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12.I have carefully considered the submissions advanced by the learned counsel on either side.

13.The short question which arises in these Original Petitions is as to whether the change in law would enable the respondents to compensation under clause 13.16.5 adopting CPA 32 or change in law would entitle the respondents to compensation under clause 13.16.2 to 13.16.4 when CPA is not adopted. In fact, the learned counsel for the respondent would also raise an objection that this contention that has been argued before me was neither raised before the Arbitral Tribunal nor in the memorandum of grounds of https://www.mhc.tn.gov.in/judis  challenge to the award under Section 34 before this Court, but raised for the first time in the oral arguments. The primordial defence of the petitioners before the Tribunal was that when the respondents were already compensated for price variation adopting CPA 32, whether the petitioner was entitled to claim further additional costs owing to change in law in view of proper interpretation of CPA 37 (clause 13.16.1 to 13.16.5).

https://www.mhc.tn.gov.in/judis  Modified clauses under CPA

15.It is not in dispute that CPA 32 was invoked and price adjustment claim was made by the respondents in both the cases. In terms of the amended CPA 37, if CPA 32 is adopted and price variation is claimed by the contractor, then no addition or reduction in costs due to changes in law will be allowed, except in three scenarios, namely i) changes in custom duties ii) changes in excise duties and iii) changes in output TN VAT. As seen from clause 13.1(b) of GCC, the contract price was not subject to adjustment in view of the changes in cost of labour, materials or other matters. However, under CPA 32, the parties agreed for providing price escalation on a particular formula being adopted.

18.It is the case of the petitioners that CPA 37, post agreement replacing sub clause 13.16 of the GCC does not provide for additional costs for change in law and it is subject to application of two scenarios, namely if CPA 32 is applied, payment for change in law would be available only in respect of three events, namely change in customs duties, excise duties and output TN VAT. Secondly, when there is an unrestricted change in law https://www.mhc.tn.gov.in/judis  which is subject to application of the first scenario, if applied, then second scenario would not be available. The Arbitral Tribunal has found that the modification of clause 13.16 of GCC vide CPA 37 was only to avoid duplication in payment. The Tribunal has failed to see that both CPA 32 and CPA 37 apply in different contexts, namely price escalation and change in law. Clause 13.16.4 takes care of double payment by clearly stating that additional or reduced costs shall not be separately paid if the same has already been taken into account under any other clauses under the contract.

21.The omnibus entitlement for price adjustment under clause 13.16 was watered down in CPA 37 to a great extent, entitling the respondents to seek additional costs on account of change in law, only if the respondent has https://www.mhc.tn.gov.in/judis  not adopted the price variation formula in CPA 32, unless under three exceptions carved out, namely customs duty, excise duty and output TNVAT. Therefore, the only possible interpretation that can be given to 13.16.5 is that if the contractor has already claimed the price variation invoking CPA 32 which provides for a formula, then the contractor cannot claim any additional costs citing change in law, except where the change in law is pertaining to customs duties, excise duties and TNVAT. However, this only possible and right interpretation of the clauses has not been adopted by the Tribunal and the Tribunal erroneously held that irrespective of being compensated under CPA 32, the respondents would still be entitled to claim additional costs due to change in law which is clearly patently illegal and the Tribunal erroneously held that there is a mandatory requirement for the price adjustment on account of change in law which is contrary to the terms and conditions, especially after the modifications ushered in by CPA 37. The interpretation of clause 13.16.5 by the Tribunal is not in consonance with Section 28(3) of the Arbitration and Conciliation Act and if the interpretation given by the Tribunal is accepted, then it would in fact amount to rewriting the contract, especially clause 13.16.5. https://www.mhc.tn.gov.in/judis