FAO/6130/2014 of STATE OF HARYANA & ANR Vs J.V. UNITECH LTD & ORS on 30 December 2016

IN THE HIGH COURT FOR THE STATES OF PUNJAB ANDHARYANA AT CHANDIGARH

FAO No.6130 of 2014 (O&M)

Date of Decision.30.12.2016

2. FAO No.6202 of 2014 (O&M)

State of Haryana and another

.......Appellants

Vs

J.V. of Unitech Limited and others

........Respondents

3. FAO No.9063 of 2014 (O&M)4.FAO No.9750 of 2014 (O&M)4.FAO No.9750 of 2014 (O&M)

J.V. of Unitech Limited

.......Appellant

Vs

State of Haryana and others

........Respondents

Present:Mr. Puneet Jindal, Senior Advocate with Ms. Sakshi, Advocate and for Mr. Ashwinie Kumar Bansal, Advocate and Mr. Anmol Pandit, Advocate for the appellants in FAO No.6130 and 6202 of 2014 and for respondent Nos.1 and 2 in FAO No.9063 and 9750 of 2014.for respondent Nos.1 and 2 in FAO No.9063 and 9750 of 2014.

Mr. Puneet Bali, Senior Advocate with

Mr. Vibhav Jain, Advocate

for the appellant in FAO Nos.9063 and 9750 of 2014 and for respondent No.1 in FAO Nos. 6130 and 6202 of 2014.

CORAM:HON'BLE MR. JUSTICE AMIT RAWAL

-.-

AMIT RAWAL J.

C.M. No.26928-CII of 2014 in FAO No.9750 of 2014C.M. No.24913-CII of 2014 in FAO No.9063 of 2014

For the reasons stated in the application, delay of 18 days and 12 days in refiling the appeals is condoned.

Applications are allowed.

C.M. No.26929-CII of 2014 in FAO No.9750 of 2014C.M. No.24914-CII of 2014 in FAO No.9063 of 2014

PANKAJ KUMAR2017.01.16 12:20I attest to the accuracy andintegrity of this document

For the reasons stated in the applications, delay of 2 days infiling the appeals is condoned.

Applications are allowed.

Main cases

This order of mine shall dispose of four appeals, which havearisen, owing to the passing to two Awards namely 28.05.2009 andclarificatory Award dated 19.08.2009 in respect of contract work HR-1 and04.07.2007 and clarificatory Award dated 19.08.2009 arising out of contractwork HR-2. The contract HR-1 was in respect of four laning andstrengthening of NH-1 from Karnal to Ambala i.e. from 132.675 kms to155, for a total consideration of `38,05,95,389/- and contract HR-2 was forfour laning and strengthening of NH-1 from Karnal to Amabala i.e. 155 kmsto 212.161 for a total consideration of `2,06,35,78,392/-.

Both the aforementioned tenders were allotted to the contractornamely J.V. of Unitech Limited and others on 18.11.1994. The dispute,according to the State of Haryana, arose on account of the fact that the workwas not completed within the stipulated period. The contract containedcertain terms and conditions binding the parties, much less, the claimdemand and the alleged non-acceptance of the same, resulted into seekingreference of dispute through the process of arbitration, owing to arbitrationclause.

For the Contract Work HR-1, the contractor-claimant,submitted the following 10 claims.

“Claim No.1:Claim of `2,36,78,550/- on account of refund ofconditional rebate by way of damage/cost on account ofmultiple breaches.

Claim No.2: Claim for `1,47,30,093/- on account ofabnormal variations.

Claim No.3:Claim for `4,00,41,730/- on account ofabnormal variations including variations in quantities asspecified in the BOQ.

Claim No.4.Claim for `3,51,65,000/- on account ofprolongation costs.

Claim No.5. Claim of `3,45,00,000/- account of amount dueby way of sourcing of fund.

Claim No.6: Not pressed by the claimant before the learnedArbitral Tribunal.

Claim No.7: Claim for `49,03,289/- on account of variationclaim in terms of clause 52.3 of GCC.

Claim No.8: Claim for interest pendente lite till date ofSOF&C (11.06.2003).

Claim No.9: Claim for interest from 11.06.2003 till date ofAward.

Claim No.10: Post award interest.

The Arbitral Tribunal vide Award dated 28.05.2009 partly

allowed Claim Nos.1, 3 & 4 and rejected claims No.2, 5 and 7. The totalamount of compensation awarded was `4,04,13,131/- whereas claim Nos.8and 10 regarding the interest @ 12%, had been allowed and the counterclaims of the State of Haryana were rejected.

It is a matter of record that after passing of the Award dated28.05.2009, an application under Section 33 of the Arbitration andConciliation Act, 1996 seeking clarification was moved and theClarificatory Award dated 19.08.2009 came to be passed.

Similarly in respect of Contract Work HR-II, following 8claims were filed:- “Claim No.1:Claim of `14,06,37,617/- on account ofabnormalvariations(subsequentlyrestrictedto`14,01,45,937/- due to some computational errors).Claim No.2: Claim for `47,00,00,000/- on account ofprolongation cost.abnormalvariations(subsequentlyrestrictedto`14,01,45,937/- due to some computational errors).Claim No.2: Claim for `47,00,00,000/- on account ofprolongation cost.

Claim No.3:Amount claimed nil.

Claim No.4.Claim of `18,00,00,000/- on account of cost ofsourcing of fund.

Claim No.5: Claim for `74,92,000/- on account of variationclaim in terms of clause 52.3 of GCC.

Claim No.6: Claim for interest pendente lite till date ofSOF&C (11.06.2003).

Claim No.7: Claim for interest from 11.06.2003 till date ofAward.

Claim No.8: Post award interest.

Against the aforementioned 8 claims, the Arbitral Tribunal vide Award dated 04.07.2009 and Clarificatory Award dated 19.08.2009,awarded a total amount of `24,60,44,827/-. Claim Nos.1 and 2 were partlyallowed and claims Nos.4 and 5 were rejected and against the claim Nos.6to 8, interest @12% was awarded.

It it pertinent to mention here that as regards the Contract HR-1, against the claim No.1 for `2,36,78,550/- on account of refund ofconditional rebate by way of damage/cost on account of multiple breaches,the Arbitral Tribunal awarded a sum of `40,54,719 and against claim No.3for `4,00,41,730/- on account of abnormal variations including variations inquantities as specified in the BOQ and Claim No.4 for `3,51,65,000/- onaccount of prolongation costs, awarded `1,92,68,400/- and `1,70,90,012/-respectively. Against claims Nos.6 to 8, interest @12% had been granted.

The Objecting Court in respect of Contract HR-1, accepted the objection petition filed against the Award dated 28.05.2009 and modified the claim No.3 for `1,92,68,400/- to `19,54,600/- and reduced the rate ofinterest from 12% to 7%. It is in this backdrop of the matter, two appealsPANKAJ KUMAR2017.01.16 12:20I attest to the accuracy andhave been filed for non-accepting of the objection qua claim Nos.1 and 4 byintegrity of this document the State of Haryana bearing No.6130 of 2014 titled as “State of Haryanaand another Vs. J.V. of Unitech Limited and others” and the claimants-contractors also filed the first appeal bearing No.9750 of 2014 titled as “J.V.of Unitech Limited and others Vs. State of Haryana and others” against thesame.

As regards the Contract Work HR-II, against claim No.1 for`14,01,45,937/- on account of abnormal variations and claim No.2`47,00,00,000/- on account of prolongation cost. The Arbitral Tribunal videAward dated 04.07.2009/19.08.2009, awarded a sum of `1,75,96,872/- and`22,84,47,955/- respectively.

The Objecting Court allowed the objection petition filed by theState of Haryana qua claim No.1 by reducing the same from `1,75,96,872/-as awarded by the Arbitral Tribunal to `13,74,096/- but dismissed qua claimNo.2 and against claim Nos.6 to 8, reduced the interest from 12% to 7%. Itis in this backdrop of the matter, the State of Haryana challenged theaforementioned order, of the Objecting Court, in First Appeal bearingNo.6202 of 2014 titled as “State of Haryana and another Vs. J.V. of UnitechLimited and others” and the claimants-contractors filed the counter appealbearing No.9063 of 2014 titled as “J.V. of Unitech Limited Vs. State ofHaryana and others”.

As regards the rejection of claims Nos.2, 5 and 7 in respect ofContract HR-1 and claim Nos.4 and 5 in respect of Contract HR-11, thecontractor did not file any objections before the Objecting Court.

hearing, whether the contractor was/is entitled to any amount or not, inessence, whether the deduction of the amount by the Objecting Court wasjustified or the Award was required to be set aside in toto.

On the contrary, the argument of the contractor had been thatthe order of the Objecting Court in accepting objection petition of State ofHaryana qua claim No.3 in respect of Contract HR-I and claim No.1 inrespect of Contract HR-II had not been in accordance with terms andconditions of the contract, much less, provisions of Section 34 of theArbitration and Conciliation Act, 1996.

Mr. Puneet Jindal, learned Senior Counsel assisted by Ms.Sakshi, Advocate and Dr. Ashwanie Kumar Bansal, learned counselappearing for the appellants-State in FAO Nos.6130 and 6202 of 2014,submitted, that the Objecting Court failed to address the issue with regard toclaim No.4 while dealing with the arguments raised by the appellants, thus,committed perversity, much less, patent illegality in awarding thecompensation. Clause 44.1 of the contract dealt with execution of work intime. It was submitted that on perusal of the aforementioned provisions, itis clear that there can be numerous circumstances where extension of timecan be granted without there being any fault on the part of theemployer/contractee i.e. the State of Haryana and the respondent-contractor.The extension of time is to be supported by reasons, in essence, forawarding damages regarding the prolongation as submitted by thecontractor, there has to be a finding based upon the material on record as towho was the defaulter for prolongation of the contract. It is only thereafter,the damages can be quantified and for that purpose, the Arbitral Tribunalrelied upon Hudson's formula. The passing the Award by the ArbitralPANKAJ KUMAR2017.01.16 12:20I attest to the accuracy andintegrity of this document

Tribunal on the basis of judgment rendered by the Hon'ble Supreme Court

inMcDermott International Vs. Burn Standards Co. Ltd. 2006(2) Arb LR

498 (SC)is incorrect interpretation.

Clause 53.4 of the contract provided that if the contractorfailed to comply with any of the provisions of this clause in respect of anyclaim, his entitlement to payment in respect thereof shall not exceed suchamount as the Engineer or any Arbitrator or Arbitrators appointed pursuantto sub-clause 67.3 while assessed the claims after consideringcontemporary records, in essence, no contemporary record has been placedon record and therefore, the claim was wholly misplaced. For the sake ofbrevity, the same reads as under:- “53.4 Failure to comply: if the Contractor fails to comply withany of the provisions of this Clause in respect of any claimwhich he seeks to make, his entitlement to payment in respectthereof shall not exceed such amount as the Engineer or anyarbitrator or arbitrators appointed pursuant to Sub-Clause67.3 assessing the claim considers to be verified bycontemporary records (whether or not such records werebrought to the Engineer's notice as required under Sub-Clauses 53.2 and 53.3).

The Contractor failed to produce on record books of account or any other material, much less, the evidence qua actual expenditure incurredon overheads yet the Tribunal allowed the claim on hypothesis to the tune of`1,70,90,012/-, though it reduced by the Objecting Court but the factremains that the Contractor was/is not entitled to a single penny. In fact, thefinding of the Arbitral Tribunal in applying the Hudson's formula to becorrect being accepted by the Hon'ble Supreme Court in McDermottPANKAJ KUMARInternational's case(supra), is wholly erroneous. There has been a mis-2017.01.16 12:20I attest to the accuracy andintegrity of this document interpretation of letter dated 30.10.2000. Hudson's formula is the oldest,which has been widely criticized by many authors.

The contractor had raised the claim for prolongation cost i.e.cost of overheads and profit @29.9%, though the Tribunal rejected theclaim for profit of 10% but allowed the claim only for overheads @14.53%after reducing element of profit of 10% based on Data Book of Ministry ofRoad Transport and Highways. The delay in completion was 8 monthsonly but the Tribunal granted damages for 13 months, in essence, time limitof 42 months was w.e.f. 14.01.1998 to 13.06.1998. The work after delay of8 months was completed on 28.03.1999. The defect liability period of oneyear expired on 28.03.2000. The Taking Over Certificate (TOC) was issuedon 30.08.2000 i.e. after a delay of 5 months and the Tribunal, thus, hasgranted compensation for that 5 months i.e. 8+5+=13, by applying theHudson formula.

They further submitted that High Court of Bombay in M/s Essar Projects Limited Vs. M/s Edifice Developers and Projects Engineers Limitedin Arbitration Petition No.313 of 2007 decided on 11.11.2011 hadconsidered the similar matter and rejected the Award of the Tribunalgranting the damages by applying the Hudson formula.

In order to lend support to the contention that the ObjectingCourt committed illegality in not appreciating, that the contractor had failedto produce any proof of actual loss and therefore, the damages on the basisof prolongation of contract could not have been granted, in support ofsubmission relied upon the judgment rendered by Hon'ble Delhi high CourtinAll India Radio Vs. M/s Unibros (Delhi) 2010(5) RCR (Civil) 757.

As regards the entitlement of the contractor to the variation

charges, it was submitted that the Arbitral Tribunal erroneously andwrongly granted higher rates for the original quantity as well as variedquantity in complete violation of clause 52.2. Though the Objecting Courtreduced the awarded amount from `1,92,68,400/- to `19,54,600/- but yet itought not to have granted the aforementioned amount. In this regard, theybrought to the notice of this Court Engineer's letter dated 4.2.2000 (Ex.C-35) where it had rejected the claim of the contractor, in essence, did not findjustification for higher rates on account of additional/reduced quantities.The opinion of the Engineer was on the basis of the interpretation of clause52 as well that the rate as given in the agreement had become inappropriateand inapplicable as per the mandatory condition of clause 52.2. TheTribunal had no jurisdiction to deduce the rate than given in the agreement.The Engineer, for the first time, was approached on 12.11.1999 i.e. after 7months of completion of the item.

They further submitted that the Tribunal violated clauseNo.52.1 of the agreement in granting higher rates for entire quantityincluding executed quantity. The Award in fact is hit by clause 52.1 whichprovided that variation shall be valued at the rates and prices set out in thecontract. In support of their contention, reference of the Central PublicWorks Department (CPWD) Manual was made. The contractor executedthe work of a particular quantity. There was a marginal increase of quantitybeyond 125% of total work and the value thereof had already been paid,therefore, the additional amount, granted by the Tribunal, due to marginalincrease in the quantity of work is not sustainable. The Arbitral Tribunal atthe most could have granted suitable rate for varied quantity of 36.25 cum.In fact the chart extracted in the order of the Objecting Court is perfectlyPANKAJ KUMAR2017.01.16 12:20I attest to the accuracy andintegrity of this document legal and justified. The Award is lacking reasons, thus, there is violation ofprovisions of sub-section 3 of Section 31 of the 1996 Act.

The claimants had failed to give any evidence regarding thepercentage of variation. The claim lacked substantive material, in essence,neither the details as to how the amount had been worked out nor thequantitative details for new rates, had been given.

Similar arguments have been addressed with regard to claims in Contract HR-II, as the claim No.1 pertained to abnormal variations andclaim No.2 pertains qua prolongation cost. In order to lend support to theaforementioned arguments, Mr. Jindal, relied upon Clauses 51.1, 52.1 and52.2, which have been reproduced in grounds of appeal of FAO No.6130 of2014. For the sake of brevity, the same are extracted here-in-below:- “Clause No.51.1Variations- The Engineer shall make any variation ofthe form quality or quantity of the Works or on any part thereof that may,in his opinion, be necessary and for that purpose or if for any other reasonit shall, in his opinion be appropriate, he shall have the authority toinstruct the Contractor to do and the Contractor shall do any of thefollowing:-

(a) Increase or decrease the quantity of any work included in the Contract.(b) Omit any such work (but not if the omitted work is to be carried out bythe Employer or by another contractor.

(c) Change the character or quality or kind of any such work.

(d) Change the levels, lines, position and dimensions of any part of theworks.

(e) Execute additional work of any kind necessary for the completion ofthe works or (f) Change any specified sequence or timing of construction of any part ofthe works.

No such variation shall in any way vitiate or invalidate the Contract, butthe effect, if any, of all such variations shall be valued in accordance withClause 52.

Provided that where the issue of an instruction to vary the Works isnecessitated by some default of or breach of contract by the Contractor orfor which he is responsible, any additional cost attributable to such defaultshall be borne by the Contractor.

CLAUSE 52

52.1 Instructions for Variations - All variations referred to in Clause 51

and any additions to the Contract Price which are required to bedetermined in accordance with Clause 52 (for the purposes of this Clausereferred to as “varied work”) shall be valued at the rates and prices set outin the Contract if in the opinion of the Engineer the same shall beapplicable. If the Contract does not contain any rates or prices applicableto the varied work, the rates and prices in the Contract shall be used as thebasis for valuation so far as may be reasonable, failing which after dueconsultation, by the Engineer with the Employer and the Contractor,suitable rates or prices shall be agreed upon between the Engineer and theContractor. In the event of disagreement, the Engineer shall fix such ratesor prices as are in his opinion appropriate and shall notify the Contractoraccordingly with a copy to the Employer. Until such time as rates or pricesare agreed or fixed the Engineer shall determine provisional rates or pricesto enable on- account payments to be included in certificates issued inaccordance with Clause 60.

52.2 - Power of Engineer to Fix Rates -

Provided that if the nature or amount of any varied work relative to thenature or amount of the whole of the Works or to any part thereof, is suchthat, in the opinion of the Engineer, the rate or price contained in theContract for any item of the Works is by reason of such varied workrendered inappropriate or inapplicable, then after due consultation by theEngineer with the Employer and the Contractor a suitable rate or priceshall be agreed upon between the Engineer and the Contractor. In theevent of disagreement the Engineer shall fix such other rate or price as isin his opinion, appropriate and shall notify the Contractor accordingly,with a copy to the Employer. Until such time as rates or prices to enableon-account payments to be included in certificates issued in accordancewith Clause 60.

Provided that no change in the unit rates or prices quoted shall beconsidered for items included in the priced Bill of Quantities unless suchitems individually account for an amount of more than 5 (five) percent ofthe Contract Price named in the Letter of Acceptance and the actualquantity of work performed under the item exceeds or falls short of theoriginal billed quantity by more than 25 percent.

Provided also that no varied work instructed to be done bv the EngineerPursuant to Clause 51 shall be valued under Sub-Clause 52.1 or under thisSub-Clause unless within 14 davs of the date of such instruction and otherthan in the case of omitted work, before the commencement of the variedwork notice shall have been given either.

(a) By the Contractor to the Engineer of his intention to claim extrapayment or a varied rate or price or (b) By the Engineer to the Contractor of his intention to vary a rate orprice.

With eloquence and vehemence, it was submitted that no doubtthe contractor is entitled to the variation but there is a yardstick for thesame. The procedure had been prescribed to arrive at a consensus betweenthe contractor and the employer and in the event of failure, the discretionhad been vested with the Engineer to fix the rates or prices which in hisopinion are appropriate and shall be notified to the contractor with a copy tothe employer. Unless and until such exercise is done, the Engineer shalldetermine the provisional rates or the prices to enable the interim payment.

In fact, both the parties relied to the aforementioned clauses butthe State of Haryana also referred to Clause 53 which began with nonobstante clause “notwithstanding with any other provision of the contract, ifthe Contractor intended to claim any additional payment pursuant to anyclause of these conditions or otherwise, he shall be required to give noticeof his intention to the Engineer with a copy to the employer, within 28 daysafter the event giving rise to the claim has first arisen.” In fact, the entireargument, according to the both parties, hinges upon the proviso to clause52.2, that no change in the unit rates or prices quoted shall be considered foritems included in the priced bill of quantities unless and until such itemsindividually account for an amount of more than 5% of the contract pricenamed in the Letter of Acceptance and the actual quantity of workperformed under the item exceeds or falls short of the original billedquantity by more than 25%. There had been a reference to the provisions ofSection 70 of the Contract Act and its interpretation by the Hon'ble Supreme

Court in Food Corporation of India and others Vs. Vikas MajdoorKamdar Sahkari Mandli Ltd. 2008(1) RCR (Civil) 284.

In order to lend support to the order of the Objecting Courtregarding reduction of the interest from 12% to 7%, reliance was placed tothe ratio decidendi culled out by the Hon'ble Supreme Court in KrishnaBhagya Jala Nigam Ltd. Vs. G. Harischandra Reddy AIR 2007 SC 817and on similar lines Rajasthan State Transport Corporation Vs. IndagRubber Ltd. 2007(2) SCC 720.

Ratio decidendi

Per contra, Mr. Puneet Bali, learned Senior Counsel assisted byMr. Vibhav Jain, Advocate appearing for the J.V. of Unitech Limitedsubmitted that the Objecting Court had assigned no reasons for reducing theinterest from 12% to 7% as it is against the mandate of the provisions ofsub-section 7 of Section 31 of the 1996 Act and further submitted that theinterpretation of the contract is within the domain of the Arbiral Tribunaland not of the Objecting Court. In this regard, reliance to the ratiodecidendi culled out by the Hon'ble Supreme Court in Madhya PradeshHousing Board Vs. Progressive Writers and Publishers (2009) 5 SCC 678was laid.

He further submitted that due to default or breach on the part ofthe employer, the contract got prolonged. It was substantially completed on28.03.1999 with a delay of 13 months. The defect liability period (DLP) of12 months was to commence from the date of substantial completion asannounced in the Taking Over Certificate (TOC) which was issuedbelatedly on 30.03.2000, stating the date of completion as 28.03.1999. Bythe time of issuance of TOC, the Defect Liability Period of 12 months hadalready expired. Though the contractor had submitted many claims but onlyPANKAJ KUMAR2017.01.16 12:20I attest to the accuracy andintegrity of this document three claims were allowed as indicated above. The calculation done beforethe Objecting Court by reducing the amount of variation is the calculationsubmitted by the State of Haryana during the course of hearing, in fact, itwas not the part and parcel of the record of the Arbitral Tribunal. Thecontract provided that the quantities may vary and the contractor wasentitled to the payment for quantities actually executed at the agreed rates.Clause 52.2 of the Contract was also relied upon to submit that if the rate orprice contained in the contract for any items of the works is, by reason ofsuch varied work, rendered inappropriate or inapplicable then, after dueconsultation by the Engineer with the employer and contractor, a suitablerate or price shall be agreed upon between the Engineer and the contractor.

The thrust of the argument was whether the rate or price is to betaken for the entire quantity executed or only for the quantity executedbeyond the threshold limits of 125% i.e. 100%+25% thereof and to buttresshis arguments, Mr. Bali, submitted that it has to be for the quantity executedbeyond 125% i.e. 100%+25% thereof, whereas the contention of theemployer had been that when the rates were rendered inappropriate orinapplicable then the fresh/suitable rate or price was to be fixed for theentire quantity executed, thus, it was a case of interpretation of the contractand the Arbitral Tribunal being expert had occasion to discuss the sameextensively and arrived at a finding of fact. In fact the State has not beenable to point out that the Awards suffer from a patent illegality to bring theobjections within the parameters of Section 34 of the 1996 Act.

quantity did not represent only the increase/decrease in the original quantitybut the quantity actually executed after such variation and in this regard ahypothetical situation was also manifested, by submitting that 'if the givenquantity of a particular item is 100 units and there is a decrease in variationof, say 35%, then the actual quantity executed thereof would be 65 units(100-35) and in case the employer's argument is accepted then the variedquantity to be valued, would be only for 35 units, being the quantity notexecuted and the executed 65 units would be paid at the contracted rate, inessence, when the decreased quantity of 35 units is actually not executedthen there can be no rates or revised rates for the same, thus, theinterpretation of the employer that the contractor is only entitled to quantityexecuted thereof and not of the entire quantity actually executed isincorrect/inappropriate. It is only in case if there is increase of 35% in thequantities then the quantities actually executed would be 135 units (100+35)thereof and by applying the uniform interpretation of the clause, the suitablerate would be fixed for the entire quantity actually executed namely 135units and not only for 35 units.

He further submitted that an attempt of the State had been inreading the provisions of the clauses in between and not in their letter andspirit. If at all, they envisaged any such situation, there would have been aclarificatory condition/clause. He further submitted that the Award passedby the Arbitral Tribunal is most reasoned one whereas the Objecting Courthas very limited scope to interfere with the Award. The reasoning given forreduction of the variation clause is wholly preposterous, much less,fallacious. The Objecting Court had been erroneously swayed away inholding that the Tribunal had awarded a huge amount, thus, the reasoning ofPANKAJ KUMAR2017.01.16 12:20I attest to the accuracy andintegrity of this document

Objecting Court in reducing the awarded amount of compensation on thevariation clause is contrary to the settled position of law and contractstipulations as, perusal of the date of variations would show that thequantity variation was quite high which was not disputed as the cogentevidence had been brought on record before the Tribunal.

In support of submission qua very limited scope of interferencereference to ratio decidendi culled out by Hon'ble Supreme Court inNational Highway Authority of India Vs. Cementation India Ltd. 2015(3)RAJ 1and Associate Builders Vs. Delhi Development Authority (2015) 3SCC 49was laid.

As regards the awarding of interest, ratio decidendi culled outby the Hon'ble Supreme Court in M/s Hyder Consulting (UK) Ltd. Vs.Governor, State of Orissa through Chief Engineer 2015 (2) SCC 189where the award of interest @18% has been upheld, has been referred.

He further sumitted that the order of the Objecting Courtreducing the rate of interest without any reasons, is not sustainable, thus,relied upon the judgment rendered by the Hon'ble Supreme Court inSayeedAhmed and Co. Vs. State of U.P. And otherspassed in Civil AppealNo.4197 of 2009 on 09.07.2009 and on similar lines, Bhagwati OxygenLtd. Vs. Hindustan Copper Ltd. (2005) 6 SCC 462.

I have heard learned counsel for the parties, appraised the paperbook, records and of the view that there is some force and merit in thesubmissions of Mr. Puneet Jindal, learned Senior Counsel and Mr.Ashwanie Kumar Bansal, Advocate viz-a-viz the application of the Hudsonformula without giving reference to other formulas. This aforementionedview of mine is derived from the Divison Bench judgment of Bombay HighPANKAJ KUMAR2017.01.16 12:20I attest to the accuracy andintegrity of this document

Court referred to by Mr. Jindal in Edifice Developers and ProjectsEngineers Ltd. Vs. M/s Essar Projects (India) Ltd.passed in Appeal No.11of 2012 on 03.01.2013, for, the Arbitral Tribunal quantified the claim interms of percentage but no such evidence had been led in this regard. In theabsence of such evidence, the Arbiral Tribunal should not have done theguess work and tread on the path of imagination/figmentation. Theaforementiond finding of Arbitral Tribunal, in my view, is a travesty ofjustice. A specific objection was taken in this regard in the objections filedunder Section 34 of the 1996 Act but the Objecting Court abdicated in notreferring or discussing the same except to reduce the amount with regard toprolongation cost.

The prolongation of conract is a conceded postion on record.The argument of Mr. Jindal that the Arbitral Tribunal while awarding thecompensation with regard to prolongation cost heavily relied upon theHudson Formula, though rebutted by Mr. Bali that there has been only apassing reference of the Hudson Formula but while calculating the amountthey relied upon the other documents also. For the sake of brevity, therelevant portion of the Award reads as under:- “4.3.8.We now advert to the next plea of the claimant, who hascontended that total cost of overheads & profit is to the extent of29.9% Direct Cost of say, 42.6% Basic Cost. It is further contendedthat the respondent was duly and fully aware of the claimant's directcosts at the rate of 29.9% of 'Total Cost' (corresponding to 42.6%Basic Cost) as the claimant had as early as 1997 informed the sameto which the Engineer had vide its letter dated 11.7.1997(Ex.C/8)sought substantiation (break-up) of direct cost of 40% to 42.6% (ofBasic Cost) for the purposes of evaluation of new rates. The saiddetails (break-up) were duly furnished to the Engineer videclaimant's letter dated 23.7.1997 (Ex.C/10).contended that total cost of overheads & profit is to the extent of29.9% Direct Cost of say, 42.6% Basic Cost. It is further contendedthat the respondent was duly and fully aware of the claimant's directcosts at the rate of 29.9% of 'Total Cost' (corresponding to 42.6%Basic Cost) as the claimant had as early as 1997 informed the sameto which the Engineer had vide its letter dated 11.7.1997(Ex.C/8)sought substantiation (break-up) of direct cost of 40% to 42.6% (ofBasic Cost) for the purposes of evaluation of new rates. The saiddetails (break-up) were duly furnished to the Engineer videclaimant's letter dated 23.7.1997 (Ex.C/10).

The respondent had contended that the Direct Cost component at 29.9% of Contract Price (corresponding to 42.6%Basic Cost) has wrongly been claimed. It is contended that theclaimant had vide its letter dated 16.10.2000, issued in response tothe Engineer's letter dated 13.10.2000 given its acceptance toadoption 32.5% mark-up on Basic Cost (which corresponds to24.53% Direct Cost) towards overheads and profit for the purposesof valuation of variation items. The said letter dated 16.10.2000 ison record at page 4 of Vol.III, as also at page 286 of Vol.III, of therespondent's documents. Further, the Respondent had, vide itsMemo No.2842-44 dated 30.10.2000 agreed to the aforesaid 'Mark-up percentage of Contractor's overhead & profit.' This letter/memoof the respondent is available at page 287 of Vol.III, of therespondent's documents.

The Claimant's argument is that the said mark-up was for thepurposes of valuation of variations and as such the claimant hadagreed for a lower mark-up whereas actually its cost of overheadsand profit comes to 29.9% Direct Cost. On the other hand, therespondent's contention is that despite the said agreed figure, theactual cost (of overheads and profit) to the claimant is far less. Weare not agreeable to either of the said contentions of the parties.Once the claimant has agreed to a particular figure representing itscost of overheads and profit, it cannot be allowed to unilaterallyincrease the same. Similarly, the respondent also having agreed to aparticular figure of mark-up percentage of contractor's overheadsand profit cannot contend any lower figure for the same. At thesame time, there is no other mutually admitted document to showand establish the said cost at a figure other than 32.5% Basic Cost(corresponding to 24.53% Direct Cost). We are, therefore, inclinedto bind the parties to the said admitted figure and adopt 32.5%mark-up percentage of Basic Cost (corresponding to 24.53% DirectCost) for the purposes of assessing the claimant's entitlement forprolongation cost during the extended period of contract and over-stay at site.

This leads us to the actual computation of the claim amount.Details of the claim amount have been given at page 66 of Vol.6(MC) of SOFC. The said computations are in accordance with theHudson formula by taking into account the total contract value andthe stipulated contractual period. With the said two figures the average monthly contract value has been arrived at for thestipulated contract period. This figure has then been taken at29.9%, being the Direct Cost component (representing contractor'soverheads and profit), to arrive at average monthly Direct Costcomponent (representing monthly overheads and profit of thecontractor) during the stipulated conract period. Finally, this figureof monthly Direct Cost component (representing monthly overheadsand profit of the contractor ) has been multiplied by the duration ofthe extended/prolonged period to arrive at the total prolongationcost claim. Hudson's formula has been accepted by the SupremeCourt in Mcdermott case (supra). The AT is on sure ground inadopting Hudson's formula because firstly it has been recognized bythe Supreme Court and secondly it was accepted by the respondentat an earlier stage when new rates were being fixed and informationwas sought from the claimant as regards break-up of the rates.

However, from the correspondence and other documents submittedby the Claimant, it is observed that the claimant's claim is onaccount of delays caused due to issue of drawings, non-handing overof the site by the Respondent and oher site conditions consequent towhich the Engineer has to make assessment of EOT in terms ofClause 44 and additional cost in terms of Clause 6.4, 12.2, 42.2 ofthe Contract in consultation with the Contractor and Employer.

The Final Notice dated 10 July, 1999 of the Claimant to theEngineer (Ex.C-30, page 95 of “Written Synopsis” of the Claimant),based on which reference to Engineer under Clause 67.1 was made,was also for determination of the Engineer pursuant to Clause 6.4,12.2, 42.2, 52.1/52.2, 44.1(d) and in accordance with clause 2.1(a)and 2.6. The reference to Engineer was accordingly for suchdetermination.

In case the contractor suffers delay and incurs costs on account ofdefaults of the Engineer/Employer, Clauses 6.4, 12.2 and 42.2 of theContract provide for determination by the Engineer of time extensionunder Clause 44 and such additional costs in consultation with theContractor and the Employer.

As per Clause 1.1((g) (i) of GCC of the Contract Agreements “Cost means all expenditure properly incurred or to be incurred,whether on or off the site, including overhead and other charges properly allocable thereto but does not include any allowance forprofit.”

As per the contract clauses, there is no provision for payment for anyloss of profit. Therefore, the Claimant is not entitled to any loss orprofit but only overhead costs as per the terms of the contract.In the direct cost component of 29.9% intimated by the Claimant,there was a provision of 19.9% for overheads and 10% for profit.In the Date Book of Ministry of Road Transport & Highways, theelement of profit has been adopted uniformly as 10% for all types ofworks with varying overheads. Accordingly, adopting profit @10%in the direct cost of 24.53% agreed between the parties, theoverheads work out as 14.53% of the total cost.

Therefore, against the claim amount which is computed with thedirect cost as 29.9% of the total cost, we allow it at 14.53% of thetotal cost, for the component of overheads only. The amount socomputed works out `1,70,90,012/- as per details below.

The claim of the claimant is allowed. The claimant is held entitled toan amount of `1,70,90,012/- only by way of prolongation costsagainst his claim of `3,53,65,000/-.”

A cumulative reading of the aforementioned finding leads toirresistible conclusion that the Arbitral Tribunal had applied the Hudsonformula on the premise that there was no mutually admitted document toshow and establish the said cost at a figure other than 32.5% Basic Cost.Once the Arbitral Tribunal itself found that there was no other document, itcould not have in straight-jacket applied the Hudson formula. The correspondences would not enable the Arbitral Tribunal for conforming theclaim or arrive at a conclusion. Even the reference to other documents is afinal notice and nothing beyond that. The Data Book of Ministry of RoadTransport & Highways could not be looked into in view of the terms andconditions of the contract to which the parties were bound in letter andspirit.

The finding of the Arbitral Tribunal is a pointer that it had notapplied its own mind while dealing with the claim for “Prolongation Cost”and simply swayed away in applying the Hudson formula which is notpermissible. I would be committing a fallacy in case I do not extract thefinding rendered by the Division Bench of Bombay High Court inEdificeDevelopers and Projects Engineers Ltd.(supra) regarding the applicationof Hudson Formula for quantification of claim:-

“8. The Learned Single Judge, in our view, was justified incoming to the conclusion that the Arbitrator was manifestly in errorin awarding the claim for overhead losses in spite of the fact that nooral evidence was adduced on behalf of the Appellant. In Brij PaulSingh's case the Supreme Court noted that it was not disputed thatwhere in a works contract a party entrusted with the work commits abreach of the contract, the contractor would be entitled to claimdamages for loss of profit which he expected to earn by undertakingthe contract. The Supreme Court, however, noted that what must bethe measure of the profit and what evidence should be tendered tosustain the claim are different matters. The judgment of the SupremeCourt adverts to the fact that in that case the High Court hadreferred to Hudson's treatise on Building and Engineering Contracts.Hudson states there that in major contracts subject to competitivetender on a national basis, the evidence given in litigation on manyoccasions suggests that head office overheads and profits arebetween 3 to 7% of the total price of cost which is added to thetender. The High Court in that case had rejected the claim of thecontractor. The Supreme Court noted that in an identical contract with regard to another portion of the same road and for the sametype of work the High Court had accepted loss of profit at 15% of theprice of the balance of work as a reasonable measure of damages ifthe State is guilty of a breach of contract. It was on this basis that theSupreme Court came to the conclusion that since for the same type ofwork, between the same parties involving a nearby portion of thesame road a certain measure of damages had been adopted by theHigh Court, the same measure ought to have been adopted in thatcase as well.

9. Brij Paul Singh's case therefore does not stipulate as adoctrine of law that the formula which has been prescribed inHudson's treatise must invariably be accepted in all cases as ameasure of damages sustained on account of loss of overheads. Onthe other hand in the subsequent decision of the Supreme Court inMcDermott International (supra), the Supreme Court has relied uponthe following observations contained in the earlier decision inM.N.Gangappa v Atmakur Nagabhushanam Setty & Co. (1973) 3SCC 406.

"In the assessment of damages, the court must consider onlystrict legal obligations, and not the expectations, howeverreasonable, of one contractor that the other will dosomething that he has assumed no legal obligation to do."

10. The judgment in McDermott International (supra) considersvarious formulae including Hudson's Formula, Emden Formula andEichleay Formula. As regards Hudson's Formula the Supreme Courthas noted, in the following extract, that although it has receivedjudicial support in many cases, it has been the subject matter ofcriticism :

"(a) Hudson Formula : In Hudson's Building and EngineeringContracts, Hudson formula is stated in the following terms :

"Contract head office overhead & contract sum period of delay"profit percentage x --------------------- x contract period In the Hudson formula, the head office overhead percentage istaken from the contract. Although the Hudson formula has receivedjudicial support in many cases, it has been criticized principallybecause it adopts the head office overhead percentage from the contract as the factor for calculating the costs, and this may bearlittle or no relation to the actual head office costs of the contractor."(emphasis supplied)

11. In McDermott International (supra) the Supreme Court has heldthat it is an accepted position that different formulae can be appliedin different circumstances and the question as to whether damagesshould be computed by taking recourse to one or other formula,having regard to the facts and circumstances of a particular case,would fall within the domain of the Arbitrator. In the present case noother formula other than Hudson's formula has been considered inthe arbitral award. In the present case the Arbitrator proceeded onthe basis that it was only Hudson's Formula which was to be appliedand that even though no direct evidence had been adduced on behalfof the Appellant, nonetheless the Appellant would be entitled todamages measured with reference to the aforesaid formula. Thisapproach of the Arbitrator is manifestly in the teeth of the law laiddown by the Supreme Court in McDermott International. Section 28(1)(a) requires that the Arbitral Tribunal shall decide a disputesubmitted to arbitration in accordance with the substantive law forthe time being in force in India. Section 28(3) requires the ArbitralTribunal to decide in accordance with the terms of the contract andtake into account the usages of the trade applicable to thetransaction. The Arbitral Tribunal under Section 28(2) can act asamiable compositeur and can decide ex aequo et bono only if partieshave expressly authorized it to do so. In the present case, theLearned Single Judge was correct in coming to the conclusion thatthe award of the Arbitrator proceeds on the manifestly misconceivednotion that a contractor is entitled to claim overhead losses even inthe absence of evidence on the basis of Hudson's Formula. Similarly,the Arbitral Tribunal proceeded on a misconceived premise that thisformula is invariably adopted for quantification of claims foroverhead losses in India. In the present case the Appellant producedno evidence in support of its claim; this has been so stated in theAward. The award of the claim is on the misconceived basis that theHudson's Formula must be applied despite the absence of evidence.Since the fundamental basis that has permeated the award is contrary to law, the judgment of the Single Judge cannot be faultedin setting aside the arbitral award on that aspect.

Thus, finding of the Arbitral Tribunal and the Objecting Courtqua claim of prolongation cost is not sustainable as, in my view, it fallswithin the scope and ambit of “patent illegality”. It would be a total farcicalexercise in remanding the matter back to the Arbitral Tribunal as the StateExchequer is being unnecessarily burdened with the element of interestrunning day by day.

As regards the argument of Mr. Bali with regard to reduction ofrate of interest from 12% to 7%, in my view, though lacked reasons but the fact remains that the prevailing lending banking rates keeping in view theinflation and rising the price index, has considerably been reduced. Asregards the claim qua interest, the Arbitral Tribunal after discussing therival contentions of the parties, arrived at a finding that the interest shouldhave been 12% simple. For the sake of brevity, the finding of the ArbitralTribunal reads thus:- “8.1 Claimant's Submissions:

Facts

8.1.1 Under Claims No.8, 9 & 10, the claimant has claimed interestat the rate of 18% per annum on the amount awarded for thependente-lite period till the date of award, namely, with effect from11.6.2003 till the date of award and, thereafter, from the date ofaward till the actual payment of the award amount.

8.1.2 The interest claimed at the rate of 18% per annum is inaccordance with the provisions of the contract between the parties,as referred to under claim No.5 above.

8.1.3 In addition thereto, it is submitted that even under theprovisions of the Act of 1996 interest at the rate of 18% per annumis payable on the award amount.

8.1.4 The AT is fully competent to award interest for the pendente-lite as well as future period as per the settled position of law in thisregard. The claimant refers to and relies upon the judicial pronouncements of the Hon'ble Supreme Court, as detailed in para5.5 above.

8.1.5 In view thereof, it is submitted that the claimant is entitled toaward of interest at the rate of 18% per annum on the awardamount for the pendente-lite and future period.

8.1.6 The claimant has also claimed costs of these proceedings, and,in regard thereto, it is submitted that the respondent/Employer hadbeen acting arbitrarily and in flagrant disregard, rather breach, ofcontractual provisions.

8.1.7 The respondent has also not conducted itself in accordancewith law of the land and had arbitrarily, whimsically andcapriciously been withholding huge amount due to the claimantunder the contract, in question.

8.1.8 The claimant has been constrained to pursue its legal remediesto recover its legitimate dues. The claimant, therefore, is entitled to,and the respondent is liable for the amount incurred by the claimantin pursuing its legal remedies against the respondent, inter alia, byway of present arbitral proceeding.

8.1.9 As on date, the claimant has already incurred amounts in thesum of Rs.30 lacs (approx.) which includes the amount of fees paidto the Hon'ble Members of this Arbitral Tribunal, the fees paid tothe Technical Consultants and Legal Advisors for present arbitralproceedings and the amount incurred in holding of hearings of thearbitral proceedings etc.

8.1.10 Further amount is likely to be incurred by the claimant in thisregard inasmuch as the proceedings are still notcompleted/concluded. The claimant craves leave to file a detailedstatement of expense with an affidavit in this regard at a later date.

8.1.11 The claimant relies upon the following judicialpronoucements in support of its said claim:-

1. Jagdish Rai & Brother Vs. Union of India 1999(1) ArblR696R696

2. Mohinder Pal singh vs. Northern Railways 143(207)DLT 634DLT 634

8.2 Respondent's submissions

8.2.1 The claim for interest is not maintainable amongst others onthe following grounds:

In respect of claims for pendente lite interest no interest is payableinasmuch as it is only a claim for an unascertained sum of money.

The claim amount becomes ascertained sum of money only on thedate of making of the award, if at all the claim is allowed which mayqualify for interest at the discretion of the Tribunal from the date ofaward or from such date as has been fixed by the tribunal in theaward.

8.2.2. Reference is being made to the following decisions of theHon'ble Supreme Court:

Executive Engineer, Dhenkanal Minor Irrigation Division,Orissa Vs. N.C. Budharaj (dead) by LRs AIR 2001 SC 626.(Annexed herewith as Annexure-B). The relevant part of thejudgment states as follows:- “Para 18......... the next contention is that no interest could beawarded for the period before the suit on the amount of damagesdecreed. Legal position with respect to this is well settled: (seeBengal Nagpur Railway Co. Ltd. Vs. Ruttanjit (AIR 1938 PC 67)that the decision of the judicial committee was relied upon by thiscourt in Seth Thawardas Pherumal v. The Union of India (AIR 1955SC 468). The same view was expressed by this Court in Union ofIndia Vs. A.L. Rallia (AIR 1963 SC 1685). In the absence of anyusage or contract, express or implied, or of any provision of law tojustify the Award of interest, it is not possible to award interest byway of damages....”

8.2.3 It has been held by the Hon'ble Supreme Court in thefollowing cases that having regard to down trend in the economyand lowering of interest rates by banks, interest may not be grantedmore than 9%. If at all having regard to the facts andcircumstances of the case, the Ld AT considers a particular case fitfor award of interest, it should not be more than 9%. (KrishnaBhagya Jal Nigam Ltd. Vs. Harish Chandra Reddy & Anr (2007) 2SCC 720) & DDA and others Vs. Joginder S. Monga and others(2004) 2 SCC 297).

8.3 Claims 8, 9 & 10 – Findings and Award of A.T.

8.3.1 Interest

The claimant claims interest @18% p.a. From 11.6.2003. Inaddition cost of sourcing fund has been claimed under Claim No.5.

As regards interest, the Hon'ble Supreme Court held in theBhagwati Oxygen ltd. Vs. Hindustan Cooper Ltd. (2005) 6 SCC 462following the Constitution Bench in Buddhiraja's case (2001) 2 SCC

721, that the Tribunal has the power to grant pre-reference,pendente lite and future interest. As per the prevailing practice andas allowed in several cases by the Supreme Court and as claimed bythe claimant in these proceedings a commercial rate of interest of18% p.a. May be justified as was held in the case of BhagwatiOxygen supra. The A.T., however, consider that the rate of 12%simple interest per annum to be just and reasonable on the sumsawarded having regard to the facts and circumstances of thiscommercial contract.”

Since the claim of interest @18% though was not found to be

justified and the reasoning given I have already held is not justifiable, inessence, lacked by any settled law or provisions but I cannot remainoblivious of the fact that the claim was for an unascertained amount ofmoney i.e. particulary with regard to prolongation cost. No doubt, forvariation clause, there had been some substance in the claim of thecontractor and as well as the submission of Mr. Bali, though admittedly, themeasurement book has not seen the light of the day. There could bereference to certain other documents which have not been discussed inextenso. In my view, the Arbitral Tribunal has committed illegality inawarding interest @12% and therefore, is liable to be fixed at 9%, by takinginto consideration the provisions of Interest Act, 1978 and thisaforementioned view of mine is derived from the judgment of Hon'bleSupreme Court rendered inU.P. Cooperative Federation ltd. Vs. M/s Three Circles 2009(4) RCR (Civil) 546. The ratio decidendi culled out in thejudgment of Bhagwati Oxygen Ltd.'s case(supra) and other judgmentsrelied upon by Mr. Bali provided particular amount of interest. Clause 60.8does not refer to interest at compound rate with regard to outstandingamount, particularly unascertained, thus, the order of the Objecting CourtPANKAJ KUMAR2017.01.16 12:20reducing the interest from 12% to 7% is hereby set aside and the rate ofI attest to the accuracy andintegrity of this document interest would be 9% per annum.

As regards the interpretation of awarding of the amount forvariation in both the contracts, there would have been a force in thesubmission of Mr. Jindal and Mr. Bansal as it was not backed bydocumentary evidence on record, in essence, the claim was not inaccordance with the terms and conditions of the contract indicated above,but, the fact remains that the Department had not taken care of the fact thatduring the pendency of the hearing, the Tribunal directed the claimant tosubmit analysis of the amount claimed in respect of each of the claim madeand the analaysis in respect of the claim was filed as Ex.CH-3. For the sakeof brevity, the relevant portion of the same reads as under:- “During the hearing of the mater, the claimant was directed bythis Hon'ble AT to file analysis of the amounts being claimed inrespect of the each of the claim made. The analysis in respectof such claim amount is being filed herewith as Ex.CH-3.”

The Engineer at the relevant time never asked for the details ofextra rate claimed by the claimant and this fact has been noticed by theTribunal whereby copy of aforementioned notice issued to the Engineerunder Clause 67.1, was also issued to the Employer and despite being awareof the claimant's claim, the Employer did not demand any rate analaysis.However, the Tribunal had undertaken the exercise of examining the claimand found that as per the terms and conditions of the contract, the Engineerwas obliged to determine fresh rates (value the variations) and communicatethe same to the Contractor. It was the Employer, who had appointed theEngineer and had the power and control over him, in essence, was to ensurethat the Engineer fulfilled and performed his functions as per the terms and

the fresh rate was prepared by the Engineer nor any analysis for extra claimsas claimed by the contractor was called for from him. The relevant portionof the finding given by the Arbitral Tribunal reads as under:- “3.3.8 The A.T. has carefully considered the rival contentions.

In our view, under clause 52.2, it was incumbent on theEngineer to fix new rates for such items (with value more than5% of the Contract Price) whose quantities got varied by morethan 255. However, the Engineer did not fix new rates. Whenthe claim was referred to him uner Clause 67.1 for Engineer'sDecision, the claim was rejected as noted in an earlierparagraph. No analysis for any fresh rates was prepared bythe Engineer nor any analysis for the extra rates as claimed bythe Contractor was called for from him.”

The argument of Mr. Jindal, learned Senior Counsel that theaforementioned reasoning is in isolation of the proviso to the clause fallsflat. The proviso would have come into force, had the exercise of analysisbeen done. The Tribunal found that once the twin conditions of 5% of thecontract price and variation in excess of 25% as laid down in Clause 52.2were fulfilled for any item, the contractor shall be eligible for new rates.

There is another aspect of the matter. The Engineer in hisdecision on 04.02.2000 in pursuant to provisions of Clause 67.1 rejected theclaim No.2 for abnormal variations in quantities and the reasoning was thattwins conditions, namely the individual item exceeding 5% of the conractprice and actual variation being more than 25% of the quantity were notlikely to be complied with. In fact, the Engineer at the relevant time did notask for the details of the extra rate claimed and therefore, such decisionlacked by any documenary evidence. In other words, the extra rates claimedby the contractor were never disputed by the Engineer.

There is no dispute to the ratio decidendi culled out from the

Judgments referred to by Mr. Jindal, learned Senior Counsel but the factsand circumstances of the case in hand have to be looked into.

Mr. Jindal, has not been able to rebut the contention of Mr.Bali, that the calculation referred to by the Objecting Court in arriving at acalculation regarding the claim of variation was not the part and parcel ofthe records before the Arbitral Tribunal. In fact, it was their owncalculation submitted during the course of the arguments. It is strange that itwas not only a case of re-appreciation of evidence but also taking on recordnew evidence. The parties had raised this argument that the aforementionedcalculation was only part and parcel of the written submissions submited onbehalf of the State of Haryana. In my view, the alleged exercise done by theObjecting Court is alien to the provisions of Section 34 of the 1996 Act,much less, the ratio decidendi culled out from the judgment of Hon'bleSupreme Court in Associate Builders Vs. Delhi Development Authority(2015) 3 SCC 49and National Highway Authority of India Vs.Cementation India Ltd. 2015(3) RAJ 1.

The ultimate result, the awards of the Tribunal and orderspassed by the Objecting Court regarding “Claim No.4” and “Claim No.2”qua prolongation of cost in respect of Contract Work HR-1 and ContractWork HR-II respectively, are hereby set aside, meaning thereby the theappeals filed by the State i.e. FAO Nos.6130 and 6202 of 2014 in thisregard are allowed.

The awards regarding “Claim No.3” and “Claim No.1” qua

Nos.9063 and 9750 of 2014 in this regard are allowed and the appeals filedby the State i.e. FAO Nos.6130 and 6202 of 2014 are dismissed.

As regards the interest, the Awards passed by the ArbitralTribunal and the orders passed by the Objecting Court are modified to theabove extent, meaning thereby, the appeals filed by the Contractor i.e.FAO Nos.9063 and 9750 of 2014 are partly allowed and the appeals filed bythe State i.e. FAO Nos.6130 and 6202 of 2014 are dismissed.

December 30, 2016 Pankaj*

(AMIT RAWAL) JUDGE

Whether speaking/reasonedYesWhether reportable No