that ought to have been included in the interim payment certificate, cannot be held to be a perverse or an implausible view.

55. Ms. Bharti had submitted that the Arbitral Tribunal was proscribed from awarding compound interest, therefore, the impugned award is vitiated by patent illegality. This contention is unmerited. In the present case, the Arbitral Tribunal has examined the contract between the parties and had found that it did contemplate payment of compound interest. In addition, the respondent had also produced material to show that it was liable to pay compound interest on funds borrowed from the bank.

56. The reliance placed upon the decision of the Supreme Court in Hyder Consulting (UK) Ltd. v. Governor, State of Orissa: (2015) 2 SCC 189 is misplaced. The said decision does not support the contention. On the contrary, the Supreme Court had held that it is permissible for the Arbitral Tribunal to award interest under Section 31(7)(b) on the interest as included under Section 31(7)(a) of the A&C Act. In a later decision in UHL Power Company Ltd. v State of Himachal Pradesh with State of Himachal Pradesh v UHL Power O.M.P. (COMM.) 22/2020 Page 26 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022 Company Ltd: (2022) 4 SCC 116, the Supreme Court has clarified that the Arbitral Tribunal is not barred from awarding compound interest.

57. This Court is also unable to accept the contention that award of financing charges is in the nature of a penalty. The Arbitral Tribunal's view that time is not of the essence of the contract as extension was granted repeatedly is also a plausible view and warrants no interference in these proceedings. This Court is also unable to accept that the Arbitral Tribunal has ignored the terms of the contract and the impugned award falls foul of Section 28(3) of the A&C Act. The said contention is unmerited.

58. In view of the above, this Court finds no ground to interfere with the impugned award.

59. The petition is, accordingly, dismissed. All the pending applications are also disposed of.

VIBHU BAKHRU, J JULY 04, 2022 O.M.P. (COMM.) 22/2020 Page 27 of 27 Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:04.07.2022

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