M/S.Tuticorin Port Trust vs Jan De Nul Dredging India Pvt.Ltd on 10 September, 2019

[Cites 15, Cited by 0]

Madras High Court

M/S.Tuticorin Port Trust vs Jan De Nul Dredging India Pvt.Ltd on 10 September, 2019

The present appeal is directed against impugned order dated 10.9.2019 passed in O.P.No.152 of 2015. By the impugned order, the learned single Judge has dismissed O.P.No.152 of 2015 filed by the appellant herein. The appellant was aggrieved by an award dated 18.10.2014 passed by the Arbitral Tribunal in a commercial dispute between the appellant and the respondent. Thus, O.P.No.152 of 2015 was filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996.

2. Since the award was passed prior to the amendment to the provisions of the Arbitration and Conciliation Act, 1996 in 2015, challenge to the award was disposed as per the provisions of the Act as it stood at the ____________ https://www.mhc.tn.gov.in/judis/ Page No 2 of 87 O.S.A.No.101 of 2020 time of the filing of O.P.No.152 of 2015 under Section 34 of the Arbitration and Conciliation.

3. The Hon’ble Supreme Court has also clarified that the law as it stood at the time of the passing of the award would govern the challenge to the award in S.Sangyong Engg. & Construction Co. Ltd., Vs NHAL, (2019) 15 SCC 131. Therefore, to that extent the disposal of O.P.No.152 of 2015 was in accordance with the law.

4. The brief facts of the case are that the appellant had awarded a dredging contract to the 1st respondent for deepening of the channel and basin to facilitate passageof 12.80 M drought vessel at Tuticorin Port pursuant to a tender floated by the appellant. A contract was thereafter signed into between the appellant and the 1strespondent on 27.12.2010 which was titled as “License Agreement”. The tender conditions were incorporated as part of the said Agreement.

5. The appellant had assessed the average daily output of 12,000 ____________ https://www.mhc.tn.gov.in/judis/ Page No 3 of 87 O.S.A.No.101 of 2020 Cubic Meters for the scenario of deployment of Heavy DutyCutterSuction Dredger(CSD) to complete the work within the specified period of 14 months for which the following indicative plant and equipment were required:-

(i) Cutter Suction Dredger having cutter-power 3000 HP or more-1 No.

(ii) Self-propelled barges having hopper capacity 16,000 Cubic Meters-3 Nos.

(iii) Sufficient length of Floating/Submersible pipelines with and without the ball joints 800 MM to 900 MM diameter.

(iv) Backhoe Dredger having bucket capacity 3 to 4 Cubic Meter-1 No.

(v) Supporting Vessels.

(vi) Survey Vessels et cetera.

6. The contract value as per theaforesaid License Agreement was for a sum of Rs.465,47,56,517/- (Four Hundred Sixty Five Crore Forty Seven Lakhs Fifty Six Thousand Five Hundred and Seventeen only). The duration of the contract was for 14 months. ____________ https://www.mhc.tn.gov.in/judis/ Page No 4 of 87 O.S.A.No.101 of 2020

7. The 1strespondent commenced the work on 28.12.2010 and completed on 31.08.2011 much ahead of the schedule by eight months. The 1strespondent also did not stay beyond the contract period. On completion of the work, the Appellant issued a take over certificate to the 1strespondent on 02.04.2012.

8. The 1st respondent thus submitted its final bill on 29.05.2012. A dispute arose between the appellant and the 1strespondent regarding the payments. Among other disputes, a dispute arose as to whether the 1strespondent was entitled for additional compensation towards idling charges for 2 Cutter Suction Dredger and 1Backhoe Dredger deployed by it. Cutter Suction Dredger was a Major Dredger while Backhoe Dredger was a Minor Dredger.

9. The claim for idling charges for these Dredgers were made by the 1st respondent though the work was completed much ahead of the schedule by citing few clauses in the agreements and the tender documents ____________ https://www.mhc.tn.gov.in/judis/ Page No 5 of 87 O.S.A.No.101 of 2020 to which we shall refer in the course of the order.

10. Since the appellant did not entertain the claims of the 1 st respondent, the 1strespondent invoked the arbitration clause under the License Agreement. The dispute was thereafter referred for arbitration on 20.09.2012 before an Arbitral Tribunal consisting of Members.

11. Before the Arbitral Tribunal, the 1strespondent raised 11 claims against the appellant under the following heads:-

1. Reimbursement of Wharfage Charges

2. Soil Conditions in the Approach Channel

3. Reimbursement of Customs Duties enacted afterTender

4. Employer’s Reclassification of New Basin Works to Existing Basin Works

5. Contractors Equipment idle due to Traffic within Port Entrance

6. Contractors Equipment idle due to Traffic outside Port Entrance

7. Contractors Equipment idle due to the Respondent Failure to Provide Possession of and Access to Site

8. Contractors Equipment idle due to adverse Physical ____________ https://www.mhc.tn.gov.in/judis/ Page No 6 of 87 O.S.A.No.101 of 2020 Obstructions

9. Contractors Equipment idle due to the Respondent Delay in Providing No Objection Certificate

10.Contract Interest Reimbursement due to Respondents Payment Default (As at 30 April 2013

11.Contractors losses due to relative Exchange Rates Euro versus Indian Rupee due to Respondent’s Payment Default (As at 30 April 2013)

12. The Arbitral Tribunal framed the following issues for consideration for answering the claims:-

S.No. General Issues

1. (a) Whether the claims both as individual claims and as collective claims are barred under Section 120 of the Major Port Trust Act?

(b) Whether the claimant has increased the value of any of their claims at various stages and if so does this affect the Claimant’s entitlements (if any) in the arbitration?

(c) Whether the Claimant is entitled to raise issues regarding idle time of dredgers not raised during the pre-bid meetings?





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                     Page No 7 of 87
                                                                                   O.S.A.No.101 of 2020

                              S.No                         Specific Issues
                             1       Reimbursement of Wharfage Charges

Whether the claimant is entitled to reimbursement of wharfage charges levied by the Respondent on the cargo vessels carrying Dredger parts, attendant craft and machinery?

2 Soil Conditions in the Approach Channel a. Whether the Claimant is entitled to compensation for loss and expenses suffered due to unforeseen soil conditions in the Approach Channel?

b. Whether the claimant has took the risk of hard materials by performing their dredging in the Approach Channel without drilling and blasting the alleged hard rock area, and if so, whether this reduces the claimant’s entitlement (if any) to such loss and expense?

c. Whether due to prior experience by the Claimants for the work done in the same port in the near area, they are estopped from raising a claim for loss and expense arising out of the alleged dredging of hard rock in the Approach Channel?

d. Whether the post contract soil investigation allegedly made by IIT-M, Mumbai is binding on the Respondent Port?

e. Whether the Claimant should have insured its equipment against damage arising out of dredging hard material?

f. Whether any failure of the Claimant to take insurance exonerates the Employer from liability for any claim ____________ https://www.mhc.tn.gov.in/judis/ Page No 8 of 87 O.S.A.No.101 of 2020 S.No Specific Issues based on unforeseen soil conditions?

3 Reimbursement of Customs Duties Enacted after Tender a. Whether the customs duties paid by the Claimant pursuant to Customs Notification No.21 of 2011 dated 1 March 2011 are to be reimbursed by the Respondent? b. Whether before payment of customs duty the claimant was bound to raise the issue with the Port as to enable the Port to raise it with the customs?

c. Whether the Claimant was bound to prefer an appeal regarding the imposition of customs duties before the appropriate Appellate Authority?

4 Employer Reclassification New Basin Works to Existing Basin Works 4 a. Whether the classification in the New Basin and the Existing Basin for the purpose of valuation of works is arbitrary and unilateral?

b. Whether the work done by the Claimant can be treated as New Basin works or Existing Basin works? c. Whether the Respondent has proved the final dredge quantities in the Respondent’s letter dated 25 July 2012?

d. Whether the claimant is, in any event entitled to the valuation difference between its final Bill of Quantities dated 6 September 2011 and the Respondents Bill of Quantities dated 25 July 2012 amounting to ____________ https://www.mhc.tn.gov.in/judis/ Page No 9 of 87 O.S.A.No.101 of 2020 S.No Specific Issues Rs.106,267,974/-?

e. Whether the Claimant dredged the area in front of berth No.9 from the level - 7.30 to -11.90 m or whether Dharti Dredging Infrastructure dredged that area from -7.30 m to

-11.90 m?

5 Contractor’s Equipment Idle due to Traffic within Port Entrance.

5 Whether the Claimant is entitled to its claim for idling for contractor’s equipment due to traffic outside port entrance?

6 Contractor’s Equipment Idle Due to Traffic outside Port Entrance 6 Whether the Claimant is entitled to its claim for idling for contractor’s equipment due to traffic outside port entrance?

7 Contractor’s Equipment Idle Due to the Respondents Failure to Provide Possession of and Access to site 7 a. Whether the Claimant is entitled to its claim for idling of BHD Jerommeke due to Respondents failure to provide possession of and access to site?

b. Whether the BHD Jerommeke is a “major dredger” by reason of its having a cutter power of 3000 HP or more as defined in Clause 38 of Section 3, and if so, whether idle time is to be determined by reference to BOQ item 5 at page 14 of Vol 1 of the Agreement? Contractor’s Equipment Idle due to Adverse Physical 8 Obstructions.

8 Whether the Claimant is entitled to its claim for idling of contractor’s equipment due to adverse physical ____________ https://www.mhc.tn.gov.in/judis/ Page No 10 of 87 O.S.A.No.101 of 2020 S.No Specific Issues obstructions?

Contractor’s Equipment Idle due to Respondents Delay 9 in Providing Non-Objection Certificate. 9 a. Whether the Respondent delayed issuing the “No objection Certificate” for demobilization of CSD Zheng He such that the claimant is entitled to its claim for idling of CSD Zheng He?

10 Common issues Re: Claim Nos.5-6-7-8-9 11 Interest a. Whether the Claimant is entitled to interest as prayed 11 for?

Contractors Losses Due to Relative Exchange Rates Euros Versus Indian Rupee Due to Respondents 12 Payment Default.

a. Whether the Respondent is liable to compensate the Claimant for losses due to relative exchange rates Euros 12 vs. Indian Rupees after the completion of the contract? 13 Miscellaneous a. Whether the Respondent’s deduction of rental charges is a breach of contract and, if so, whether the claimant is entitled to be reimbursed in respect of such deductions?

b. Whether the Claimant exceeded the space allotted for office and workshop within the customs bond area inside the Green Gate, and if so, whether the Respondent is 13 entitled to charge rental for any such excess space?


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                     Page No 11 of 87
                                                                                     O.S.A.No.101 of 2020

                              S.No                           Specific Issues

14 Whether the claimant has damaged the Oil Spill Boom and if so, whether the Claimant is entitled to be reimbursed the deduction made by the Respondent on this account?

Whether the Respondent’s charge of interest for alleged “excess payment” is contrary to the contract and, if so, 15 whether the claimant is entitled to be reimbursed the deduction made by the Respondent on this account? a. Whether the Respondent’s charges made for Floating Crane Hire Charges is contrary to the contract and, if so, whether the Respondent has to repay the Claimant the amounts deducted as Floating Crane Hire Charges? Whether KSP & Sons has done any work of the Claimant to 16 complete the project, and if so, whether the Respondent is entitled to recover any such costs?

Whether the Respondent has to repay the Claimant the amounts deducted against Insurance costs due to the 17 Claimant?

Whether the Claimant is entitled to be reimbursed for 18 the various deductions made by the Respondent? 19 To what other reliefs are the parties entitled?

13. The Arbitral Tribunal allowed Claim Nos.3,4,5,6,7,9 and 10 vide award dated 18.10.2014 for a sum of Rs.426,883,388/- as detailed below:-

PART-L ____________ https://www.mhc.tn.gov.in/judis/ Page No 12 of 87 O.S.A.No.101 of 2020 SUMMARY OF CONCLUSIONS: CLAIM-WISE Claim Description Amt – INR Allowed or No. Rejected Reference BoQ BoQ Payments 199,632,249 199632249 J-9 Overdue as per the Respondent’s Final Quantities dated 25.07.2012 (See Claim 4 belowfor balance of BoQ) 1 Reimbursement of 14,065,411 Rejected K-1.37 Wharfage Charges 2 Soil Conditions in the 1,277,215,471 Rejected K-2.89 Approach Channel 3 Reimbursement of 9,127,096 9,127,096 K-3.18 Customs Duties enacted after Tender 4 Employer’s K-4.44 Reclassification of 106,267,974 106,267,974 New Basin Works to Existing Basin Works 5 Contractors 15,788,952 K-5.25 & K-

                                   Equipment idle due 15,788,952                        5.30
                                   to Traffic within Port
                                   Entrance

                         6         Contractors Equipment 63,332,550       63,332,550    K-6.9


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                                                                               O.S.A.No.101 of 2020

                         Claim          Description        Amt – INR     Allowed or
                         No.                                              Rejected     Reference


                                   idle due to Traffic
                                   outside Port Entrance
                         7         Contractors        146,604,216       146,604,216     K-7.6
                                   Equipment idle due
                                   to the Respondent
                                   Failure to provide
                                   Possession of and
                                   Access to Site


                         8         Contractors         33,302,775       Rejected        K-8.8
                                   Equipment idle due
                                   to adverse Physical
                                   Obstructions


                         9         Contractors           85,762,600     85,762,600      K-9.18
                                   Equipment idle due
                                   to the Respondent
                                   Delay in Providing
                                   No          Objection
                                   Certificate
                         10        Contract      Interest 466,409,752   Claim          K-10.22
                                   Reimbursement due                    allowed, but
                                   to       Respondents                 not
                                   Payment Default (as                  quantified
                                   at 30 April 2013)

                         11        Contractors      losses
                                   due    to     relative 170,744,284    Rejected      K-11.12
                                   Exchange Rates Euro
                                   versus Indian Rupee
                                   due to respondent’s
                                   Payment Default (as
                                   at30 April 2013)


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                     Page No 14 of 87
                                                                                O.S.A.No.101 of 2020

                         Claim           Description       Amt – INR     Allowed or
                         No.                                              Rejected     Reference


                                                         2,588,253,330   626,515,637
                                        Total

14. In this appeal, we are concerned with the correctness of the award as affirmed by the learned single Judge in O.P No.152 of 2015 quay Claim No.7 alone.

15. The appellant challenged the amounts awarded to the 1strespondent towards claim Nos.3,4,5,6,7,9 and 10. However, at the time of hearing before the Learned Single Judge, the appellant restricted its challenge to the amounts awarded to the respondent by the Arbitral Tribunal towards claim No.7 alone.

16. In the present appeal also, the appellant has confined its challenge to impugned order of the learned single judge in so far as it upholds the amount award passed by the Arbitral Tribunal towards Claim ____________ https://www.mhc.tn.gov.in/judis/ Page No 15 of 87 O.S.A.No.101 of 2020 No.7.

17. The Arbitral Tribunal awarded an amount of Rs.14.66,04,216 to the 1strespondent towards Claim No.7.The said claim was towards idle charges for Backhoe Dredger, a Minor Dredger at the same rate for a major dredger.

18. Claim No.7 was awarded by the Arbitral Tribunal based on the reasoning given by the Arbitral Tribunal for awarding Claim No’s 5&6 for two Major Dredgers.

19. Claim No.5 encompassed issue No.5,6 and 10 (a),(b) & (c) and General Claim No.1as extracted above. Claim Nos. 6 &7 were answered in favour of the respondent based on the reasoning adopted by the Arbitral Tribunal for awarding Claim No.5.

20. Since reasoning for Claim No.7 is based on Claim No.5, it will ____________ https://www.mhc.tn.gov.in/judis/ Page No 16 of 87 O.S.A.No.101 of 2020 be useful to reproduce the reasoning of the Arbitral Tribunal for awarding claim No.7. They are reproduced below:-

Claim Number 5:

Contractors Equipment Idle due to Traffic within Port Entrance-INR 15, 788, 952/-

and Specific Issue No. 5, 10 (a), (b) and (c) and General issue 1 (c).

5. Whether the claimant is entitled to its claim for idling of contractor’ s equipment due to traffic within Port entrance?

-------------------

10 (a) Whether the idle time claims were made by the power of attorney in writing within 12 hours of the occurrence of idling to the designated Chief Engineer of the Port as mentioned in Clause 51.1 of the agreement? If not, what effect does this have on the Claimant’s idling claims?

(b) Whether the Claimant is entitled to five idle time charges notwithstanding the early completion of dredging part of the work by 7 months?

(c) Whether any of the Claimant’s claims are to be reduced because of the alleged “excess machineries” brought in for the work for by the Claimant?

---------------------

General Issue 1 (c) Whether the Claimant Is entitled to its claim for idling of contractors equipment due to traffic within Port entrance? K-5.1 The Contract provided for payment of idle time charges and ____________ https://www.mhc.tn.gov.in/judis/ Page No 17 of 87 O.S.A.No.101 of 2020 the claimant claims INR 15, 788, 952 (before adjustment for interest and currency fluctuations) in respect of Claim No 5 and INR 63, 332, 550 under Claim No. 6. The claimant complains that the Respondent has not paid “even a rupee towards idle time charges”…..“despite the fact that the Contract itself quantified probable idle time as 465 hours in the Tender Bill of Quantities” K-5.2 Claim No 5 represent the claim for equipment kept idle due to traffic within the port entrance, and Claim No 6 is idle equipment outside the port entrance. Although there are many similarities in the claim, there is said to be some difference in the contract provisions that were applicable and the claims are therefore considered separately in that success or failure of one does not necessarily translate into success or failure of the other.

K-5.3 Within the Port Entrance, the claimant deployed its CSD’s for dredging works in the area between the chainage 00m to 300m in the channel, and in the harbour basin just within the Port entrance. The contract provided that this area should be subject to a restriction to allow for pilotage between 0700 hours to 1400 hours each day, meaning that dredging works in this area could only be performed after 1400 hours and up to 0700 hours of the subsequent day (Section III clause 6.0[CV III/1020]. The claimant submits (relying on clause 44, [CV III/980]) that subject of this restriction only, the contractor was permitted to work continuously.

K-5.4 The Claimant contends that since Clause 44, just referred to permit the Claimant to work continuously and clause 6.0 specified the envisaged working conditions for chainage 00m to 300m, it follows that, in other areas, the contractor was free to dredge without restriction of time but taking into account ship operations of the day in particular.

____________ https://www.mhc.tn.gov.in/judis/ Page No 18 of 87 O.S.A.No.101 of 2020 K-5.5 Therefore the claimant submits that the combined effect of the above clauses is that apart from the restricted working hours for Chainage 00m to 300m, there was no restriction on the Claimant’s working hours in the Contract. Consistent with that understanding is the fact that the Respondent was liable to pay idle time charges. K-5.6 Clause 38, Section III required the Contractor to “… furnish idle time rates for the “major dredgers” proposed to be deployed by him…”. This was because:

“Contractor may be instructed to stop the work from time to time due to security reason, movement of ships or any other reasons as per the instruction of Port Authorities”.

K-5.7 The claim is quantified, therefore, at INR 15,788,952 in respect of an incurred total payable delay time of 48.24 hours; valued in accordance with the agreed contractual rate of INR 327,300 per dredger hour.

K-5.8 There is an issue between the parties as to which items of plant and equipment attract the payment of idle charges. In that regard the Claimant notes that it was required to provide a method statement for the Works for the approval of the Engineer. It did so, specifying that CSD’s JFJ De Nul, and Zheng He were to be deployed as well as the Backhoe Dredger Jerommeke. Therefore, the Claimant says that its entitlement to idle time charges extends to all of these items of plant.

K-5.9 Although not actively pressed at the hearing, the Respondent has contended that idle time charges are payable only for one “major” dredger, on the basis that clause 38 provides that the idle time rate was to be set by reference to the proposed charges of other ____________ https://www.mhc.tn.gov.in/judis/ Page No 19 of 87 O.S.A.No.101 of 2020 tenderers.

K-5.10 The Claimant submits, and the Tribunal agrees, that when clause 38 is read together with Clause 51.1 [CV III/1039] it is clear that the payment of idle time is not restricted to “major” equipment nor is the restriction only to one item of plant. Clause 51.1 (which is quoted below, see para K-5.14) refers, in terms, to payment in respect of idle time of “dredger/equipment”.

K-5.11We note, moreover, that as a matter of logic the use of more than one dredger by the Claimant should not result in any increase of idle time overall, or any prejudice to the Respondent. If three dredgers were deployed instead of one, the likely logical effect would appear to be (as it appears in fact transpired) that the overall duration of the dredgers on site would be reduced. In other words, on anygiven day an interruption may result in idle time to three machines not one, but the number of days on which the machines were affected would be at least not greater than if only one dredger were deployed over a longer period of time. K-5.12 The “mechanism” by which claims for idle time payment were to be made is that contained at clause 52.1 [CV III/985]. This requires the giving of notice by the Claimant of the event within 30 days of the event giving rise to the claim. The Claimant’s case is that it has given the necessary notice by daily, weekly and monthly reports of the interruptions because of traffic within the Port entrance.

K-5.13 Notification and details of the causes of the delays incurred were also given by the Claimant via log books of its vessels and by way of daily reports which, in the case of the CSD JFJ De Nul, were countersigned by a representative of the Respondent stationed on board that vessel. Similar reports were submitted in respect of the CSD Zheng He. The ____________ https://www.mhc.tn.gov.in/judis/ Page No 20 of 87 O.S.A.No.101 of 2020 Claimant submits that notification in this way complies with the contract requirement for notification in writing.

K-5.14 In response to the claim, the Respondent submits, firstly, that there is a lack of logic in the claim for idle time on a contract which had duration of 18 months but which was completed in approximately 10 months. In other words, the work was finished sooner than the contract required, so any suggestion of “delay” having been caused is inconsistent. This is itself however something of a non sequitur. All that is shown by this is that, without “interruption” by vessel traffic in and out of the Port the contract could have been completed even sooner than it was. Moreover, it may be noted, the total duration of the interruptions which are the subject of the claim is rather short compared to even the 10 months of actual work time. K-5.15 The second point taken on behalf of the Respondent was one canvassed in correspondence, and was set out in the Respondent’s letter dated 16 May, 2011 [RV I/99]. That letter complained that the Claimant had failed to “follow the procedure” stipulated in clause 51.1 of Section III. It appears from the examples given in the letter however that there are two points and the particular complaint was not as to “procedure” as such, but rather as to whether the requirements of clause 51.1 had been met. The examples given indicated that the duration of the interruptions said to have caused the idle time were too short to qualify under the contract.

K-5.16 Accordingly we turn to clause 51.1 for its terms:

“Interruptions to Work The contractor shall allow in his rates for any loss of working time due to whether, surveying positioning of craft, shifting the dredger/equipment during maintenance. Idle time of the dredger/equipment exceeding a continuous period of 4 (four)hours due to interruption caused by Port traffic, berthing/berthing or shifting the vessels and other ____________ https://www.mhc.tn.gov.in/judis/ Page No 21 of 87 O.S.A.No.101 of 2020 operations in the Harbour basin and Approach Channel excluding the specified time under Sub Clause 6.0 Section-III shipping operations (i.e.) from 07.00 hours to 14.00 hours as instructed/agreed by the Engineer shall be paid for at the quoted rates included in the Bill of Quantities subject to the Engineer being notified by the Contractor within 12 hours on each occasion of such interruptions. The idle time for such payment shall be reckoned as the total time in one continuous interruption minus 2 hours…” K-5.17 Although, as referred to above, examples had been referred to in correspondence of instances in which the interruption was said to have been less than the continuous 4 hours referred to in the clause, none have in fact been identified and the only proposition put to the Claimant’s witness, Mr.Levrau, was that these claims for idle time were “against the terms of the contract” (Q.54). Unsurprisingly the witness did not agree.

K-5.18 Also raised in correspondence (in the letter of 29th of May 2011 [RV I/101]) was the proposition that notification to the Engineer within 12 hours had not been complied with. So far as this point is concerned it was elaborated by Mr.Jeyakumar in his affidavit of evidence that what was being suggested was that the notice within 12 hours was a notice which had to be given by the Project Manager of the Claimant (and no one else) to the Engineer (and no one else).

K-5.19 We do not accept that this is a correct reading of the contract. The clauses referred to above contain no such stipulation, and we see no reason why it should be implied that relatively routine notices of this nature should be confined in that way. The contract required notice in writing, nothing more. K-5.20 Moreover, we accept that the format of the daily reports was such as to fulfill the requirements of the contract ____________ https://www.mhc.tn.gov.in/judis/ Page No 22 of 87 O.S.A.No.101 of 2020 as to the giving of notice of delay having occurred. For example, the daily report of 16th of April 2011 [CV V/158] contains a statement under “Remarks” setting out the precise times and durations of interruptions, and naming the relevant vessels. That information was summarized in the box marked “Delays” and subdivided into delays in excess of 4 hours, and delays of less than 4 hours. This, it appears to us, is precisely what the contract required.

K-5.21 In summarizing the idle time the Claimant has [CV VI/109] identified the idle time accruing outside the specified period for Port traffic, and the claim represents only that “additional” element of time. K-5.22 It follows therefore, in our view, that the Claimant’s claim is made out, and the Respondent’s defense does not succeed.

K-5.23 Specific Issue No.5is answered in favour of the Claimant and against the Respondent.

K-5.24 General issue 1(c) would have its impact claim Nos.5,6,7 and 8. It is dealt with here only. We have not been shown any provision either in the contract or in law that if any dispute, in particular, a dispute regarding idle time of dredgers was not raised in pre-bid meetings, it cannot be adjudicated upon by the Arbitral Tribunal. We are interpreting the relevant provisions of the contract and evaluating the evidence in the light thereof. If the Claimant is held entitled to succeed in any claim, the claim cannot be denied tobe awarded simply because an issue regarding that was not raised at the pre-bid meeting.

K-5.25 General issue 1(c) is answered in favour of the Claimant and against the Respondent.

K-5.26 For convenience we take up the group of three issues marked 10 (a), (b) and (c) for consideration here itself as they are related to idle time claims and have already been discussed hereinabove. Resolution of these issues ____________ https://www.mhc.tn.gov.in/judis/ Page No 23 of 87 O.S.A.No.101 of 2020 will have its impact on claims nos.5-6-7-8 and 9. These issues are answered as under:

K-5.27 As to issue 10(a) we hold that the provisions are directory and not mandatory. A substantial compliance would be enough and that was done by the Claimant. A strict compliance with ‘claim within 12 hrs. of the occurrence of idling is not necessary so long as the claim was made within a reasonable time. The Respondent has not shown how it has been prejudiced for non-claim within 12 hrs. K-5.28 Under issue 10(b) we hold the Claimant is entitled to four idle time charges out of five claimed. Early completion of dredging part of the work by seven months does not have any impact on the claim for idle time charges.

K-5.29 Under issue 10(c) it is held that merely because the claimant brought additional machineries than those contemplated by the contract and thereby was able to finish the dredging work before seven months of the schedule time, the claims are not liable to be reduced so long as they are in accordance with the contract and the law.

K-5.30 The Claimant is held entitled to the sum of Rs.15,788,952/-

in respect of Claim No5.

21. Before reproducing reasoning given by the Arbitral Tribunal for awarding Claim No.7, it will be useful to reproduce claim No.7 of the respondent before the Arbitral Tribunal:-

Description of the Dispute:

While executing the Works, Contractor’s Equipment suffered a considerable amount of idle time because of the failure on the part of the Employer to give possession of the Site for which the Contractor is seeking reimbursement as per the Conditions of Clauses 41.1 and 41.2 of Section II and Clause 38 of Section ____________ https://www.mhc.tn.gov.in/judis/ Page No 24 of 87 O.S.A.No.101 of 2020 III of the Contract. The amounts to which the Contractor is entitled under the Contract are included in the Contractor’s Monthly Statements.

So far, the Engineer has not certified and the Employer has not made any payment for the Idle Time of Contractor’s Equipment.

We refer to clauses 41.1 and 41.2 of Section II of the Contract:

- Clause 41.1 d) of Section II of the Contract (Possession of Site and Access thereto) states - The Engineer will, from time to time as the works proceed, give to the Contractor possession of such further portions of the Site as may be required to enable the Contractor to proceed with the executionof the works with due dispatch in accordance with such program or proposals, as the case may be-

- Clause 41.2 of Section II of the Contract (Failure to Give Possession) states – If the Contractor suffers delay and/or incurs costs from failure on the part of the Employer to give possession in accordance with the terms of Sub-Clause 41.1…...the amount of such costs … . shall be added to the Contract price ………-

- The general program referred to under Clause 41.1 was submitted to you together with our tender submission and was submitted to you again vide our letter dd. 22nd November 2010 (our reference OUT/L/TPT/00057).

- We have regularly updated you in writing on the program of the dredgers and the same was discussed every day in berth meetings of your Traffic Department. Clause 41.2 of Section II of the Contract clearly states that if the Contractor suffers additional costs from failure on the part of the Employer to give possession of the Site then the amount of such costs shall be added to the Contract Price. The qualification of the costs was done by multiplying the idle time of Contractor’s dredger with the idle time rate for the ____________ https://www.mhc.tn.gov.in/judis/ Page No 25 of 87 O.S.A.No.101 of 2020 dredgers specified in the Bill of Quantities. As per the conditions of these clauses and as per the Conditions of Clause 38 of III of the Contract, Idle Time is payable for each and every Standby of our equipment / dredgers on your orders and directions.

Idle time for Stoppage of the Works is not idle time for traffic. Clauses 38 and 51.1 cover two different kinds of idle time. The conditions of Clause 38 apply only to idle time for Stoppage of the Works and not to idle time for traffic. The conditions of Clause 51.1 apply only to idle time for traffic (outside of the port entrance) and not to idle time for Stoppage of the Works.

Any idle time for Stoppage of the Works is payable idle time. No condition precedent whatsoever applies for making a valid claim for payable idle time. The three conditions mentioned under Clause 51.1 do not apply as Clause 51.1 is only applicable to idle time for traffic while dredging outside of the port entrance.

In clause 38 the expression – major dredger – is used but this expression is however not defined under Clause 38. In the Bill of Quantities, major dredgers are defined as suitable machinery / equipments including heavy duty cutter suction dredger with cutter head capacity of not less than 3000 HP-. Or in other words, the following of Contractor’s equipment on Site qualifies as major dredging equipment:

- CSD Zheng He

- CSD JFJ De Nul

- BHD Jerommeke

- TSHD Galilei

- SHB Geelvinck, Weseltje, Nyptangh, La Boudeuse “Minor” equipment – although not defined under the Contract – relates only relate to a survey vessel, a tug boat, a multicate or the like.

References:

____________ https://www.mhc.tn.gov.in/judis/ Page No 26 of 87 O.S.A.No.101 of 2020 Clauses 41.1 and 41.2 of Section II of the Contract Clause 38 of Section III of the Contract Clause 57.2 of Section II of the Contract.

Attachments to this Dispute Note:

(1) Calculation sheet detailing the amounts included in Contractor’s Monthly Statement (9 pages) Relief sought:

Payment by the Employer of the amounts included in the Monthly Statements for Idle Time of Contractor’s Equipment because of the failure on the part of the Employer to give possession of Site increased by Interest Charges for late payment and by the applicable Service Tax.

Contractor’s receivables for the Idle Time of Contractor’s Equipment represent a value of not less than 146,604,216 INR + Interest Charges on late payment + Service Tax (to be adjusted)

22. Annexure to Claim No.7 of the 1strespondent indicates a total of 447.92 hours for which the idle time was made for one minor dreger Back Hoe Dredge viz., BHD Jerommeke. Claim No.7 was laid on the strength of Clause 41.1 and 41.2, Section II and Clause No.38, Section III of the Contract.

23. According to the 1strespondent idling charges for BHD ____________ https://www.mhc.tn.gov.in/judis/ Page No 27 of 87 O.S.A.No.101 of 2020 Jerommeke could not be laid on the strength of Clause 51.1, Section III of the Contract. It was specifically averred that the conditions of Clause 51.1 apply only to idle time due to traffic (outside of the port entrance) and not to idle time for Stoppage of the Works.

24. Even, according, the respondent, the three conditions mentioned under Clause 51.1 did not apply to idle charges for BHD Jerommeke and the said Clause was only applicable only to idle time for traffic while dredging outside of the port entrance and outside the Port Entrance. Before the Arbitral Tribunal, the 1strespondent also categorically stated that idle time for Stoppage of the Works was not towards idle time for traffic.

25. Even according to the 1strespondent Clauses 38 and 51.1 cover two different kinds of idle time. The conditions of Clause 38 applies only to idle time for Stoppage of the Works and not to idle time due to port traffic both within and outside the port.

26. The response of the appellant to Claim No.7 before the Arbitral ____________ https://www.mhc.tn.gov.in/judis/ Page No 28 of 87 O.S.A.No.101 of 2020 also gave a vague reply which reads as under:-

The relevant Port’s letters which are common to Claim Nos.5, 6 and 7 are as under. The Claimant has calculated all times other than working time for Jerommeke backhoe dredger as idle time which is not sustainable on the face of it as working time itself is regulated between 14.00 hours to 7.00 hours. The same is covered in Vol.I of the Agreement in Page 102 and 103 in Clause 6.0 Sec.III under the caption Envisaged working condition. The Contractor has accepted the working condition and has signed the agreement in Page 102 and 103 also.

Exhibits of Port’s Letter Dated 16/6/2011 (Exhibit – Document 14), 29/5/5011 (Exhibit – Document 15), 8/7/2011 (Exhibit – Document 16), 20/7/2011 (Exhibit – Document 17) & 20/8/2011 (Exhibit – Document 18) are common for counter for idle time Claims 5, 6 & 7. The Agreement Clause 41.1 (page 56 Volume – I of Agreement) under the sub head “Possession of Site and access thereto” states as follows.

Save in so far as the contract may prescribe

(a) the extent of portions of the site of which the contractor is to be given possession from time to time and

(b) the order in which the works shall be executed as may be mutually agreed on and as per the programme. ____________ https://www.mhc.tn.gov.in/judis/ Page No 29 of 87 O.S.A.No.101 of 2020 From the above, it is clear that from time to time, the extent of portions of the site will be given for contractor’s possession and works shall be executed as mutually agreed on and as per the programme. As per contractor’s original programme, the whole of the works ends only in April 2012.

Clause 46.2 of Sec III (Page I118 of Vol. I of Agreement) – “Port Requirement” which states that “The normal business will be continued throughout the progress of the works and the contractor must conduct his operation so as not to obstruct shipping, Port traffic and operations”.

Further, it also states that the contractor shall work only in specified area authorized by Employer / Engineer.

The same Clause 46.2 of Section III (Page 118 of Vol.I of Agreement). Para 5 also states “Certain areas within the Port basin will be in constant use during the dredging works and these areas are to be kept free from all items of equipment related to the dredging operations unless specifically authorized by the Engineer”.

Clause 38 of Section III (Page 114 of Vol. I of Agreement) specify that “The contractor shall furnish idle time charges for the major dredgers proposed to be deployed by him in the BOQs proposed to be deployed by him in the BOQ”.

b) “Jerommeke is not a major dredger for consideration ____________ https://www.mhc.tn.gov.in/judis/ Page No 30 of 87 O.S.A.No.101 of 2020 of idle time for the following reasons. “Jerommeke” did less than 1% (0.94%) of the whole of the works as per contractor’s method of execution. The above mentioned equipment did only 30,000 cu.m out of the total volume. “Jerommeke” is only a backhoe dredger and not a cutter suction dredger of major nature, (0.746 KW = 1 HP and Total Capacity of Jerommeke is only 840 KW as against the requirement of 2238 KW = 3000 HP to be considered as Major Dredger) their claim of idle time charges idle claim or any other claim only Mr.KurtLevrau alone is legally empowered to write letters and nothing has been given by Mr.KurtLevrau regarding idle time to the Chief Engineer within the stipulated time of 12 hours in writing.

27. However, Claim No.7 was answered by the Arbitral Tribunal contrary the case of the respondent before it. It reads as follows:

“K-7 Claim No.7:

Contractors equipment idle due to the Respondents failure toprovide possession of and access to site - INR.146,604,216.

and specific issue No.7 (a) and (b) a. Whether the Claimant is entitled to its claim for idling of BHD Jerommeke Due to Respondent’s failure to provide possession of an access to site?

b. Whether the BHD Jermommeke is a “major dredger” by reason of its having a cutter power of 3000 HP or more as defined to Clause 38 of Section 3, and if so, ____________ https://www.mhc.tn.gov.in/judis/ Page No 31 of 87 O.S.A.No.101 of 2020 whether idle time is to be determined by reference to BoQ item 5 at page 14 of Vol.I of the agreement?

K-7.1 According to the claimant the employer and its engineer were submitted the detailed evaluation of idle time incurred in respect of vessel idling due to the Respondents* failure to give the claimant assess to and possession of the site in order to execute the works in a regular and orderly manner. The valuation of such idling time is INR.146,604,216 as per annexure submitted with the claim (CV-VI, pp 153-159). The entitlement to such payment is to be found in clause 51.1 of Section III (CV-I, p.122) and B.O.Q. item No.5 (CV-II, p-14).

K-7.2 The statement of defense does not raise any dispute about the data filed by the claimant. The defenses raised are only to; Firstly, that Jerommeke BHD is not covered by the agreement as it is not a major dredger, and secondly, engineer was not notified by the contractor within 12 hours of each occasion of delay as required by Clause 51.1 of Section-III of the Agreement.

K-7.3 The defenses do not call for a detailed scrutiny here at in as much as they have already been dealt with under Claim No.5 & 6 (See para K-5.8 to K-5.10 of this Award). For the reasons assigned there at, the twin defenses are held unsustainable and hence rejected. In fact during the course of hearing the stand taken on behalf of the Respondent* has been that Claims No.5,6 and 7 deserve to be dealt with together as the relevant considerations for adjudging merits thereof would be similar. K-7.4 It is the case of the Claimant # that all such claims as have accumulated were notified from time to time and promptly by the Claiman#t to the Chief Engineer. Illustratively, there are letters dated 09.05.2011 (CV-VII, p.103), letter dated 02.06.2011 (CV- ____________ https://www.mhc.tn.gov.in/judis/ Page No 32 of 87 O.S.A.No.101 of 2020 VII, p.190) and several such letters. The receipt of such letters is not disputed by the Responden*t. The defences are only two which we have already dealt with.

K-7.5 Issue Nos.7(a) & (b) are answered in positive, that is, for the Claimant# and against the Responden*t. It is held that (a) claimant is entitled to its claim for idling of the BHD Jerommeke due to Respondent’s failure to provide possession of an access to site; (b) the BHD Jerommeke is a dredger to be taken into consideration for idle time to be determined by reference to BoQ item 5.

K-7.6 The claim is allowed.

(* Appellant herein: # Respondent herein)

28. The learned Single Judge vide impugned order in O.P No.152 of 2015 has dismissed the challenge to the award in so far as Claim No.7 with the following observation:-

9.In the above back ground, in the light of the submissions of the learned Senior Counsel with regard to the above claim when considered the main submission is that since the contract did not provide for using more than one dredgers and the respondent used more than one dredgers which forced the Port to divert the traffic and only 465 hours has agreed and 500 hours extra dredged and rate given the bigger dredgers cannot be per major dredgers.

10.It is relevant to refer the tender conditions. Clause-C reads as follows:

____________ https://www.mhc.tn.gov.in/judis/ Page No 33 of 87 O.S.A.No.101 of 2020 “(C) Plant and Equipment -– Dredgers and ancillary equipments:-

The intending Tenderers should own or hire suitable plant and equipmesnt if it is on hiring, proof of availability of the plant and equipment on lease/charter for the entire duration of the work at short notice specifically for this project shall also be attached. It will be incumbent on the intending Tenderers to describe fully the equipment and plant which they propose to utilize for completing the work within the prescribed period. The choice of technology and plant and equipment proposed to be deployed will be left to the choice of the intending tenderers, subject to satisfying the Port Trust and the adequacy of the proposed technology and plant and equipment.

The Port Trust has assessed and average daily output of 12000 cubic meters for the scenario of deployment of Heavy Duty CSD to complete the work within the specified period of Fourteen Months for which the following indicative plant & equipment could be required.

1. Cutter Suction Dredger having cutter power 3000 HP or more - 1 No.

2. Self propelled barges having hopper capacity 1600 Cubic Meters - 3 Nos.

3. Sufficient length of Floating / Submersible Pipe lines with and without ball joints 800 mm to 900 mm diameter.

4. Bachoe Dredger having bucket capacity 3 to 4 Cubic Meters - 1 No.

5. Supporting vessels

6. Survey Vessels etc., The license agreement is open to firms / companies / voluntary formed Joint Ventures / Consortia meeting all ____________ https://www.mhc.tn.gov.in/judis/ Page No 34 of 87 O.S.A.No.101 of 2020 the Minimum Eligibility Criteria as stipulated hereinabove.

11. The Port Trust has assessed and indicated that the above mentioned equipments is required, the fact remains that Clause C of the Tender makes it clear that the choice of technology and plant and equipment proposed to be deployed will be left to the choice of the intending tenderers. The above clause is only an illustrative list of equipment required prospectively for the work. Clause 10 the First Right of Refusal also clearly indicate that if an Indian Bidder executes the work by deploying Foreign flag vessel, penalty of Rs.1,00,000/- stipulated per day per dredger for the period of deployment of such vessel for the work. The above clause itself indicates that more than one dredger can be used for work. Similarly Clause 14.1 of the contract clearly indicate that only the contractor shall provide information regarding detailed description of the arrangements and methods and the contractor while preparing the “work programme” shall take into account the Dredger Plan to be furnished by him.

12. Clause 44 permits the contractor to work continuously during day and night, including locally recognised days of rest except the three National Holidays. In clause 57.1 sub-

clause (iv) deals with the number of dredgers mobilised and the cost of mobilisation / demobilisation with break-up details shall be furnished by the contractor. The nature of the work condition is also clearly set out in Clause Section 3 of Clause 6 of the contract.

13. The Respondent’s typed set Volume III Page 972- 983 clearly indicate that the programme submitted for three dredgers was accepted by the Petitioner. When the tender itself clearly indicate that the nature of the equipment is the choice of the contractor since their experience in this field, merely on the basis of illustrative list of equipment as assessed by the Port, it cannot be said that the contract stipulates only one dredger. The learned Arbitrators had dealt in detail the above aspect in the claim No.5 and 6. In ____________ https://www.mhc.tn.gov.in/judis/ Page No 35 of 87 O.S.A.No.101 of 2020 fact clause 38 Section 3 of the contract is also relied upon by the Arbitrators. The tribunal has concluded that Clause 38 read together with Clause 51.1, held that the payment of idle time is not restricted to “major” equipment nor is the restriction only to one item of plant. When the learned Arbitrators have considered the entire aspect and interpreted the contract reasonably, such finding cannot be interfered. As already discussed the contract is only illustrative nature further clauses in the contract indicated above also clearly indicated that there is no restriction to use more than one dredgers. All these aspects considered in detail by the learned Arbitrators. Hence the contention of the learned counsel for the petitioner has no merits. Accordingly the challenge made to the award has to fail. The judgment cited by the learned counsel for the petitioner will not help him in any manner.

14. As far as the interest payment is concerned the learned Arbitrators awarded SBI PLR + 2% for Rs.199,632,249 with effect from 6.8.2011 till payment and interest at the rate of 9% p.a. awarded on the balance amount i.e., on Rs.426,882,388 with effect from 26.04.2013 and Clause 57.2 of the Contract makes it clear that interest charges @ SBI Prime lending rate + 2% shall be payable on delayed payments and the Parties have agreed interest, this court is of the view that in contractual rate of interest cannot be reduced.

15. Though the judgment in Krishna Bhagya Jala Nigam Ltd., case (supra)the Honourable Apex Court taking note of the economic reforms in the country the interest regime has changed and the rates have substantially reduced, the Arbitrators reduced the rate of interest to 9% from 18%. The learned Arbitrators passed the award only on the contract rate of interest and thereafter reduced to 9%. Therefore, the contention of the petitioner to reduce interest also has to fail. Accordingly, the original petition is dismissed.

16. In the result, the Original Petition is dismissed. No ____________ https://www.mhc.tn.gov.in/judis/ Page No 36 of 87 O.S.A.No.101 of 2020 costs”.

29. Assailing the impugned order of the learned Single Judge in upholding the award impugned under Section 34 of the Arbitration and Conciliation Act, 1996, the learned Senior Counsel for the appellant Port Trust instructed by the learned counsel for the appellant submits that the award was vitiated on account of patent illegality and was contrary to public policy and that the learned single judge misread the contract and has wrongly upheld the same.

30. According to the 1strespondentas per the intimation given to the appellant on 21.11.2010, the following equipment’s were to be used and employed for dredging purpose.

I. Cutter Suction Dredger: For dredging of the New Basin and the Existing Basin;

II. Cutter Suction Dredger and Split Open Barge: For Dredging of Navigational Channel;

III. Back Hoe Dredger: For dredging the areas alongside the berths.

31. It is submitted that as per Clause 42 of Section II of the License ____________ https://www.mhc.tn.gov.in/judis/ Page No 37 of 87 O.S.A.No.101 of 2020 Agreement, the whole work including pre-dredge survey, mobilisation, post-dredge survey and demobilisation has to be completed within a period of 14 months from the 60th day of the work order/letter of acceptance or actual date of commencement of work whichever is earlier as stated in the Instruction to Tender and in accordance with provisions of Clause 47 with the time stated in the Appendix to Tender for the whole of the Works calculated from the Commencement Date, or such extended time as may be allowed under Clause 43.1.

32. The1strespondent was expected to commence the work within 60 days from the date of the work order and expected to proceed with the work with due expedition and without delay.

33. The learned senior counsel for the appellant submitted that the entitlement to the claim as set out by the 1strespondent in the statement of claim was made in terms of 41.1, Section II of the agreement between the parties. In para 4.3 under claim no.7 of the statement of claim, the 1strespondent had specifically stated that Clause 44, Section II permitted ____________ https://www.mhc.tn.gov.in/judis/ Page No 38 of 87 O.S.A.No.101 of 2020 the 1strespondent to work continuously during day and night except in the area between chainage 00m to 300m.

34. Since the BHD Jerommeke was not scheduled for deployment in the said area, it could be operated day and night to carry out the dredging near the berth.

35. It was submitted that even as per the 1strespondent before the Arbitral Tribunal in its claim petition, reliance was placed on Clause 41.2, Section II of the Agreement though it was attracted only if respondent suffered delay and/or incurred costs on account of the alleged failure of the appellant to give possession of the site to the 1strespondent, in accordance with Clause 41.1.

36. It is submitted that no case made out for delay in handing of site under Clause 41.1 Section II. It is submitted that though there were intermittent stoppage of work due to port traffic it was factored by the ____________ https://www.mhc.tn.gov.in/judis/ Page No 39 of 87 O.S.A.No.101 of 2020 respondent.

37. It was submitted thatas per Clause 37, Sec III, the works to be carried out inside the seaport was to be so programmed to ensure that the time period required to carry out the entire activities was minimum and that this may call for working continuously or at unscheduled hours as directed and approved by the engineer. It is submitted that since BHD Jerommeke was not a Major Dredger and there for Clause 38, Section III was not attracted.

38. Learned senior counsel for the appellant also submitted that the specific plea of the 1strespondent also was that Clause 51.1 of Section III of the contract did not apply to the Claim No.7 even as per the 1strespondent in para 4.7 of the claim statement. However, the Arbitral Tribunal allowed the claim under clause 5.1.1 of Section III. ____________ https://www.mhc.tn.gov.in/judis/ Page No 40 of 87 O.S.A.No.101 of 2020

39. The learned senior counsel for the appellant further submitted that, the appellant had calculated every possible delay for Jerommeke Backhoe Dredger and was therefore not entitled to additional compensation.

40. Learned counsel for the appellant further submitted that as per Clause 6, section III of License Agreement, dredging time was between 14.00 hours to 7.00 hours on the next day as Port working time would be between 7am to 2pm. However, the 1strespondent has not only assumed that it was entitled to work continuously 24 hours x 7 days with its Jerommeke Backhoe Dredger but had also applied the rates given in the Bill of Quantity for Equipment and Dredger for situation under Clause 51.1, Section III.

41. The learned senior counsel for the appellant also submitted that though Claim No.7 was admittedly based on Clause 41.1 and 41.2 of Section II read with Clause 38, Section II, the Arbitral Tribunal allowed the said Claim under Clause 51.1 of Section III. Thus, the award passed was patently illegal. He therefore submits that the award was perverse and there ____________ https://www.mhc.tn.gov.in/judis/ Page No 41 of 87 O.S.A.No.101 of 2020 was patent illegality and was liable to be set aside.

42. The learned senior counsel for the appellant further referred to clause 38 Section II which refers to idle time charges for major dredger. It is submitted that though clause 51.1 Section III provides for idle time of dredger/equipment to be paid at the quoted rates in the Bill of quantities, it is not applicable for idle charges for stoppage of work near berth.

43. The learned counsel senior counsel for the appellant submitted that Claim No. 5 related to contractors’ equipment idle due to traffic “Within Port Entrance” while Claim No 6 related to contractors’ equipment idle due to traffic “Outside Port Entrance” and therefore same yard stick cannot be applied to a minor dredger like Backhoe JerommekeDredger.

44. It was submitted that Claim No 5 &6 were allowed by mis- reading clause 38 with clause 51.1 of section III as is clear form para K5.10 of the award by observing “while that the claimant (respondent herein) submits and the tribunal agrees, that when clause 38 is read together with ____________ https://www.mhc.tn.gov.in/judis/ Page No 42 of 87 O.S.A.No.101 of 2020 clause 51.1, it is clear that the payment of idle time is not restricted to “major” equipment nor is the restriction only to one item of plant. Clause 51.1 refers in terms to payment in respect of idle time of “dredger/equipment”.

45. It was submitted that Claim No 7 was mis-construed by Arbitral Tribunal. The claim of the 1strespondent was under clause 41.1 and 41.2 of section II, but the Arbitral Tribunal has erroneously held “The entitlement of such payment is to be found in 51.1 of Section III and BOQ item no.5.”This was patent illegality.

46. It was submitted that the defence of the appellant in its counter was that respondent had calculated all times other than the working time of the Backhoe Dredger as idle time and such a claim was impermissible in the light of clause 6 and clause 46.2 of section III of the license agreement. ____________ https://www.mhc.tn.gov.in/judis/ Page No 43 of 87 O.S.A.No.101 of 2020

47. In essence the defence was that no claim for the idle charges could be made during the working hours of the port and no claim could be made for operations that would obstruct shipping and port operations. Yet, the award proceeded on an erroneous basis that the defence of the appellant in respect of Claim No 7 was the same as to Claim No.5 &6 by holding “The defence do not call for a detailed scrutiny here at in as much as they have already been dealt with claim 5&6”

48. It was submitted that as per Clause 46.2, Section III (Port requirement), the 1strespondent must conduct its operations so as to not obstruct shipping and/or port traffic. He submits as per Clause 46.2,Section “The normal business will be continued throughout the progress of the worked and the contractor must conduct his operations so as not to obstruct shipping, port traffic and operations”. Thus, even otherwise clause 41.1 and 41.2 of section II of license agreement was not attracted. ____________ https://www.mhc.tn.gov.in/judis/ Page No 44 of 87 O.S.A.No.101 of 2020

49. It was further submitted that Clause 38 applies only to idle time charges for major dredger and was not applicable to minor Backhoe Jerommeke Dredger.

50. It was submitted that the award passed was patently illegal and against public policy as the reasoning adopted for awarding Claim No’s 5&6 have been made the basis for allowing Claim No. 5 by relying on clause 51.1 read with clause 38 of section III. Since the Arbitral Tribunal has treated Claim No 7 in the same manner as Claims No’s 5&6 and allowed Claim No 7 there was a serious miscarriage of justice. Further, Clause 38 III could apply only to Major Dredgers in the event of stoppage of work as it is evident from a reading of the said clause.

51. It is submitted that the Tribunal failed to see that Claim No 7 was made even in respect of the working hours of the port. It was submitted that idling time could not be claimed for period when normal port operations were going on. The 1strespondent claim for 447.92 hours would not have been granted.

____________ https://www.mhc.tn.gov.in/judis/ Page No 45 of 87 O.S.A.No.101 of 2020

52. The learned senior counsel further submitted that as per Patel Engineering Ltd vs North Electric Power Corporation Ltd., (2020) 7 SCC 167, it has been held that when an award results in an unjust enrichment and is contrary to the fundamental policy of Indian law, it is a ground for interference with an arbitral award under section 34(2) of the Act.

53. It is submitted that if the award in the instant appeal is not interfered with, it would result in unjust enrichment as the 1strespondent would get for a small Backhoe Jerrommeke Dredger, the idle time charges for major dredger computed at Rs.3,27,300/- per hour and that too for 447.92 hours which is almost the equivalent to the time for the entire project.

54. Although, the 1strespondent had estimated the idle time hours at 465 hours for the entire project in the Bill of quantities the idle time charges allowed in the award was 951.66 hours, more than twice the period estimated while awarding Claim No.5,6, and7. ____________ https://www.mhc.tn.gov.in/judis/ Page No 46 of 87 O.S.A.No.101 of 2020

55. Defending the impugned order, the learned counsel for the 1strespondent submitted that no new ground can be taken by the appellant under section 37 of the Act. It is submitted that the scope of interference under section 37 is narrower than under section 34 and the courts have tended to treat section 37 proceedings on par with a second appeal.

56. It was submitted that in State Trading Corporation of India Ltd., vs Toepfer International Asia PTE Ltd., (2014) SCC Online Del 3426a Hon’ble Division Bench of the Delhi High Court held that the scope of appeal under section 37 is even more restricted. The court held that analysing the contract between the parties and interpreting the terms and conditions thereof will be nothing else than sitting in appeal over the arbitral award which is not permissible. The court dismissed the appeal with costs. It also noted that certain arguments were raised for the first time in appeal.

57. It was submitted that in Thanikkudam Bhagwati Mills Ltd., vs Reena Ravindra Khona and ors., 2007 (3) ARBLR 161 Bom / 2007 ____________ https://www.mhc.tn.gov.in/judis/ Page No 47 of 87 O.S.A.No.101 of 2020 (4) BomCR 21 Hon’ble Division Bench of Bombay held that it is well settled law that a petitioner challenging an award under the provisions of the Act has to raise all the grounds of challenge in the petition filed. In the absence of ground being specifically raised in the petition filed under section 34, the petitioner is not entitled to canvass any new ground extraneous to those grounds enumerated in such petition.

58. It was further submitted that in Mahanagar Telephone Nigam Ltd., vs Fujitshu India Pvt., Ltd., (2015) 2 ALR 335 (Delhi) Hon’ble Division Bench of the Delhi High Court held that under Section 37, the extent of judicial scrutiny and scope of interference is further narrower than under section 34 of the Act as an appeal under section 37 is like a second appeal. The court further held that where there are concurrent findings of fact and law, the Appellate Court would be very cautious and reluctant to interfere in the findings returned in the award by the Arbitral Tribunal and confirmed by the court under section 34.

____________ https://www.mhc.tn.gov.in/judis/ Page No 48 of 87 O.S.A.No.101 of 2020

59. It was submitted that since the scope of interference under Section 37 of the Act, was restricted the present appeal was liable to be dismissed and therefore prays for dismissal of the appeal. It is submitted that it is well settled that only grounds taken under section 34 can be taken up for hearing and no new ground can be entertained under Section 37 of the Act as it is barred under limitation and cannot be considered at all.

60. It was submitted that clause 51.1 of the license agreement referred in the award is also relevant for claim No.7. It contains the provisions for notice for idle time charges. The appellants submitted that in his counter before the Arbitral Tribunal, the appellant had relied on clause 51.1 of the License Agreement as the notice provision for all the claims no.5 to 7.

61. The learned counsel for the 1strespondent submitted that in claim statement before the Arbitral Tribunal proceedings, claim was to be paid on 465 hours in the Bill of Quantities. It is submitted idle time charge was well below the estimated idle time and the appellant had not disputed ____________ https://www.mhc.tn.gov.in/judis/ Page No 49 of 87 O.S.A.No.101 of 2020 the statement. There was not even a pleading regarding 465 hours idle time in the appellant’s counter to the claim statement or in the appellant’s counter to the rejoinder of the respondent. Section II clause 54.1 of the license agreement clearly states that the quantities set out in the Bill of Quantities are the estimated quantities for the works and they are not to be taken as the actual and correct quantities of the works.

62. It was further submitted that the 1strespondent cannot increase or decrease the idle time as idle time and it is payable only for interruptions caused by Port order/actions. It is submitted that the clause 51.1 of the License Agreement was solely in the control and power of the appellant. Thus, this ground is also an entirely new ground and is untenable under the proceedings under section 37 before this court.

63. The learned counsel for the 1strespondent submits that the Arbitral Tribunal had considered the specific issue no 7(b). It is submitted that the Arbitral Tribunal had rightly interpreted the clause 38 and 51.1 of ____________ https://www.mhc.tn.gov.in/judis/ Page No 50 of 87 O.S.A.No.101 of 2020 section III of License Agreement and has held that the payment of idle time is not restricted to major equipment alone and there is no restriction.

64. It was further submitted that Clause 38, Section III of the License Agreement requires a contractor to furnish idle time charges for “Major Dredgers” proposed to be deployed by him in the Bill of Quantities only for the purpose of equalisation and evaluation of tenders and also submitted that when it came to payment for idle time of the license agreement provided for payment of idle time charges for “dredger/equipment” and not for major dredger only.

65. It was submitted that the Bill of Quantities was estimated based on which tenders which were to be applied on all dredgers or equipment. However, keeping in mind that different powered equipment/vessels would be involved, the Tender required a bidder to quote idling charges only for major dredger and the lowest idle time charges quoted by another bidder were to be accepted.

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66. Therefore, the tender equalised the idling charges for dredgers and equipment with reference to the lowest idle time charges quoted by other bidders. This pre-acceptance exercise of equalisation obliterated the distinction between dredgers as major or minor. The payment was for dredger/equipment that were to be deployed for the works and not was not restricted for major dredgers only.

67. It was submitted that the contract does not distinguish between major and minor dredgers. The clause 10(iv), section I shows that penalties were imposed without distinction as to major or minor dredgers or cutter suction Dredgers or Backhoe Jerommeke Dredgers(BHD). This clause penalises an Indian bidder who has been awarded the contract preferentially if he uses foreign flagged vessels. The penalty is stipulated as Rs.1lakh per day per dredger for the period of deployment of foreign flag vessel for the works.

68. It was submitted that the Backhoe Jerommeke Dredgers was a specialised dredger used for dredging berths and jetties. Though it is not a ____________ https://www.mhc.tn.gov.in/judis/ Page No 52 of 87 O.S.A.No.101 of 2020 major dredger, it was an equipment under Clause 51.1 Section III. It was therefore prayed that the present appeal be dismissed with cost.

69. We have considered the relevant portions form the impugned order of the learned Single Judge and the relevant portions of award of the Arbitral Tribunal impugned in O.P.No.152 of 2015. We have also gone through the License Agreement dated 27.12.20010 and the Tender Document. We have also considered the arguments advanced by the learned Senior Counsel for the appellant and the learned counsel for the respondent.

70. The License Agreement signed between the appellant and the 1strespondent was based on “Bill of Quantities” for the work to be undertaken by the 1strespondent for the appellant ie. “Deepening of the Channel and Basin to Cater to 12.80 Metre drop vessel at Tuticorin Port. The rates were calibrated for the work to be undertaken over a period of 14 months.

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71. Following categories of work was to be undertaken by the 1strespondent for which the 1strespondent made a claim for payment of the following amount:-

Sl. Quantity Description of Rate Per Amount No Work

1. L.S Mobilization L.S L.S Rs. 243,56,284 charges of all equipments 2 14,98,935 Dredging the 1,393 1cu.m Rs.208,80,16,455 approach channel etc.,

3. Dredging the 1RM dock basin from the existing level

a) 13,18,975 Existing basin 1,101 1 cu.m Rs.145,21,91,475 Cu.m

b) 3,88,298C New basin 2,034 Rs.78,97, 98,132 u.m

4. L.S Demobilisation L.S L.S Rs. 8,11,87,614 charges of all the equipments including dredgers, ____________ https://www.mhc.tn.gov.in/judis/ Page No 54 of 87 O.S.A.No.101 of 2020 Sl. Quantity Description of Rate Per Amount No Work plants, materials, labour etc., Rs.465,47,56, 517 Sub Total Service tax at Rs. 47,94,39,921 10.30% for Sl.No 1-4 465 hours Idle time Hour charges beyond

5. 4 hours 3,27,300 subclause 51.1 under Section-

III (interruption to work) will be paid GRAND Rs.513,41,96,438 TOTAL

72. The estimated value of the work as per License Agreement was Rs.465,47,56,517/. The 1strespondent however, completed the work ahead of the Schedule by 8 months on 2.4.2012.

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73. In this case, we are not concerned with the manner in which the Claim Nos.5 and 6 were awarded by the Arbitral Tribunal to the 1strespondent as the appellant has not chosen to question the same in this appeal though the appellant had originally challenged the same along with other claims awarded by the Arbitral Tribunal in O.P.No.152 of 2015.

74. As per Clause 14.1, of the License Agreement, the 1strespondent was required within 30 days from the date of work order, submit to the Engineer of the appellant for its consent to the program, in such form and detail as desired or as the Engineer may reasonably prescribe, for the execution of the Works.

75. The 1st respondent was also expected to provide in writing to the Engineer a detailed description of the arrangement and the method which the 1strespondent proposed to adopt for the execution of the contracted work.

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76. The 1strespondent while preparing the “work programme” was take into account the “Dredger Plans” to be furnished by it under Sub- Clause 44.1 of Section-III [B. Particular Specification] of the License Agreement. The expression “dredger plan” has not been defined in Section II of the License Agreement.

77. As per clause 44.1, Section III-Particular Specification, before any plant is brought to the site, a detailed Dredging programme with details of Dredging Zones and dredger workplans, time period for each zone, particulars of dredger’s, and other equipment which the 1strespondent proposed to use was to be submitted to the Engineer for approval.

78. Clause 44.2, Section-III stipulated the Method of Execution. It stipulates that before the commencement of the Dredging work, the 1strespondent shall submit a detailed method statement to the engineer of the appellant for approval.

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79. The Method of Execution was to show how the 1strespondent intended to carry out the dredging of various types of soil/hard strata work/rock. Should the 1strespondent find it necessary to supplement/optimise method of operation during the progress of the Works and shall at the time submit an optimised method statement to the Engineer for his approval.

80. As per clause 45 of Section III, respondent was to record and submit to the engineer before 2nd day of every week, a progress report for the preceding week showing up to date progress and progress during the previous week on all items of each section of the work in relation to and in consideration of detailed CPM schedule.

81. In addition, the 1strespondent had to submit on the 2nd day of every month a detailed progress report giving the progress of the work carried out during the preceding month and also indicating the upto date progress of the work.

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82. Clause46.2 of Section III, provides for Port Requirement. The normal business was to be continued throughout the progress of the work and the 1strespondent was conduct operation so as not to obstruct shipping port traffic and operations.

83. The 1strespondent was also to obey the orders and directions of the Engineer of the appellant or authorised representative in the course of the discharge of duties. The 1strespondent was to cease dredging whenever and for so long as the engineer may consider it essential to do so. Floating plant were to display day and night signals as was required by the Port authority.

84. Clause 6.0, Section III deals with Envisaged Working Condition. The dredging in the approach channel beyond Chainage 300 m was to be so arranged as to have the least disturbance to the shipping operations. The ____________ https://www.mhc.tn.gov.in/judis/ Page No 59 of 87 O.S.A.No.101 of 2020 dredging in the area between Chainage 00m to 300 m in the channel and in the harbour basin just within the report entrance may be proposed to be done with a specified proposal acceptable to the port of having a restricted pilotage between 7.00 hours to 14:00 hours which would imply that the dredging could be done from 14:00 hours of the 1st day to the 7.00 hours of the subsequent day and so on.

85. A detailed working arrangement was expected under the contract to be made in consultation with the operational department of the port. Thus, the dredging work was to be carried out between 2 o’clock in the afternoon and 7 o’clock in the morning of the next day of each day.

86. The dredging in the harbour basin where it would be normally required/utilised for ship manoeuvring within the harbour could be done taking into consideration the ship movement of the day in particular and the tender is just a suitable time for shipping in the methodology proposed by him.

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87. For dredging in the areas adjacent to the specified berths and jetties, the 1strespondent was to give the total number of days required for the dredging including placing of the barge and removal of pipelines if any, so that the downtime/non-operational time of the berths can be pre-assessed and compared in the qualification stage itself.

88. The methodology and the equipment proposed were to be strictly adhered to and utilised in the actual dredging, the successful contractor and any alternatives that are required or may be suggested shall be put forth in the methodology and equipment requirements.

89. While upholding the award of the Arbitral Tribunal, the learned Single Judge has given a finding that the Arbitral Tribunal has given a fair and reasonable interpretation of the clauses in the Agreement and therefore, the invocation of Section 34 of the Arbitration and Conciliation Act, 1996 was not justifiable.

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90. The learned Single Judge has extracted portions from the License Agreement and has come to a conclusion that under Clause 14.1 of the Contract clearly indicated that the 1strespondent was to merely provide information regarding the detailed description of the arrangements and methods and that the 1strespondent while preparing the work programme was to take into account the Dredger Plan to be furnished, though there is no dispute on the same.

91. The learned Single Judge has upheld the conclusion of the Arbitral Tribunal that Clause 38 read with Clause 51.1 was not confined only to major equipment and therefore, conclusion of the Arbitral Tribunal cannot be interfered under Art.34 of the Arbitration and Conciliation Act, 1996. It is to be noted that Clause 38 operates in a different sphere while Clause 51.1 operates in a different sphere.

92. Under Section 34 of the Arbitration and Conciliation Act 1996, ____________ https://www.mhc.tn.gov.in/judis/ Page No 62 of 87 O.S.A.No.101 of 2020 a Court cannot substitute the reasons given by the Arbitral Tribunal either to uphold or to set aside an award. It has to merely examine whether the arbitral award passed by the Arbitral Tribunal suffers from any of the infirmities, weakness mentioned in the said provisions. If it does find that the award suffers from any of infirmities and weakness which makes it vulnerable and susceptible for being set aside, it has to merely aside the award to that extent.

93. In this case, it is noticed that the Arbitral Tribunal while allowing Claim No.7 of the respondent, has merely relied on the reasoning given by it for awarding Claim Nos. 5 and 6 even though even according to the respondent, it was entitled for compensation for idle time in claim No.7 in terms of Clause 38, Section III of the License Agreement read with Clause 41.1 and Clause 41.2, Section II of the License Agreement due to “Stoppage of the Works” by the appellant.

94. It is also to be noticed that Claim No.7 was quantified by the 1strespondent based on “Bill of Quantity” attached to the License ____________ https://www.mhc.tn.gov.in/judis/ Page No 63 of 87 O.S.A.No.101 of 2020 Agreement by relying on Clause 51.1 Section III (Interruption to work)though even according to the respondent conditions of Clause 51.1 was attracted only for idle time for traffic (outside of the port entrance) and not to idle time for Stoppage of the Works.We shall also refer to these two clauses in the course of this order.

95. However, the break of the Claim No.7 in Annexure to the Claim Petition of the 1strespondent before the Arbitral Tribunal was passed on clause 51.1. Section III. It is reproduced below:-

Payable Idle Time (hours) January 2011 0.00 February 2011 0.00 March 2011 151.25 April 2011 63.25 May 2011 76.84 June 2011 156.58 ____________ https://www.mhc.tn.gov.in/judis/ Page No 64 of 87 O.S.A.No.101 of 2020 Payable Idle Time (hours) July 2011 0.00 August 2011 0.00 Total payable 447.92 delay time (hours) Idle time for a 3,27,300 INR/hour dredger Total amount payable for idle INR 14,66,04,216 time for traffic while dredging outside of the port entrance:

447.92 x 3,27,300 = Rs.14,66,02,214/-

* Rs.3,27,300/- is the rate prescribed for event under clause 51.1 of Section III of the Contract.

96. Extract from the Bill of Quantity attached to the agreement reads as under:-

____________ https://www.mhc.tn.gov.in/judis/ Page No 65 of 87 O.S.A.No.101 of 2020 NAME OF WORK: “DEEPENDING OF THE CHANNEL ANDBASIN TO CATER TO 12.80 M DRAUGHT VESSELS AT TUTICORIN PORT” BILL OFQUANTITIES.

Sl. Quantity Description of work Rate (in figures Per Amount and words) No. 1 - - - - -

2 - - - - -

3 - - - - -

4 - - - - -

Idle Time Charges Rs.3,27,300.00 beyond 4 hours as 5 465 indicated in Sub- (Rupees Three Hour Clause 51.1 under lakhs,TwentySeve hours Section III n Thousand and (Interruption to Three Hundred work) will be paid Only)

97. Claim No.7 before the Arbitral Tribunal of the 1strespondent was for compensation for idling of the equipment due to “Stoppage of the Works” by the appellant. Claim No.7 was laid on the strength of Clause 41.1 and Clause 41.2 of Section II read with Clause 38 of Section III and on ____________ https://www.mhc.tn.gov.in/judis/ Page No 66 of 87 O.S.A.No.101 of 2020 the strength of clause 51.1 Section III.

98. Clause 38 of the License Agreement based on which the Claim No.7 was made was applicable only for “Stoppage of Work” where major jetties were used. It was not applicable for stoppage of work near berth.

99. As per Clause 41.2, Section II of the license agreement, if the 1strespondent suffered delay and/or incurs cost from failure on the part of the appellant to give possession in accordance with the terms of sub- clause 41.1, amounts were payable.

100. Under clause 43.1, Section II the Engineer, after due consultation with the Employer (appellant herein) and Contractor (respondent herein) were was to determine, any extension of time to which the Contractor was entitled, the amount of such cost which shall be added to the Contract Price and shall notify the Contractor accordingly. If there was any extension of time alone the respondent would have been eligible ____________ https://www.mhc.tn.gov.in/judis/ Page No 67 of 87 O.S.A.No.101 of 2020 for additional compensation.

101. In this case, there is no delay in handing over possession of the site to the respondent. Thus, neither Clause 41.1 & 41.2 Section II nor Clause 38 or 51.1were attracted in the facts of the present case. In fact, the work was completed 8 months ahead of the schedule. As such there was no failure to give possession of site.Therefore, the Arbitral Tribunal has also not discussed this aspect in its award though this was one of the issues which the Tribunal should havedeliberated while passing its award.

102. Further, Clause 43.1 Section II of the License Agreement was attracted only in the event of:-

i) any delay caused by the amount or nature of extra or additional work, or

ii) exceptionally adverse climatic conditions, or

iii) any delay, impediment or prevention by the Employee

iv) other special circumstances, which may occur, other than through a default or ____________ https://www.mhc.tn.gov.in/judis/ Page No 68 of 87 O.S.A.No.101 of 2020 breach of Contract by the Contractor to an extension of the Time for Completion of the Work, or any Section or part thereof, the Engineer shall, after due consultation with the Contractor, determine the amount of such extension and shall notify the contractor accordingly.

103. Therefore, the 1strespondent (contractor) could claim additional compensation from the appellant (employer) only in the event the 1strespondent suffered loss on account of any delay and/or incurred any additional cost on the account of the failure on the part of the appellant to give possession of the site in accordance with the terms of sub-clause 41.1.

104. The claim was also not laid on the strength of Clause 51.1, Section III of the License Agreement although, the above calculation in Annexure to Claim No.7 was based on Bill of Quantity attached to the License Agreement. Bill of Quantity which was applicable only for situation contemplated in Clause 51.1, Section III of the License Agreement. Thus, this aspect ought to have been noticed by the Arbitral Tribunal and learned Single Judge.

105. If the Arbitral Tribunal had given a reasonable interpretation ____________ https://www.mhc.tn.gov.in/judis/ Page No 69 of 87 O.S.A.No.101 of 2020 to the Clauses in the License Agreement, there is no scope for interference under Section 34 of the Arbitration and Conciliation Act, 1996. On the other hand, if the interpretation given is contrary to the License, we are bound to interfere and set aside the award. We shall therefore refer to the relevant clauses in the agreements. As per Associate Builders vs Delhi Development Authority [2015 (3) SCC 49] it has been held in para 42.3 as follows:

“In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. Thus, the third sub-head of patent illegality is really a contravention of Section 28(3) of the Arbitration Act. This contravention must be understood with a caveat. 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. 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 fair-minded or reasonable person could do.”

106. As per clause 46.2 of Section III, the normal business will be continued throughout the progress of the work and the contractor must conduct his operation so as not to obstruct shipping, port roughing and ____________ https://www.mhc.tn.gov.in/judis/ Page No 70 of 87 O.S.A.No.101 of 2020 other operations. Further the amount that could be awarded had to be in terms of Section 28(3) of the Arbitration and Conciliation Act,1991 which reads as under:-

“ prior to its amendment in 2015 “In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.”

107. Consequence for failure to give “Possession of Site” is governed by Clause 41.2 of Section II of License Agreement. It was relied by the 1strespondent before the Arbitral Tribunal in support of the Claim No.7. Consequence of failure to give possession is prescribed in Clause 41.2 of the License Agreement. Both the Clauses are reproduced below:-

Clause 41.1 of Section II: Clause 41.2 of Section II:

Possession of Site and Failure to Give Possession Access thereto Save in so far as the Contract may prescribe If the Contractor suffers delay

a). the extent of portions of and/or incurs costs from on the the Site of which the part of the Employer to give possession in accordance with Contractor is to be given terms of Sub-Clause-41.1, the possession from time to time ____________ https://www.mhc.tn.gov.in/judis/ Page No 71 of 87 O.S.A.No.101 of 2020 Clause 41.1 of Section II: Clause 41.2 of Section II:

and Engineer shall, after due consultation with the Employer

b). the order in which the and Contractor, determine, any Works shall be executed as extension of time to which the may be mutually agreed on Contractor is entitled under and as per the programme Clause-43.1, and the amount of such costs which shall be added to

c). so much of the Site, and the Contract Price and shall notify

d). such access as, in the Contractor accordingly. accordance with the Contract, is to be provided by the Employer as may be required to enable the Contractor to commence and proceed with the execution of the Works in accordance with the program referred to in Clause – 14.1, if any, and otherwise in accordance with such reasonable proposals as the Contractor shall, by notice to the Engineer. The Engineer will, from time to time as the Works proceed, give to the Contractor possession of such further portions of the Site as may be required to enable the Contractor to proceed with the execution of the Works with due dispatch in accordance with such program or proposals, as the case may be.

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108. The above Clauses were not attracted as there was no there was no case for “Failure to give possession of Site” to the 1strespondent by the appellant. On the other hand, the claim No.7 had to be examined only in the light of the Clause 38, Section III of the License Agreement. The Arbitral Tribunal however referred to Clause 51.1, Section III of the License Agreement read with Clause 38, Section IIIof the License Agreement to award Claim No.7 infavour of the respondent. This was the reason given for awarding Claim No.5 & 6 by the Arbitral Tribunal.

109. Since Claim No.7 was awarded by the Arbitral Tribunal referring to Clause 51.1 of Section III of the License Agreement read with Clause 38 of Section IIIof the License Agreement, we shall also refer to these clauses. They are reproduced below:-

Clause 38: Stoppage of Work Clause 51.1: Interruption to Work Section III Section III Contractor may be instructed to The contractor shall allow his ____________ https://www.mhc.tn.gov.in/judis/ Page No 73 of 87 O.S.A.No.101 of 2020 stop the works from time to time rates for any loss of working time due to security reason, movement due to weather, surveying, of ships or any other reasons as positioning of the craft, shifting per the instruction of Port of dredger/equipment during Authorities. maintenance. Idle time of dredger/equipment exceeding a continuous period of 4 (four) The Contractor shall furnish idle hours due to interruption caused time charges for the major by port traffic, birthing/and dredgers proposed to be birthing or shifting of vessels and deployed by him in the BOQ. The other operations in the harbour rate for idle time charges quoted basin and Approach Channel by the lowest Bidder will be excluding the specified time finalized taking into account the under clause 6.0, of Section III lowest idle time charges quoted shipping operations (i.e) from by the other Bidders. 07.00 hours to 14.00 hours as instructed/agreed by the Engineer shall be paid for at the quoted rates included in the Bill of Quantities subject to the Engineer being notified by the Contractor within 12 hours on each occasion of such interruptions. The ideal time for such payment shall be reckoned as the total time in one continuous interruption minus 2 hours. Berthing programme of measures will be provided everyday after berthing meeting at 12:00 hours or when ETAS are made available to port by shipping agencies.

Notice will be given approximately one hour before the sailing of the vessel and the contractor shall contact the port Marine Department for any information in this regard.

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110. Clause 51.1, Section III deals with idle time of dredger/equipment exceeding a continuous period of 4 hours. A contractor is to be compensated due to interruption caused by port traffic, berthing/and berthing or shifting of vessels and other operations in the harbour basin and Approach Channel excluding the specified time under clause 6.0, of Section III shipping operations (i.e) from 07.00 hours to 14.00 hours as instructed/agreed by the Engineer in the Bill of Quantities.

111. Even according to the 1strespondent Clause 51.1, Section III was applicable only for interruption outside the port entrance. Therefore, Clause 51.1, Section III was not attracted for the purpose of Claim No.7.

112. As per Clause 51.1 Section III of the License Agreement which has been extracted above, the 1strespondent was to allow in its rates for any loss of working time due to the weather, surveying, positioning of craft, ____________ https://www.mhc.tn.gov.in/judis/ Page No 75 of 87 O.S.A.No.101 of 2020 shifting of dredger / equipment during maintenance.

113. Idle time of the dredger / equipment exceeding a continuous period of 4 (four) hours due to interruption caused by Port traffic, berthing / unberthing or shifting of vessels and other operations in the Harbour basin and Approach Channel excluding the specified time under Sub-Clause 6.0 under Section III shipping operations (i.e.) from 07.00 hours to 14.00 hours as instructed / agreed by the Engineer alone was to be paid for at the quoted rates included in the Bill of Quantities subject to the Engineer being notified by the Contractor within 12 hours on each occasion of such interruptions.

114. Such idle time for such payment was to be reckoned as the total time in one continuous interruption minus 2 hours. However, no abatement of time has been factor by the 1st respondent, as is evident for the Calculation in Annexure to the Claim No.7. The calculation was also contrary to Clause 51.1, Section III.

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115. In other words, for every 4 hours of continuous stoppage and delay, compensation to be paid to the 1strespondent would be calculated at 2 hours. There is however no discussion in the award on this aspect.

116. Thus, for every 4 hours of delay, there has to be an abatement of 2 hours while calculating the compensation under Clause 51.1, Section of the License Agreement. Not only Clause 51.1, Section III was inapplicable but also the calculation in Annexure to Claim No.7 was incorrect and highly exaggerated.

117. Yet the Arbitral Tribunal proceeded to award Claim No. 7 based on the reasoning given by it for awarding amounts under Claim No.5 and 6. Thus, the award passed by the Arbitral Tribunal was patently illegal. It also does not bear any proper discussion. This aspect has been missed in the impugned order. As per defence of learned counsel in Oil & Natural ____________ https://www.mhc.tn.gov.in/judis/ Page No 77 of 87 O.S.A.No.101 of 2020 Gas Corporation Ltd., vs Saw Pipes Ltd., [2003 (5) SCC 705] an award could be set aside and in addition to narrower meaning given to the term “Public policy” in Renusagar case it is required to be held that the award could be set aside if it is patently illegal. The result would be award could be set aside if it is contrary to

i) fundamental policy of Indian law; or

ii) the interest of India; or

iii) justice or morality, or

iv) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.

118. As Clause 51.1 Section III of the license agreement was applicable only in case of “Interruption of work” due to traffic outside of the port entrance”. It was also specifically averred by the 1strespondent before the Arbitral Tribunal that Claim No.7 was based on Clause 38, Section III read with Clause 41.1 and Clause 41.2 Section III. ____________ https://www.mhc.tn.gov.in/judis/ Page No 78 of 87 O.S.A.No.101 of 2020

119. As even according to the respondent, Clause 51.1 (Interruptions to Work) Section III of license agreement was not applicable where there was a failure to give possession. Therefore, the Arbitral Tribunal erred in awarding Claim No.7 contrary to Clause 38.

120. The Arbitral Tribunal has failed to see as per Clause 51.1 of Section III, the idle time for such payment shall be reckoned as the total time in one continuous interruption minus 2 hours. For “Stoppage of Works” the issue had to resolved under Clause 38 of Section III. Both Clause 51.1 and 38 of Section III deal with stoppage of work.

121. Even otherwise, Annexure to the Claim No.7, merely states that there was a delay of 447.92 hours and the idle time rate for a dredger was Rs.3,27,300/- per hour and therefore, the appellant was liable to pay a sum of Rs.14,66,04,216/-.

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122. The amount of Rs.3,27,300/- per hour is based on the Bill of Quantity specified major dredger for Clause 51.1 Section III of the License Agreement which clause 51.1 of Section III is inapplicable to the facts of the facts.

123. It was not applicable for compensating the 1strespondent for idle time for other equipment including Backhoe Jermomeke Dredger used near the berth. The stoppage of near berth was deemed to have been factored into the entire contract value.

124. Clause 38, Section III, was attracted only in the event of stoppage of work for awarding compensation for major dredger. As Backhoe Jermomeke Dredger was not used at the major dredger, neither Clause 38 in Section III of the License agreement nor Clause 51.1, Section III of the License Agreement were attracted.

125. If Clause 38, Section III was attracted, the 1strespondent was ____________ https://www.mhc.tn.gov.in/judis/ Page No 80 of 87 O.S.A.No.101 of 2020 required to furnish idle time charges only for Major Dredger deployed in the Bill of Quantity. The rate for idle time charges quoted by the lowest bidder was to be finalized taking into account the lowest idle time quoted by other bidders.

126. Further, Clause 51.1 further stipulated that notice shall be given approximately 1 hour before the sailing of the vessels and the contractor shall contact the Port Marine Department for any information in this regard and that no claim whatsoever for additional payments on account of the specified interruption will be entertained.

127. Payment under clause 51.1 was to be made subject to the Engineer being notified by the contractor within 12 hours on each occasion of such communications.

128. Thus, the calculation given by the appellant claiming the ____________ https://www.mhc.tn.gov.in/judis/ Page No 81 of 87 O.S.A.No.101 of 2020 compensation for the entire value for a sum of Rs.14,66,04,216/- (447.92 x 3,27,300) was clearly contrary to the terms of the contract. As per the contract to the idle time for such payment is to be reckoned as the total time in one continuous interruption minus 2 hours. It cannot be said it was reasonable interpretation.

129. Further, under Clause 51.1, Section III, an Engineer was to be notified by the Contractor (respondent) within 12 hours on each occasion of such interruptions. Further, the idle time for such payment was be reckoned as the total time in one continuous interruption minus 2 hours.

130. While preparing tender documents, the appellant has factored 14 months for completing the works and therefore, it has factored the delay that may be arise due several factors.

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131. Clause 52.0, Section II of the License agreement deals with the “Procedure for Claims”. As per the said clause, if the 1strespondent intended to claim any additional payment pursuant to any clause of the conditions or otherwise, it was to give a notice of its intention to the Engineer within 30 days after the event giving rise to the claim has 1st arisen.

132. Further, as per clause 46.2, Section III, the 1strespondent was required to carry on the operation so as not to obstruct shipping, port traffic and operations. Thus, respondent had factored the stoppage of work near the berth while giving its offer to undertake the dredging operations for the appellant.

133. The Arbitral Tribunal has awarded the amount contrary to the terms of the Agreement. Therefore, the award passed by the Arbitral Tribunal to the extent it upholds the Claim No.7 of the 1strespondent is liable to be set aside.

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134. Further, under Section 29 of the Arbitration and Conciliation Act, 1996, the Arbitral Tribunal is bound by the terms of the Contract. The Contract is for a period of 14 months. The work was completed by the respondent, well ahead of the time prescribed in the contract for 8 months. In fact, reading of the reasoning given for awarding Claim No.5 itself suffers from infirmity in as much as the Tribunal has not given a clear finding as to the submission of the appellant was incorrect. However, we are refraining from going in detail.

135. That apart, the license agreement has given a freedom to the 1strespondent to choose the equipment and a choice of technology and plant of documents proposed to be deployed by the respondent.

136. Claim No.7 has been thus awarded contrary to the terms of the contract. Idle charges for Backhoe Jermomeke Dredger was not payable under clause 51.1, Section III. Clause 38, Section III was attracted as it was ____________ https://www.mhc.tn.gov.in/judis/ Page No 84 of 87 O.S.A.No.101 of 2020 attracted only for major dredger due to stoppage of work. Clause 41.1 and the consequence under Clause 41.2 of the General Terms of the Contract were also not attracted as there was no failure to give possession of the site. Therefore, the impugned order of the learned single Judge upholding the Award passed by the Arbitral Tribunal for clause No.7 was unsustainable and liable to be set aside as the amount awarded not only shocks the conscience of the Court, but is based on unreasonable interpretations of clauses in the agreement.

137. For the above-mentioned reasons, we are unable to uphold the impugned order of the learned single judge upholding the award as far as Claim No.7 is concerned.

138. In the result, this Original Side Appeal is allowed. No costs. ____________ https://www.mhc.tn.gov.in/judis/ Page No 85 of 87 O.S.A.No.101 of 2020 Consequently, connected miscellaneous petition is also closed.

                                                                (R.P.S.J.)                     (C.S.N.J.)

                                                                                 15.03.2021

                     Index : Yes / No
                     Internet : Yes / No
                     kkd

Notes:-In view of the present lock down owing to COVID-19 pandemic, a web copy of the order may be utilized for official purposes, but, ensuring that the copy of the order that is presented is the correct copy, shall be the responsibility of the advocate / litigant concerned.

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and C.SARAVANAN, J.

kkd Pre-delivery Judgment in O.S.A.No.101 of 2020 and C.M.P.No.4650 of 2020 15.03.2021 ____________ https://www.mhc.tn.gov.in/judis/ Page No 87 of 87

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