Delhi High Court
Prakash Atlanta (Jv) vs National Highways Authority Of India on 17 March, 2016
Author: Pradeep Nandrajog
Bench: Pradeep Nandrajog, Mukta Gupta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved on: March 15, 2016
% Judgment Delivered on: March 17, 2016
+ FAO(OS) 428/2007
PRAKASHATLANTA(JV) .....Appellant
Representedby: Mr.KirtiUppal, Sr.Advocate instructedbyMr.ChiragM.Shroff
andMs.SahibaPantel,AdvocateswithMr.UlhasMBhole,Vice
President,Contracts, PAJV
versus
NATIONALHIGH
WAYSAUTHORITYOFINDIA.....Respondent
Representedby: Mr.SukumarPattjoshi, Sr.Advocate instructedbyMr.VikasGoel
andMr.AbhishekKumar,AdvocatesalongwithMr.P.SivaSarkar,
ProjectDirector,NHAI,LKO
FAO(OS) 621/2015
M/SPRAKASHATLANTAJV .....Appellant
Representedby: Mr.KirtiUppal, Sr.Advocate instructedbyMr.ChiragM.Shroff
andMs.SahibaPantelAdvocateswithMr.UlhasMBhole,Vice
President,Contracts, PAJV
versus
NATIONALHIGH
WAYSAUTHORITYOFINDIA.....Respondent
Representedby: Mr.SukumarPattjoshi, Sr.Advocate instructedbyMr.VikasGoel
andMr.AbhishekKumar,AdvocatesalongwithMr.P.SivaSarkar,
ProjectDirector,NHAI,LKO
FAO(OS) 585/2015
M/SNATIONALHIGH
W A
YS
AUTHORITYOFINDIA .....Appellant
Representedby: Mr.SukumarPattjoshi, Sr.Advocate instructedbyMr.VikasGoel
andMr.AbhishekKumar,AdvocatesalongwithMr.P.SivaSarkar,
ProjectDirector,NHAI,LKO
FAO(OS) 428/2007, 621/2015 & 585/2015 Page 1 of 19
versus
M/SPRAKASH-ATLANTAJV ..... Respondent
Representedby: Mr.KirtiUppal, Sr.Advocate instructedbyMr.ChiragM.Shroff
andMs.SahibaPantel,AdvocateswithMr.UlhasMBhole,Vice
President,Contracts, PAJV
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE MUKTA GUPTA
PRADEEP NANDRAJOG, J.
1. The jural relationship betweenNationalHighwayAuthority of India (NHAI) andPrakash-Atlanta JV (Prakash)was forgedas per agreement datedAugust 10, 2001. Theundernoted documentswere to be read andconstructed as part of the agreement:-
i) LetterofAcceptance;
ii) Notice toProceedwith theWorks;
iii) Contractor'sBid;
iv) ContractData (VolumeI)
v) ConditionsofContract (includingSpecialConditionsofContract ) (VolumeI);
vi) TechnicalSpecifications (VolumeII);
vii) BillOfQuantities (VolumeIII)
viii) Drawings (VolumeIV);
ix) Documents furnishedby theBidder inVolumeVof theBidDocument;
x) AddendumtoBidDocument; and
xi) Anyotherdocument listed in theContractDataas formingpart of the Contract.
2. It is an itemrate contractwithBill ofQuantities specified. For the listedquantities, the amount payableby NHAI to Prakash is `158,80,42,413/- (RupeesOneHundredFiftyEight Crores EightyLacs FortyTwoThousandFourHundred Thirteenonly). Prakashhad to construct theLucknowBypassconnectingNH-25andNH-28viaNH-56passingthrough theCityof FAO(OS) 428/2007, 621/2015 & 585/2015 Page 2 of 19 Lucknowin theStateofUttarPradesh. Thedateof commencementwasAugust30, 2001andcompletionperiodwas36months.
3. TheBill of Quantities had specifications pertaining to the different items of work andwith respect to Reinforced Earth Structures, clause 703(A) of Technical Specifications, the work was described as under:-
"This work shall consist of Reinforced Earth Structures as per patented reinforced Earth Technology and consisting of precast discreet cruciform concrete facing, high adherence galvanized steel strips with accessories/fittings and backfill material in accordance with the specifications and in reasonably close conformity with the lines, grades, design and dimensions shown on the approved drawings."
4. The relevant itemconcerning the Bill ofQuantities is 5.41 and it elaborates clause 703(A) of the Technical Specificationsby furtherdetailing thematerials tobeusedand themannerof construction, and thusweprofitablynote item No.5.41of theBill ofQuantities. It readsasunder:-
"5.41 Construction of reinforced earth structures together with the construction of earthwork in layers, assembly & erection of reinforcing element & placement of facing panels and all associated components as per drawings, Technical specifications and clause 703.
a) Construction of reinforced earth walls with precast panels, reinforcing element, foundation beam, caping beam including ground treatment, if required, complete as per drawings and Technical Specification 700.
b) Earthwork for reinforced earth retaining wall technology reinforced earthwork with approved material including all lead and lifts complete as per Technical Specification Clause 703.
c) Construction of PCC strip level footing (35 cm X 15 cm) in M-15 grade concrete complete as per technical specification and drawing.FAO(OS) 428/2007, 621/2015 & 585/2015 Page 3 of 19
d) Construction of RCC cast-in situ/precast crash barrier and parapet coping beam with cast in-situ friction slab in M-30 grade concrete as per technical specification and drawing.
e) Construction of Cold formed steel crash barrier as per technical specification and drawing.
f) Construction of catchpits and drainage outlet at intervals with 100 mm dia C.I. Pipes of required length as per drawing."
5. With reference to clause703(A)of theTechnical Specifications, since itwas a part of the tender documents and the notice inviting tender required the prospectivebidders to submit their offers by fillingup the tender documents, it needs tobenoted that before the agreementwas executedonAugust10,2001,NHAIwrote toPrakashonM arch15,2001 that an addendumbe treated to clause 703(A)of theTechnical Specifications. Letter datedMarch15, 2001written by NHAI to Prakash readsasunder:-
"To M/s Prakash Building Associates Ltd.JV with Atlanta Infrastructure Ltd.
611/3, V.N.Purav Marg, Chembur, Mumbai-400071 Fax: 022-5229699 Dear Sir, Sub: Construction of segment of Lucknow Bypass joining NH- 25 and NH-28 via NH-56 passing through Lucknow city (Contract Package No.EW-15/UP)-Addendum to Bid Document.
This has reference to the bid for the above mentioned project. It is hereby informed that the following addendum is being issued to Volume-II.FAO(OS) 428/2007, 621/2015 & 585/2015 Page 4 of 19
S.No. Clause/Sub For Read
Clause No.
1. Section-5 Clause "high adherence "reinforcing
703, 1 A- Para 1, galvanised steel element
Line 2 strips with conforming to
accessories" relevant Indian
standards
This is for your information.
Yours faithfully
B.D.Joshi
General Manager (Tech.)-II"
6. Thewords „high adherence galvanised steel strips with accessories‟ in clause 703(A) were replaced by thewords 'reinforcing element conforming to relevant Indian standards'. Thus, we take the liberty of rewriting clause 703(A) of the Technical Specifications by superimposing the addendum. So done, the clause would read : This work shall consist of Reinforced Earth Structures as per patented reinforced Earth Technology and consisting of precast discreet cruciform concrete facing, reinforcing element conforming to relevant Indian standards and backfill material in accordance with the specifications and in reasonably close conformity with the lines, grades, design and dimensions shown on the approved drawings.
7. Clause2.3 of theGeneralConditionsof theContract gave a priority to thevariousdocuments, if needarose, to removeanambiguityandconstrue thecontract between theparties. Theclause readsasunder:-
"The documents forming the Contract shall be interpreted in the following order of priority:
1. Agreement
2. Letter of Acceptance, notice to proceed with the works
3. Contractor‟s Bid.FAO(OS) 428/2007, 621/2015 & 585/2015 Page 5 of 19
4. Contract Data
5. Conditions of Contract including Special Conditions of Contract
6. Specifications
7. Drawings
8. Bill of quantities and
9. Any other document listed in the Contract Data as forming part of the Contract."
8. Aworkof suchmagnitudecouldobviouslynot bequantifiedwithexactness and thus, aswe find in all contractsof thekind, therewasa clause todealwith the situationas towhat happenswhen the final quantityof theworksdonediffers fromthe quantity in theBill of Quantities. It is clause 38.1 of theGeneralConditions of theContract. It reads as under:-
"If the final quantity of the work done differs from the quantity in the Bill of Quantities for the particular item by more than 25 percent provided the charge exceeds 1% of initial Contract Price, the Engineer shall adjust the rate to allow for the change."
9. NHAIhadkept inmind, probably toovercomeproblems encountered during the executionof theworkswhich could possiblynotbe in thedawnof realizationwhen the tenderdocumentswere finalized, variations tobemade in theworks. Said contingencywasprovidedfor inclause40.2of theGeneralConditions of theContract. It readsasunder:-
"If the work in the Variation corresponds with an item description in the Bill of Quantities and if, in the opinion of the Engineer, the quantity of work above the limit stated in Sub Clause 38.1 or the timing of its execution do not cause the cost per unit of quantity to change, the rate in the Bill of Quantities shall be used to calculate the value of the Variation. If the cost per unit of quantity changes or if the nature or timing of the work in the variation does not correspond with items in the Bill of Quantities, the quotation by the Contractor shall be in the form of new rates for the relevant items of work."FAO(OS) 428/2007, 621/2015 & 585/2015 Page 6 of 19
10. Asthework commenced,NHAIandPrakashagreed that a reinforcedearthwork fromsegment1.4km to2.92kmwould be replaced byaviaduct, and in respectof the same,onDecember03,2003, apart fromother issues whichwerediscussedand minuted, at Sl.No.11of theminutes itwasagreed asunder:-
"Variation Items:
PAJV agreed that they will not claim viaduct as a new item. For items, exceeding in quantity by more than 25% from BOQ quantity and their variation is also exceeding 1% of Contract amount, Engineer informed that request of the agency is being considered and the decision will be taken during December 2003.
Rates for all Non BOQ items ordered so far will be revised by 31.12.2003.
Rates for ground improvement will be finalized by 15.12.2003. A meeting between PAJV and CES will be held at Delhi in first week of December 2003."
11. Disputesbetween theparties surfacedwhen theworkswere inprogress. Prakashclaimed that forviaduct, it should beentitled to theprice treating thesame tobeavariation. NHAI tooka stand that itwasnot a caseof variation. Itwas a simple casewhere the final quantity ofwork executedbecamemore and thus clause38.1 of theGeneral Conditionsof the Contract becameapplicable. Asper the clause, since theprice variationdidnot exceed1%of the initial contract price, Prakashwasnot entitled for anyprice adjustment andwouldbe entitled to theworks concerning theviaduct bymeasuring the quantityofworkexecutedandapplying theunit rate asper thebid. AsperPrakash thevariationhad tobewith reference to an itemofdescription in theBill ofQuantity and thepricequoted in theBill ofQuantity for thequantityofworks listed in theBill ofQuantity,meaning thereby the1%pricevariationcontemplatedwasnotwith reference to the total bid amount, whichwehavealreadynotedwas `158,80,42,413/-. Toclarify, if for theparticular itemofwork, as perBill ofQuantity 'Y', thepricewas `'X' and the workexecutedwas 'Y'+30%Y,beingavariation in theworkbeyond25%,thepricepayable wouldbe `'X' forwork 'Y' and for30%Ythe rate adjustment has tobemadeas permarket rates of thematerial input and labour rates.
FAO(OS) 428/2007, 621/2015 & 585/2015 Page 7 of 1912. Holding in favour of Prakash, the findingby theArbitral Tribunal in para 8.4.2 of the award,with the final direction concerningsaiddispute inpara10.1of theaward,which isdatedFebruary12, 2007, is asunder:-
"Para 8.4.2
(iv) A closer look at the wording of the Clause No.9 of the Contract data would reveal that the Road works and Bridge works mentioned thereunder were required to be carried out in accordance with the drawings and provisions of the contract. At the stage of signing the contract, the drawings and Bill of Quantities provided in the contract did not envisage construction of a viaduct, but envisaged construction of RES between chainage Km.
1.400 to Km. 2.920. Thus it is clear that the construction of the said viaduct is outside the original scope of the Contract. It could be brought within the scope of the contract by mutual consent of the parties to agree to a variation, which by definition (given in Cl.1.1 of the conditions of contract) is an instruction, given by the Engineer, which varies the works. In fact Team Leader‟s Letter dt. 17.05.02 (Exhibit C-1) is an instruction to vary the nature of work between chainage Kms. 1.400 and Km. 2.920 from RES to a Viaduct. The said variation has been accepted and has been implemented by the Claimant.
(v) While evaluating the items of varied work, reliance can be placed on B.O.Q. items, only if the conditions spelt out in the first half of G.C.C. 40.2 fulfilled. But if the original scope of work is varied, GCC clause 38.1 does not remain applicable and the second part of GCC Cl.
40.2 which reads as following becomes relevant.
"If the cost per unit of quantity changes or if the nature or timing of the work in the variation does not correspond with items in the Bill of Quantities, the quotation of the Contractor shall be in the form of new rates for the relevant items of work".
In view of the above the AT finds strength in the Claimant‟s argument that the basis of his quoted rates FAO(OS) 428/2007, 621/2015 & 585/2015 Page 8 of 19 included places and position where the works were to be executed for calculating leads, lifts etc. of major resources and agrees with the Claimant‟s view that the BOQ rates-per say-would not be applicable in such a situation.
(vi) The Contract Agreement was signed on 18.08.2001. The period of completion was 36 months. The variation was ordered on 17.05.02 i.e after 9 months of signing the Contract. Under such a situation the cost per unit of quantity would change irrespective of the price adjustment clause because of the timing and location of the work as per variation did not correspond with those of the items in the Bill of Quantities. In fact, a statement of additional resources to be deployed for viaduct work, was indeed furnished by the Claimants with his letter dated 05.07.02 (Exhibit C-6). The Engineer on 16.07.02 (Exhibit C-7) also accepted the need for at least some additional resources. Hence, as per GCC Cl.40.2, the quotation from the Contractor in the form of new rates for the relevant items of work needs to be given due weightage.
(vii) The Respondent has relied on the minutes of the meeting held on 29.11.03, wherein the Claimant had stated that they would not claim viaduct as a new item. The circumstances under which such an undertaking was given had been clarified by the Claimants in his letter dated 16.07.04 (Exhibit C-24) to which there was no further reply either from the Engineer or from the Employer. Moreover, the Claimant had agreed not to Claim viaduct as a new item, but had not conceded not to claim it as a varied item of work i.e. as a variation.
(x) The AT therefore, is of the opinion that various items in the viaduct portion from Km.1/400 to km. 2/290 need to be treated as varied work under Cl.40.2. However as certain quantities of these items of work in the above stretch, were already covered as per the contract agreement and drawings (i.e.) for the flyovers/grade FAO(OS) 428/2007, 621/2015 & 585/2015 Page 9 of 19 separators etc. planned as per contract agreement drawings), only contract rates with usual escalation should be applicable for the quantities as per the original scope of work in this reach plus 25% and new rates as varied item as per agreement condition should be considered only for quantities beyond it.
Para 10.1
(i) The claim of the Claimant is accepted partially.
The quantities of work of viaduct beyond 125% of the BOQ quantities of various items shall be treated as varied work and the rates for such excess quantities should be arrived as per GCC Cl.40.2 and 40.3.
(ii) The AT directs the Employer to get the new rates for the above referred excess quantities of various items of work fixed by the Engineer, based on an examination of the Claimant‟s rate analysis and market rates to determine the balance payment due to the Claimant"
(underlining ours)
13. Challenge byNHAI to said part of the award has been repelled by the learnedSingle Judge vide decisiondated August 12, 2015. The learnedSingle Judgehas held that in viewof the lawdeclaredby theSupremeCourt in thedecision reported as (2003) 5 SCC705 ONGC Vs.Saw Pipes Ltd. and the decision reported as AIR2015 SC363 Natural Gas Corporation Ltd. vs. Western Geco International Ltd., if clauses of the contract required tobe interpreted, andespeciallywhen twoviewswerepossible, a viewtakenby theArbitral Tribunal would not be interdicted by aCourt, merely because another viewwas possible. The awardbeingdeclaratory, the learned Single Judgehasheld that anydisputepertaining to calculationwouldhave tobe resolvedbyanother roundof arbitration, andweonlyhopeandexpect that if this issue attains finality againstNHAI, itwouldnot quibblewithnumbers because the extentofworkdoneconcerning the viaducthasbeenmeasured in themeasurementbooksandallwhat is required is agree to the changedrates.
14. LearnedSeniorCounsel forNHAIargued that it was a variationwithin themeaningof clause 40.2 of theGeneral FAO(OS) 428/2007, 621/2015 & 585/2015 Page 10 of 19 Conditions of theContract, as rightly held by the learnedArbitrators, but submitted that since it waswithin the limit prescribedbyclause38.1, the contract rates had to apply. Theargument is notedand rejectedbyus for the reasonclause 38.1contemplates a situationwhere the final quantityof theworkdonediffers fromthequantity in theBill ofQuantities and limits theprice adjustment to the contract pricewhere thedeviationmaybebeyond25%but doesnot exceed1% of the initial contract price. Thewords „for the particular item' cannot be ignored in the said clause and they make it expressly clear that the deviation has to be with reference to the particular item of work; it has to be for the simple logic that a deviation would always relate to an item of work and cannot be with reference to the entire contract. We clarify. Say if at a crossing on a road, during execution of the works to lay the road it is decided to reinforce only the crossing portion of the road by increasing the depth of the foundation layer by 6 inches, the deviation would relate to the foundation layer alone and percentage variation would be with reference to the foundation layer and not other components of the road. The reasoning by the learned Arbitrators is a little tedious no doubt, but the core idea is as above. After all, the learned Arbitrators were gentlemen with technical background and we must give them the leeway which a human with non-legal background would be entitled to, in the use of words while interpreting a contract. The final direction in sub-para (x) of para 8.4.2 of the award brings this out because the Arbitrators have written : However as certain quantities of these items of work in the above stretch, were already covered as per the contract agreement and drawings (i.e.) for the flyovers/grade separators etc. planned as per contract agreement drawings), only contract rates with usual escalation should be applicable for the quantities as per the original scope of work in this reach plus 25% and new rates as varied item as per agreement condition should be considered only for quantities beyond it. The FAO(OS) 428/2007, 621/2015 & 585/2015 Page 11 of 19 preceding reasoningby the learnedArbitrators that theminutesof themeetingdatedDecember03, 2003only showthatPrakash hasagreednot to claimtheviaduct as a newitemand that for itemsexceeding inquantitybymore than25%fromthebill of quantity theywouldbe entitled toprice variation is a correct readingof theminutes of themeeting, contentswhereofwe have reproduced in paragraph10 above. In this context it assumes importance that the viaduct is an elevated road. On pillars andpiersRCCslabs are cast akin to thekindwhichwesee along themetro rail line above theground. Thedrawing providedwith the tenderdocuments shows that along the segmentof the road therewere three intersections,with roadcutting across, requiring flyovers tobeconstructedat the three intersections. Thus, for theviaduct thecontracthadsimilar items ofwork to be executed and thus the learnedArbitrators have correctly held that for these itemsof work, for variations beyond theprescribed limitPrakashwouldbeentitled topriceadjustment at varied rates.
15. The second issue of difference between NHAI and Prakash was concerning construction of Reinforced Earth Structures. On the basis that Prakash had used polymeric materials and not simple metallic strips (for purpose of reinforcement of the earth structures) it would be entitled to an extra sum was the claim by Prakash.
16. As noted by us above, clause 703(A) of the Technical Specifications described the work in question i.e Reinforced Earth Structures, with further elaboration (detailing the materials to be used) in item No.5.41 of the Bill of Quantities, which we have already reproduced hereinabove in paragraph 4 above. Argument of Prakash was that the details of the material to be used at item No.5.41 of the Bill of Quantities did not make any reference to polymeric materials and that the general practice in the trade was to use simple metallic strips. NHAI argued before the Arbitral Tribunal that para
(a) of item No.5.41 made a reference to „reinforcing element‟. NHAI further pleaded that clause 703(A) of the Technical Specifications in the original tender, having the words „high adherence galvanized steel strips', was replaced vide addendum letter dated March 15, 2001 with the words FAO(OS) 428/2007, 621/2015 & 585/2015 Page 12 of 19 'reinforcing element conforming to relevant Indian standards' and thus Prakash would not be entitled to any extra price because the contract envisaged not only reinforcing elements but even the specific description thereof i.e. „conforming to relevant Indian standards‟.
17. The learned Arbitrators have resolved this dispute with reasons given in para 9.4 of the award and the directions in para 10.2 thereof as under:-
"As the work commence NHAI and Prakash agreed that a reinforced earth work from segment 1.4 km to 2.92 km would be replaced by a viaduct, and in respect of the same, on December 03, 2003, apart from other issues which were discussed and minuted, at Sl.No.11 of the minutes it was agreed as under:-
"Variation Items:
PAJV agreed that they will not claim viaduct as a new item. For items, exceeding in quantity by more than 25% from BOQ quantity and their variation is also exceeding 1% of Contract amount, Engineer informed that request of the agency is being considered and the decision will be taken during December 2003.
Rates for all Non BOQ items ordered so far will be revised by 31.12.2003.
Rates for ground improvement will be finalized by 15.12.2003. A meeting between PAJV and CES will be held at Delhi in first week of December 2003."
(i) The working of B.O.Q. item No.5.41 refers to construction of reinforced earth structures together with construction of earth work in layers, assembly & erection of reinforcing elements & placement of facing panels etc. B.O.Q. item No.5.41 (a) reads construction of reinforced earth walls with precast panels, reinforcing element, FAO(OS) 428/2007, 621/2015 & 585/2015 Page 13 of 19 foundation beams etc. From this wording, it appears that providing reinforcing element has not been specifically mentioned, although assembly and erection of reinforcing elements and placement of facing panels etc. has been mentioned. However, the concept of providing reinforced earth walls with precast panels, reinforcing elements etc. suggests the necessity of providing reinforcing elements.
(ii) The AT has also noted from the contract agreement that it was the responsibility of the Contractor to design the Reinforced Earth Structure. As such the Claimant was aware of the type and quantity of the reinforcing elements right at the time of submitting its tender.
(iii) Considering the preamble to the BOQ and the specification cl.703.6 it is clear that there is a conflict, regarding separate payment for reinforcing elements, between the interpretations of the wording of BOQ item 5.41(a) and the provisions of the specifications. The Respondent Employer failed to modify the specifications to make them in tune with the wording of the BOQ item.
(iv) Under this conflicting situation the Claimant ought to have got, the matter about separate payment for the reinforcing elements, clarified from the Employer in the prebid meeting particularly because it knew about the type and quantity of reinforcing elements to be provided.
This was not done by the Claimant in spite of the very apparent ambiguity and availability of an opportunity.
(v) The ambiguity between the interpretations of the wording of BOQ item 5.41(a) and the provisions of the specification as regards separate payment for reinforcing elements, the possibility of alternative interpretation of the wording of BOQ items 5.41 and 5.41(a) and the failure of the Claimant to seek clarification in the prebid meeting, all need to be considered together.
(vi) Under the above circumstances, the AT is of the view that both the Claimant and the Respondent are equally responsible for this conflict and as such they should FAO(OS) 428/2007, 621/2015 & 585/2015 Page 14 of 19 equally share the cost of providing reinforcing elements. The Claimant is, therefore, entitled to 50% of the cost of procurement of reinforcing elements.
Para 10.2
(i) This claim of the Claimant is also allowed partially. The Claimant is entitled to additional payment equivalent to 50% of the cost incurred by it for providing the reinforcing elements in the Reinforced Earth Structure plus 10% towards Contractor‟s overheads and profit.
The Respondent should get the amount payable worked out by the Engineer based on duly verified procurement rates of various types of reinforcing elements.
(ii) The claimant is not entitled to relief under price adjustment clause." (underlining ours)
18. The50 : 50 solution findby the learnedArbitrators is on the reasoning that the tendermadeknowntoPrakash that therewasa reinforcingelement in theworksand therewassomehiatusbetweenclause703(A)and itemNo.5.41(a) of the TechnicalSpecifications. Putting theblameonPrakash fornothavinggot thematter resolved i.e. theconflict resolved, the learnedArbitratorsheld that it couldnotbeoverlooked thatNHAIwasequally responsible for this because itwas theauthor of the tenderdocuments. Therefore, bothpartieshad to share theblame50 : 50.
19. The learned Single Judge has held that this was a 'Panchayati Solution'. The learned Single Judge is absolutely correct. As per the Arbitration and Conciliation Act, 1996, the mandate of an Arbitral Tribunal is to decide a dispute in terms of a written agreement between the parties, if the dispute relates to the written agreement. If the language of the written agreement is clear, the Arbitral Tribunal has to give effect to the language. If the language is unclear, giving reasons to justify what was held to be unclear, the Arbitral Tribunal would have the mandate to give a meaning to the clause in question. Sub-Section (2) of Section 28 of the Arbitration and Conciliation FAO(OS) 428/2007, 621/2015 & 585/2015 Page 15 of 19 Act, 1996 reads as under:-
"28.(2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it to do so."
20. Thephrase Ex aequo et bono (Latin for „according to the right and good' or 'from equity and conscience') is used as a legal term of art. In the context of arbitration, it refers to the power of arbitrators to dispense with consideration of the law but consider solely what they consider to be fair and equitable in the case at hand. An amiable compositor also known as amiable compositeur under international law refers to an unbiased third party, often a king or an emperor, who suggests solution to a dispute between countries. Amiable compositor acts as a mediator in a dispute between subjects of international law. The concept of amiable compositor has its historical origins in French law. An amiable compositor acts as a conciliator rather than a decision-maker in a dispute. An amiable compositor is also not bound to apply strict rules of civil procedure and substantive law. An amiable compositor is also authorized to modify the effect of certain non-mandatory legal provisions. Traditionally, amiable compositor provided equity correction to strict rules of law. But today, an amiable compositor has the power to depart from the strict application of rules of law and decide a dispute according to justice and fairness.
21. Concededly, while making the reference to the Arbitral Tribunal NHAI and Prakash did not expressly authorise the Arbitral Tribunal to decide ex aequo et bono or as amiable compositeur.
22. The second part of the award was challenged by Prakash and its petition was registered as Arbitration Petition No.432/2007. It has been FAO(OS) 428/2007, 621/2015 & 585/2015 Page 16 of 19 dismissed by the learned Single Judge vide impugned order dated August 06, 2007 challenged by Prakash in FAO(OS) 428/2007. In another words, the learned Single Judge upheld the 50 : 50 solution given by the learned Arbitral Tribunal. But, challenge to the same part of the award by NHAI which was aggrieved by the 50 : 50 solution has met with success before the learned Single Judge as per decision dated August 12, 2015 whereby OMP No.392/2007 filed by NHAI has been partly allowed. As noted above, challenge by NHAI to the award concerning the viaduct issue has been repelled, but the second limb concerning reinforcement element has succeeded.
23. The reasoning by the learned Single Judge is simple. The award has ignored a material document, being the addendum as per NHAI letter dated March 15, 2001 which replaced the words 'high adherence galvanized steel strips‟ with the words „reinforcing element conforming to relevant Indian standards‟.
24. This explains FAO (OS) 621/2015 filed by Prakash challenging the impugned decision dated August 12, 2015 in so far objections filed by NHAI has succeeded to the second part of the award. It explains FAO (OS) 585/2015 filed by NHAI, which persist with the challenge to the first part of the award which has been upheld by the learned Single Judge.
25. NHAIbeinghappywith theorderdatedAugust 12, 2015 insofar the secondclaimawardedby theArbitralTribunal in favour of Prakashhas been set aside, argument of learnedcounsel for Prakash in the twoappeals filedbyPrakashwas that clause 2.3 of theGeneralConditionsof theContract listed the priority inwhich the documents had tobe interpreted and urged that theSpecialConditionsof theContract hadpriorityover thebill ofquantities, anargumentwhichwassimply tobe statedandnot carried forward for the reasonclause703Aof theTechnical Specifications in theOriginalTenderwasamended FAO(OS) 428/2007, 621/2015 & 585/2015 Page 17 of 19 onMarch15, 2001, and theamendments havealreadybeennotedbyus inparagraph16above. It therefore hardlymatters that in thebill of quantities pertaining to reinforcedearth structure thenature of the reinforcingelementwasnotmentioned. In para (a) of itemNo.5.41of thebill of quantities,with reference to constructionof reinforcedearth structures it is clearlymentioned that the same would bewith precast panels and reinforcing element. Clause 703Aof the Technical Specifications, which originally referred to reinforcing element comprising high adherence galvanized steel stripswas replacedwith reinforcement elementconforming to relevant Indianstandardsand this Indian standard is undoubtedlypolymeric material. Wetherefore concurwith theviewtakenby the learnedSingle Judge in theorder datedAugust12, 2015passed in O MPNo.392/2007.
26. Before concludinganargument advancedby learned senior counsel forNHAIneeds tobenoted. After the awardwas pronounced, on an application filedbyPrakashonMarch06, 2007,withnotice sent toNHAIonMarch12, 2007, theArbitral TribunalmetonApril 02, 2007andpertaining toclaimNo.1, correctedpara10.1of theaward, to readasunder:-
(i) The claim of the Claimant is accepted partially.
The quantities of work of viaduct beyond 125% of the BOQ quantities of various items of work within the reach of the viaduct i.e. from KM 1/400 to KM 2/920 shall be treated as varied work and the rates for such excess quantities should be arrived as per GCC Cl.40.2 and 40.3."
27. Theportion in bold andunderlined is the insertion in thepara10.1 in theoriginal award. Thecorrectiononly clarifieswhatwasalready implicit in theoriginal award. It onlymakesexpress the lengthof theviaduct,whichwasalready knownandwasnot indispute. Evenifwe remove thewords of work within the reach of the viaduct i.e. from KM 1/400 to KM 2/920 thedirection in theoriginal award is crystal clear and thusnothing turnson thecorrectionmade to theaward.
28. Thenet take of our discussion above is that the twoappeals filed byPrakashhave to be dismissed. FAO(OS) No.621/2015 tobedismissed for the reasonsgivenaboveandsince even50%of the sumawardedunder claim2by theArbitral Tribunal hasbeenset asideby the learnedSingle Judge, a findingwhichweaffirm,FAO(OS)No.428/2007filedbyPrakash in which thegrievancewas to the denial of 50%of claimNo.2has to bedismissed. Since the awardpertaining to claimNo.1 FAO(OS) 428/2007, 621/2015 & 585/2015 Page 18 of 19 which has been upheld by the learnedSingle Judge is upheld by us, FAO(OS)No.585/2015 filed byNHAIhas also to be dismissed.
29. All threeappeals aredismissedbutwithout anyorder as tocosts.
(PRADEEP NANDRAJOG) JUDGE (MUKTA GUPTA) JUDGE MARCH 17, 2016 skb FAO(OS) 428/2007, 621/2015 & 585/2015 Page 19 of 19