Ircon International Limited vs. Delhi Metro Rail Corporation

Held

The Court held that the Arbitral Tribunal (AT) did not err in its findings regarding Claims 2(a), 2(b), and 2(c). While the AT partially allowed these claims, it relied on relevant contract clauses and evidence, and the Court found no reason to interfere with its appreciation of evidence or interpretation of contract clauses under Section 34 of the A&C Act. Regarding Claims 3 and 4, the AT correctly rejected them. The AT observed that the BOQ was based on curve radius, not the number of bolts, and the Contractor failed to establish that the design changes necessitated by DMRC led to the increased bolt usage or that DMRC's insistence on European guidelines was objected to. The Court found no reason to interfere with the AT's findings on these claims, emphasizing that Section 34 does not permit re-appreciation of evidence. Concerning Claim 12, the AT partially allowed it to the extent of 1.40% based on an initial concession by DMRC, while also noting the Contractor's failure to substantiate input credit. The Court found the AT's reliance on Clause 27(v) of the SCC to be correct, as it restricted adjustments for changes in taxes. Therefore, the petition was dismissed.

Facts

IRCON INTERNATIONAL LIMITED (Contractor) filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to partially set aside an arbitral award dated November 22, 2022. The award arose from disputes with Delhi Metro Rail Corporation (DMRC) concerning the supply, installation, testing, and commissioning of ballastless track for Phase-III of the Delhi MRTS Project. The contract, awarded on February 17, 2015, had a value of INR 153,65,61,349/- + USD 72,65,823/- and was scheduled for completion by February 22, 2017. The work was completed 18 months late, on August 6, 2018, with DMRC granting extensions of time without levying liquidated damages. The Contractor raised 12 claims before the Arbitral Tribunal (AT), with Claims 2, 3, 4, and 12 being the subject of this petition.

Key Issues

1. Whether the Arbitral Tribunal (AT) erred in partially allowing Claim No. 2(a), 2(b), and 2(c) concerning increased establishment costs, bank charges for performance guarantee extensions, and insurance policy extensions due to contract prolongation, contrary to Clause 8.3 of the GCC as modified by SCC Sl. No. 22? The Contractor argued that the 18-month delay was attributable to DMRC's failure to provide the site progressively and unilateral design changes, leading to increased costs. DMRC contended that the Contractor was responsible for the delay, citing manpower and material shortages, and that extensions were granted without liquidated damages. 2. Whether the AT erred in rejecting Claim No. 3 and Claim No. 4, which related to additional costs due to the use of a different bolt fastening system and abnormal increase in track fastening quantities, contrary to the Bill of Quantity (BOQ) and Clause 5.1 of the GCC? The Contractor claimed design changes and deviations from the BOQ caused these increased costs. DMRC argued that the BOQ was based on curve radius, not bolt numbers, and that the actual variation was within acceptable limits under Clause 12.5 of the GCC. 3. Whether the AT erred in partially allowing Claim No. 12 concerning the additional GST burden, contrary to Clause 27(v) of the SCC? The Contractor sought reimbursement for the additional GST burden. DMRC argued that Clause 27(v) prohibited adjustments for changes in taxes. The AT partially allowed the claim based on an initial concession by DMRC.