Delhi High Court
National Thermal Power Corporation ... vs Gammon India Limited And Anr. on 26 May, 2008
Author: Shiv Narayan Dhingra
Bench: Shiv Narayan Dhingra
JUDGMENT Shiv Narayan Dhingra, J.
1. By this petition under Sections 28(1)(a) & (3), 31(3) and 34 of the Arbitration and Conciliation Act, 1996, the petitioner has challenged the award dated 21st October, 2004 passed by the Arbitral Tribunal in respect of disputes/differences arising out of contract dated 17th February 1988 entered into between the petitioner and respondent No. 1 for construction of two Natural Draft Cooling Towers for petitioner's project at Kawas, Gujarat.
2. Brief facts relevant for the purpose of deciding this petition are that petitioner/NTPC invited tenders on 3rd October 1986 for construction of above two cooling towers and claimant/GIL (respondent No. 1 herein) submitted its tender on 18th December, 1986. After negotiations in respect of final bid price, the offer made by the respondent No. 1 was accepted by the petitioner vide its telex message dated 20th October, 1987 and the contract for lump sum value of Rs. 5,70,07,000/- was awarded to the respondent/GIL. The petitioner/NTPC also issued a detailed letter dated 17th February 1988 setting out all the terms and conditions of the contract between the parties. This letter of award was signed by both the parties and constituted the contract between them for construction of two cooling towers. Under the contract, the stipulated time for completion of the first cooling tower was 31st October, 1989 with a further period of 30 days. However, the construction of the first cooling tower was actually completed on 30th September 1991 i.e. after 22 months. The second cooling tower was to be completed, as per the contract by, 31st January, 1990. However, it was actually completed on 10th February 1993 i.e. after 36 months. The claimant/GIL raised a claim of Rs. 3,07,68,145/- under 06 different heads and also claimed an aggregate of interest upto 30th April, 1997 amounting to Rs. 3,67,53,342/- over these claims making a total claim of Rs. 6,75,21,487/-. The claims was referred to the Arbitral Tribunal. The petitioner/NTPC denied the claims of the claimant/GIL and made a counter claim of Rs. 4,44,36,363/-.
3. The Claimant/GIL's claims were as under:
Claim No. Brief Particulars Amount Claimed
(Rs.)
1. Balance price variation payment 83,31,452/-
2. Extra payment on account of 30,68,300/-
mass concrete fill
3. Extra payment on providing CNS 52,32,810/-
layer
4. Compensation due to increase in 67,56,000/-
cost on account of delay
5. Extra expenditure/cost towards 53,64,200/-
abnormal hike in price of coarse
aggregates
6. Payment of balance work done 21,15,483/-
Total of Claims No. 1 to 6:- 3,07,68,145/-
7. Payment of interest @ 20% 3,67,53,342/-
(i) For pre-reference period
(ii) Pendent lite period
(iii) Post award period
To be given later
8. Cost of reference to arbitration
9. Any other claim on finalization
of the claim
Total:- 6,75,21,487/-
4. The respondent/NTCP's counter claims were as under:
Counter Particulars Amount Claimed
Claim No. (Rs.)
1. Award by the Engineer 2,33,21,347/-
2.(A) Against excess consumption 9,91,457/-
of owner issue materials.
Balance amount over and above
the amount for this item in
the Engineer's Award.
2.(B) Differential cast for using 27,80,638/-
SRC in place of PSC
3. Liquidated damages for delay. 7,03,516/-
Balance amount over and above
the amount for this items in
the Engineer's award
4. Interest on counter-claims over 1,54,41,773/-
and above the amount in the
Engineer's award
5. Cost of arbitration 10,00,000/-
Total amount of counter-claims 4,44,36,363/-
5. The Arbitral Tribunal observed that the claimant/GIL while asking for compensation on the ground of delay resulting in increase of cost set out 9 different kinds of delays, out of which 7 grounds of delay had been attributed to the respondent/NTPC; one ground of delay was attributed to severe rainfall before completion of underground work and one ground of delay was attributed to the hindrances caused by other agencies. Out of the seven grounds attributed to the respondent/NTPC, during arguments before the Arbitral Tribunal, Counsel for GIL did not press ground No. (ii) viz. "delay in identifying the cooling tower which was to be taken up on the first priority" and ground No. (vi) viz. "delay on account of short and delayed supply of cement and steel against claimant's requirements". The claimant/GIL had contended before the Arbitral Tribunal that because of various delays, they had incurred additional expenses and suffered losses viz. loss of productivity, loss of site overheads and head office overheads, loss of profit, cost of additional mobilization of plants, equipment, manpower etc., rise in cost of labour, material, petrol oil lubricants and other miscellaneous additional costs like payments of interest on borrowings etc. The claims of the claimant were split up in six different heads of claims because of these reasons.
6. The Tribunal considered these grounds in para 07 of its award and observed that in their opinion the main reason for delay in completing the construction of two cooling towers was the inadequate data supplied by the respondent/NTPC about the soil conditions at the site of the two cooling towers. The data given in the tender documents was inadequate in two respects (i) Sub soil water condition at the foundation level and (ii) abnormal variation in soil condition at site of two cooling towers. The Tribunal observed that due to these substantial changes extra time was required for decision making, designing and execution which led to delay in completion of work. After making this general observation, the Tribunal took up for consideration each and every ground separately and came to the conclusion that the ground of delay due to heavy rainfall was not made out since claimant failed to prove that all the work that should have done according to the agreed time schedule was carried out by them before the start of monsoon season. It was also observed that if GIL had carried out their part of the contract diligently, the heavy rainfall would not have come into the picture and the heavy rainfall was not continuous.
7. The Arbitral Tribunal further observed that the site possession was given to GIL on 28th October, 1987 (much before the signing of letter of award on 17th February 1988, on 8th day of telex message dated 20th February 1997). After having the site, the claimant/GIL was to do the soil testing in order to know the condition of the soil. The soil testing report regarding the condition of soil was obtained by the claimant only on or after 16th March, 1988. The Tribunal observed that delay in getting the soil analysis report cannot be attributed to the respondent/NTPC. As per the contract, soil investigation report should have been ready within 10 weeks from 28th October, 1987 (i.e. by 2nd January 1988). The claimant/GIL after obtaining the soil testing report on 16th March, 1988 sent letter to the respondent/NTPC setting out requirements of SRC on 27th April, 1988. The Arbitral Tribunal observed that SRC was a special kind of cement and was not available "off the shelf" and had to be specially got manufactured to meet the specifications. The respondent/NTPC supplied SRC on 3rd June, 1988 and therefore, no fault could be found with the NTPC. The Tribunal specifically observed that for initial delays in soil investigation, chemical analysis, identifying the requirement of SRC based on test results, decision making by the respondent/NTPC in supplying the SRC, actual time taken in supplying SRC, pile load testing etc., both the parties had contributed to the delays in some manner or the other.
8. The Tribunal also rejected contention of the claimant/GIL holding NTPC responsible for delay in respect of other grounds as well and observed that in their opinion the contention of the claimant that delay was caused because of the failure of NTPC to hand over the land required for infrastructure in time, was not made out. It cannot be said that NTPC caused delay in commencing of piling work by not allowing the start of piling work on the basis of initial soil investigation report. There was no undue delay on the part of theNTPC in supplying SRC. The ground of delay on account of delayed supply of cement and steel as per requirement raised by the GIL was not pressed by the Counsel for claimant. The ground of delay on account of erratic supply of power and water was also rejected. The Tribunal observed that the NTPC had taken necessary remedial steps and had provided standby generator for electricity and also a diesel generator for welding purposes. The ground of not providing approach road to the site was also found to be false. There was already an approach road existing at site.
9. After holding the grounds raised by the claimant/GIL not tenable, the Tribunal observed that there was considerable delay in erecting the two cooling towers. The Tribunal found that the claimant had submitted a time frame/work schedule L1 and a bar chart themselves along with the tender. According to the contract, the claimant was to submit L2 level of work schedule after the contract was entered into and this was required to be approved by the respondent/NTPC. The proposal for L2 was required to be given by the GIL on 19th November, 1987 but instead GIL gave the proposal for L2 on 29th January, 1988. However, the final version of L2 was approved on 2nd March, 1988 and was re-submitted by GIL on 8th March, 1988. The Tribunal observed that the time taken in finalizing L2 schedule had not contributed in any manner to the total delay in execution of the contract. The Tribunal also observed that none of the grounds for delay as raised in claim were set out by GIL in the statement of claim was reflected in any of the minutes of the meetings, which were held for periodical review of the work from time to time between the parties. The Tribunal also observed that some delays in execution of the work were attributable to the claimant/GIL because of various acts of omission and commission on the part of GIL itself. Firstly, the claimant/GIL submitted detailed drawings of the work after considerable delay, which is borne out by the letter dated 20th June, 1988. Further, there was delay in soil investigation, which under the contract was to be carried out by the claimant/GIL. The delay in getting soil investigation/chemical analysis report was itself of 77 days. The claimant/GIL was required to carry out the initial pile load testing work, which was required to be carried out before actual pile construction work could commence. This pile testing was carried out beyond the period of six weeks provided in the contract. Thus, there was delay of five months as pointed out by the respondent/NTPC in the letter dated 23rd June 1988. The Tribunal made observation that the workforce to be deployed by the claimant was required to be 1000 workmen but the claimant deployed only 400 workmen. This grave shortage in deploying adequate number of workmen was pointed out by NTPC in their monthly execution report. Further, the Tribunal found that lower crane for concreting the outer shell of 30 meters high cooling towers was not provided by the claimant and this failure to provide adequate equipment at the proper stage of work was pointed out by the respondent/NTPC. It is also observed by the Tribunal that when work was being carried out at 30 meters high tower, workmen of the claimant were climbing up and down on high ladders, which necessarily slowed down the progress of the work. The claimant should have used personnel hoist, which would have carried the workmen to the required height. The personnel hoist was not installed by the claimant in time and this was pointed out by the respondent/NTPC vide their letter dated 10th August, 1990. The Tribunal therefore found that some delay in execution of work was due to these circumstances.
10. After making observations regarding each cause of delay, the Arbitral Tribunal observed that after completion of the cooling towers since there were some disputes outstanding between the parties and which remained to be settled, a joint meeting of representatives of claimant/GIL and respondent/NTPC was held on 15th/16th October, 1993 and the minutes of said meeting were drawn up and signed by both the parties and are Ex. C-117 at page 213 volume II. In Ex. C-117 claimant/GIL had withdrawn, after discussion between the representatives of the parties, some of the claims set out before the Arbitral Tribunal. Some of the other claims were not at all raised by the claimant/GIL in the course of their meeting. The Tribunal specifically observed that claims No. 2, 3 & 5 were withdrawn by the claimant whereas claim No. 4 was not raised. Claim No. 1 was specifically raised by the claimant, for which the respondent/petitioner agreed to examine and consider the same favourably. The minutes of meeting are as under:
MINUTES OF MEETING HELD BETWEEN NTPC AND GAMMON INDIA LIMITED AT GIL's OFFICE AT BOMBAY ON 15TH & 16TH OCTOBER 1993 ON THE OUTSTANDING ISSUES UNDER NATURAL DRAFT COOLING TOWERS PACKAGE FOR KAWAS GPP.
Present:
NTPC GIL 1. Mr. J.N.Sinha 1. Mr. G.V.Hingorani 2. Mr. K.V.Rao 2. Mr. S.Chakrabarti 3. Mr. S.Ray 3. Mr. G.D.Chotraney 4. Mr. A.K.Srivastava 4. Mr. M.U.Shah 5. Mr. A.K.Sharma 5. Mr. R.B.Sainani 6. Mr. P.Balakrishnan 7. Mr. S.K.Mahapatra 8. Mr. Yash Gupta
The meeting was convened to discuss and resolve the outstanding issues under the Contract. It was specifically agreed and confirmed by GIL that with the resolution on various issues brought out in the meeting there would be no other issues or claims raised by them in future. The following was discussed and agreed between NTPC & GIL.
1. NTPC asked GIL to conduct the PG test on Cooling Tower No. 1 immediately but after giving a clear notice of one week for conductance of test.
2. GIL requested NTPC to consider extra payment on account of CNS treatment and mass fill which, as per them was not originally envisaged in the contract. NTPC clarified that the aforesaid claims of GIL were not tenable as per provisions of contract and same had also been clarified to GIL earlier. GIL agreed to withdraw their claims for CNS and mass fill.
3. GIL stated that the actual time taken for execution of contract was much longer than the scheduled period as per the contract schedule, in view of initial delays, the time taken for CNS treatment and mass fill and malaria etc. Further GIL stated that during the execution they had to face unprecedented monsoon which also resulted in delays. Accordingly GIL requested that though they have agreed to withdraw their claims for CNS and mass fill, NTPC should sympathetically consider payment of escalation on the basis of actual work done instead of scheduled period as per L2 scheudule....
NTPC stated that though GIL request was not as per provisions of contract, under the circumstances, NTPC would examine and consider their request favourably and revert back on the matter. However, it was clarified to GIL that NTPC's decision in this regard would be final and binding on them. GIL agreed.
4. The primer for joint filling component for NDCT - 1. Has failed to give the required result during testing. The issue is pending with GIL SINCE A LONG TIME. GIL suggested for suitable deduction for the same. NTPC agreed for appropriate deduction for same. Other rectification and clearance of area will be carried out by GIL immediately.
5. Issue of Calibration certificate for pitot tube used in PG Test was discussed. GIL stated that this was tested in IIT, but NTPC stated that as per BS:4485 the same is not coming within the specified tolerance. GIL handed over documents to prove the results of the PG tests report, being within the guaranteed parameters, after considering the variation of IIT test results and BS:4485 Part II tolerances for approval.
6. NTPC informed that the Special loan advance was given to GIL on specified request of GIL with interest on such loan agreed by GIL and that their request for refund of interest was not acceptable.
7. The issue on return of BGs shall be examined by NTPC.
8. The Hydraulic door closer has not been fixed so far. GIL expressed that such type of hydraulic door closer is not available. GIL will propose suitable deduction for same which was also agreed by NTPC.
9. GIL stated that just after the award of contract there was an unprecedented hike in the cost of aggregates and as such NTPC should compensate. GIL for the extra cost incurred by them for the aggregates. NTPC clarified that GIL's contention was not as per provisions of Contract and hence not tenable. GIL agreed to withdraw their claim.
10. Regarding cement, steel consumption reconciliation it was pointed out by GIL that there is some difference in quantities finalized by NTPC. NTPC requested GIL to send their authorized Engineer for reconciliation purpose to Kawas site so that final figure can be arrived. GIL requested that the Cement consumption on account of casting of louvers due to breakage may also be considered in consumption.
11. Further it was agreed that GIL's request for extra consumption of cement and steel for change in piling system from under reamed piles to cast in situ driven piles and their request for globalization of M.S. and Tor steel along with the issue of excess scrap generated and returned by them would be considered by NTPC favourably after the reconciliation of Cement and Steel quantities by GIL with Kawas site.
12. NTPC stated that since as per provision of contract only cement is to be issued free of cost by NTPC and empty cement bags are the property of NTPC, GIL should confirm acceptance to the amendment to the contract issued on 30/01/89 on the return of empty cement bags. It was agreed that since GIL has already returned substantial quantity of empty cement bags, NTPC will not insist for any further return of empty cement bags.
NTPC GIL sd/-
sd/-
11. The Tribunal rejected the contention of the claimant/GIL that Ex. C-117 was signed by the claimant under pressure and was nudum pactum. The Tribunal observed that having agreed not to raise any other issue or claim after 15th/16th October, 1993, the claimant cannot now raise those claims which were given up or not raised in the meeting of 15th/16th October, 1993. The Tribunal therefore held that claims No. 2, 3, 4 & 5 of GIL were not maintainable.
12. The Tribunal referred to price variation Clause No. 4.1.0, which reads as under:
4.1.0. The prices and price components for ex-works of equipment and erection components (excluding the price of inland transportation and inland insurance) mentioned in para 3 above are base price and are subject to price adjustment in accordance with Annexure - III read in conjunction with the provisions of Clause 22.0 of sec. INB, Clause 13.0 of sec. GCC of conditions of Contract Vol. I and Clause 14,00,00 of sec. MO of vol. II of Bid documents.
13. The Tribunal noted Annexure-III of the letter of award that deals with contract price adjustment and reads as under:
In case the work of items or work or group of items of work are delayed beyond the schedule date for the work, for reasons attributable to the contractor, the price adjustment provisions shall not be applicable for the period of time between the schedule date and the actual date
14. After noting the relevant clause, the Arbitral Tribunal observed as under:
(28) We have already held, as set out in paras 7 of this award, that the delay in construction of the two cooling towers was due to the inadequate data in the tender documents about the soil conditions at the site. Since the contract in this case was a lump sum contract and not an item rate contract, it was obligatory on the part of NTPC to give correct data about the soil conditions so that the claimants could put forward the appropriate price bid. As the delay between the schedule date and actual date of completion of the contract work is not attributable to the claimants, we hold that the price adjustment in accordance with Annexure-III to the Letter of Award dated 17.2.1988 is payable to the claimants.
15. The Arbitral Tribunal therefore awarded Rs. 78,64,197/- to the claimant/GIL against claim No. 1. Since claim No. 6 was for payment in respect of balance work done and vide its letter dated 31st July, 1997 the Engineer had given its decision that NTPC was committed for the balance payment against the work done amounting to Rs. 18,51,102.29, the Tribunal awarded amount of Rs. 18,51,102/- to the claimant. The Tribunal awarded 12% interest on these amounts.
16. The Tribunal rejected the counter claim of the respondent on the basis of Ex. C-117 holding that the respondent/NTPC had not raised any counter claim against the claimant/GIL in the joint meeting, therefore, respondent/NTPC was not entitled to any counter claim.
17. The award of the Arbitral Tribunal has been challenged by the petitioner on the grounds (a) the Tribunal concluded hearing of the proceedings in January, 2003 and passed an award after a gap of more than 21 months allowing the claim of the respondent No. 1 to the above extent giving pre-reference, pendent lite and future interest @ 12% (b) The Tribunal wrongfully rejected the counter claims of the petitioner on the basis of Ex. C-117, (c) the findings of the Tribunal were contrary to the material available on record and contrary to evidence (d) the finding of the Tribunal that the inadequate data was supplied by the petitioner about soil condition was also not only contrary to the pleadings but without any basis and was also contrary to the tender documents and the contract entered into between the parties. It is stated that the provision contained in the tender documents which formed part of the contract between the parties casted a contractual duty on the claimant/GIL to carry out all necessary tests and investigations before submitting their bids. It was specifically mentioned in Clause 13.2 of the special condition of contract that the contractor was to inspect and examine the site before submitting the bid as to the nature of ground and sub soil and collect all relevant data in respect thereof and the owner (NTPC) shall not entertain any claim under any circumstances arising out of the variation in site/soil data whether such data is indicated in the bid document or not, (e) The award was contrary to the terms of the contract since the claimant/GIL could not have claimed and nor awarded any escalation for spending more time because of its own fault in completing the project, (f) That the award of the Tribunal was intrinsically inconsistent. Once the Tribunal categorically held that there was no delay on the part of the respondent/NTPC while there were factors attributable to the claimant/GIL still the Tribunal awarded claim in respect of escalation to the claimant, contrary to the contract. That Annexure-III provided for a ceiling of 20% escalation on total civil work price of Rs. 5,17,45,354/- and nothing beyond the ceiling was payable and a sum of Rs. 69,28,997/- had already been paid by the petitioner to the respondent during the period of contract, the award of Rs. 78,64,197/- amounted to grant of more than 28% of the price variation component of the contract price adjustment, which was contrary to the terms and conditions of the contract, stipulating maximum ceiling of 20%. The petitioner claimed that the rejection of the counter claims of the petitioner was without any reasons and the reasons given by the Tribunal were not maintainable. The Counter claims could not be rejected merely on the ground that it was not discussed during the meeting of 15th/16th October, 1993.
18. I have considered the arguments advanced by the Counsel for both the parties. The key question in this case is whether the challenge to the award satisfies the provisions of Section 34 of the Arbitration and Conciliation Act. The Counsel for the respondent/GIL argued that the award was a consent award and the amount awarded was in fact modified and calculated by the petitioner itself and then awarded therefore, no challenge lies to the award. It is also submitted that none of the grounds of challenge made out by the petitioner in the petition is covered by Section 34 of the Arbitration and Conciliation Act, 1996. On the other hand, the Counsel for the petitioner argued that there was no consent and it is apparent from the award that the petitioner had opposed and resisted the claims of the respondent. The calculation of the amount of claim No. 1 was ordered by the Arbitrators and this calculation was done only on the basis of the directions of the Arbitrators. There was no agreement about awarding this amount to the claimant.
19. A perusal of award clearly shows that it is not a consent award but it is an award based on merits awarding claim of the petitioner of item No. 1 regarding escalation of price and award has to be considered on its merits. The Courts during the course of interpretation of the provision of Section 34 of the Arbitration and Conciliation Act had come to hold that Section 34 read conjointly with other provisions of the Act indicates that the legislative intent could not be that if the award is in contravention of the provisions of Act, still however, it could not be set aside by the Court. Therefore, if the Arbitral Tribunal had acted beyond its jurisdiction and had awarded an amount contrary to the contract between the parties, the award would be held to suffer from patent illegality and can be set aside under Section 34 of the Act. The Courts have held that if the award is contrary to substantive provisions of law or against the terms of contract, it would be a patently illegal award. However, such failure of procedure should be patent affecting the rights of the party. It is also held in ONGC Ltd. v. Saw Pipes Ltd. that the award must not be contrary to Public Policy of India and an award can be set aside if it is contrary to a) fundamental policy of Indian Law, b) interest of India, c) Justice or morality and d) if it is patently illegal. Supreme Court observed that illegality must go to the root of the matter and if illegality is of a trivial nature the award must be upheld.
20. In the present case, the contract between the parties categorically provided that it was the obligation of the contractor to inspect and examine the site and its hindrances and satisfy itself before submitting the bid as to the nature of ground and sub soil, the form and nature of site, the quantities and nature of work and material necessary for completion of the work and means of access to the site, the accommodation he may require in general and after acquainting himself with all these and other circumstances, which may influence its bid, the contractor shall give bid for the contract. Clause 13.2 reads as under:
13.2 The Contractor shall inspect and examine the site and its surroundings and shall satisfy himself before submitting his bid as to the nature of the ground and sub soil the form and nature of the site/the quantities and nature of work and material necessary for the completion of the works and the means of access to the site, the accommodation he may require and in general shall himself obtain all necessary information as to risks, contingencies and other circumstances which may influence or affect his bid. Owner shall not entertain any claim under any circumstances, arising out of variation in site/soil data, whether such data is indicated in the bid documents or not, as the contractor is expected to ascertain in all such data himself to his entire satisfaction.
21. In addition to this as per Clause No. 8.0.0 of Technical Specification Section c(o), the respondent/GIL was to carry out soil investigation itself. It was specified that information like soil characteristics given by the petitioner/NTPC in the tender were only indicative for guidance. Bidder was to fully satisfy himself about the nature of soil strata, its bearing capacity and other characteristics to be encountered at the site of cooling tower prior to submission of the bid. It was specifically stated by the petitioner that owner (NTPC) does not take any responsibility for actual soil data or for variation between the actual soil data and the indicative data. In view of this specific provisions in the contract and in view of the fact that the tenders were invited on 3rd October, 1986 and tenders were to be submitted in December 1986 and there was a gap of more than 2 1/2 months between invitation and submission of the bids, there was sufficient time with every tenderer to do the soil investigation, find out the data and then submit his bid. Despite this specific provision in the contract, the observation of the Tribunal regarding soil condition and that the delay was due to inaccurate soil data supplied by the petitioner is contrary to the contract and does not stand the scrutiny of law. It was not the obligation of the petitioner to give a data to the claimant/respondent in respect of sub soil, water conditions or about soil pressure to be encountered. The tenderer who was to give bid, was at liberty to conduct sub soil testing before giving bid. The bid was being given for a work, which ran into several crores of rupees and every tenderer knew that the work involved below ground construction and sub soil structure for which proper soil testing and knowing the nature of soil was necessary. If the tenderer gives bid despite warning in the tender documents, without doing the actual soil testing only relying on the indicative data, no blame can be put on the owner (petitioner) and no compensation could be awarded on this ground. It is settled law that the Arbitrator is bound by the contract between the parties. The Arbitral Tribunal cannot re-write the contract and award claims. It can interpret the contract and arrive at a conclusion about meaning of a particular clause. Such an interpretation would be binding on the parties and Courts would not find faults with interpretation unless it shocks the conscience of the Court. But the Arbitral Tribunal cannot altogether ignore the terms of contract governing relationship of parties and make an award contrary to the contract. In this case the Arbitral Tribunal at the very outset came to the conclusion that delay in completion of work by GIL was due to inadequate supply of soil data by NTPC. These observations are contrary to express terms of the contract. The Tribunal has not even bothered to look into those terms and conditions of contract which deal with this aspect what to talk of interpreting the contract. The award of amount against claim No. 1 is liable to be set aside on the ground of being contrary to contract itself.
22. Moreover, in this case there was delay of 36 months and 22 months in construction of two cooling towers respectively and finding of the Tribunal shows that the site was handed over to the claimant after 8 days of sending telex i.e. on 28th October, 1987 itself, while the actual contract was signed on 17th February, 1988, which shows that the petitioner was quite eager to see that the site was available to the claimant much before the signing of actual contract, so that the claimant can proceed immediately with actual soil testing etc. The observation of the Tribunal itself shows that the claimant got conducted soil testing very delayed and obtained soil testing report after about 06 months of the handing over of the site sometime in March 1988. Had the soil testing got done by the claimant in time and had it obtained soil testing analysis report in time, there would have been no reason for the claimant to make any grievance about inadequate data. Secondly, even as per Tribunal the soil testing report was available with the claimant on 16th March, 1988, which gave all the data to the claimant but the claimant did not submit its work schedule L2 in time as per para 17 of the award. However, there was only 08 days difference between obtaining of soil testing report and submitting of work schedule, while there was actual delay of 22 months in execution of the construction of first cooling tower and 36 months delay in construction of second cooling tower. The entire award speaks about the delays on the part of GIL. GIL, who was supposed to employ 1000 workmen employed only 400 workmen. If a work requires deployment of 1,000 men workforce and only 400 men workforce is employed, the time required is automatically 2 1/2 times more than the normal time. The Tribunal could not have closed its eyes to this very evidence discussed by it in the award and still held NTPC responsible for delay. It is also recorded by the Tribunal that GIL did not bring proper equipment and machines on the site to facilitate work at required speed. The personnel hoisting lift was not brought in time, lower crane for concreting the outer shell of 30 meters high cooling towers was not provided in time, pile testing was carried beyond the period of 06 weeks, all these reasons are writ large on the face of the award. In fact, the basic reason for delay in execution of the work is deployment of only 400 men workforce while actually 1,000 men workforce should have been deployed. By awarding compensation for delay in the work to a contractor, who deliberately deploys only 400 workmen against 1000 workmen required does not deploy equipment necessary, in fact, amounts to rewarding him for his own wrongs and is contrary to Public Policy. No person can be rewarded for his own wrongs. A contractor in this manner not only makes illegal gains but in facts kills competition. Any contractor at the time of giving tenders/bids would deliberately quote low prices with the intention of making it up later on during arbitration. Such claims would actually make his price more profitable than what he has quoted at the time of giving tender. It is possible that a person may quote such a low price at the time of bidding in which doing work is not feasible, only with the intention to keep out the other contractors and later on deliberately delay the execution of the work by under deploying the proper workforce and not bringing the necessary equipment on the site in time, delaying the work and claiming additional amount on the grounds of escalation, labour rates, administrative costs etc. as has been done in this case. By this device, the competition is killed and this is actually what is happening in many of the contracts of the Government, where invariably the arbitration clause is invoked for escalation or for other reasons and normally contractor is awarded a substantial part of the contract by arbitration awards resulting into killing of the competition at the initial stage and benefitting and rewarding the contractor for his wrongs.
23. The conduct of GIL in this case as reflected from the discussion of the arbitrators was totally contrary to the contract and despite that, if the contractor is awarded compensation for delay/escalation in execution of the work, it would actually amount to rewarding it for its wrongs and would be contrary to the Public Policy of India. There is another reason for setting aside this award i.e. once the analysis of the entire evidence done by the Arbitral Tribunal shows that there was no delay on the part of the petitioner and the delay was on the part of GIL and when contract shows that it was not the responsibility of the petitioner to supply accurate soil analysis data and it was the responsibility of the contractor to first ensure the soil analysis and then give bid, no escalation could be awarded to the contractor for delaying the project in terms of the contract reproduced in para 13 above. The award passed by the Arbitral Tribunal in respect of claim No. 1 in favour of GIL is hereby set aside, however, the award for balance payment of Rs. 18,51,102.29 along with 12% interest over this amount as awarded by the Arbitral Tribunal is sustained.
The Petition is disposed of in above terms.