National Highways Authority Of INDIA vs. Ashoka Buildcon LTD.

Facts

The National Highways Authority of India (NHAI), the petitioner, invited proposals for the construction of a Project Highway. Ashoka Buildcon Ltd. (ABL), the respondent, submitted a bid which was accepted, and a Contract Agreement was executed on August 1, 2016. A dispute arose, and ABL invoked arbitration on July 31, 2017. The Arbitral Tribunal (AT) was constituted on September 26, 2017. ABL filed its Statement of Claims, followed by NHAI's Statement of Defence and ABL's rejoinder. On March 25, 2019, the AT passed an award directing NHAI to pay ABL a sum of Rs. 3628.79 lakhs plus GST as per actual. NHAI filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside this arbitral award.

Held

The Court held that the scope of interference with an Arbitral Award under Section 34 of the Arbitration and Conciliation Act, 1996, is limited and narrow, and the Court should not sit in appeal. The petitioner failed to demonstrate patent illegality or error apparent on the face of the award that would shock the conscience of the Court. The Arbitral Tribunal considered all relevant material, and its award was well-reasoned and not in contravention of the fundamental policy of Indian law. Specifically, the Court found no reason to interfere with the findings of the learned Arbitrator regarding claims No. 4, 5, and 6, which were challenged. The Court upheld these claims as awarded by the Tribunal. The petitioner failed to corroborate with evidence how the Arbitrator had erred in adjudicating the dispute. Therefore, the Court found no cogent reasons to entertain the petition and set aside the impugned award.

Key Issues

1. Whether the Arbitral Tribunal erred in allowing the respondent's claim for delay by omitting applicable provisions of the Contract Agreement, specifically Clauses 4.1.4, 8.3, and 10.5, and whether the appointed date was mutually independent of the handing over of the Right of Way (ROW)? The petitioner argued that the Tribunal failed to consider these clauses, that the appointed date was consequent to ROW handover, and that the ROW was handed over as per the agreement. The petitioner contended that damages should have been calculated as per Article 4 of the Contract Agreement, specifically Clause 4.1.4, and that Clause 4.1.5 stipulated that damages under Clause 8.3 were full and final. The petitioner also argued that the Tribunal failed to consider the Non-Obstante Clause limiting aggregate damages to 1% of the contract price. 2. Whether the Arbitral Tribunal's award of overhead charges, idle charges, and demobilization charges was perverse and lacked reasoning? The petitioner submitted that the respondent's allegations lacked support and evidence. 3. Whether the Arbitral Tribunal erred in awarding costs of arbitration and interest against Clause 26.3 (iv) and 26.3.1(vi) of the Contract Agreement, which stipulated that each party bears its own costs and that aggregate damages were limited? The petitioner argued that the Tribunal went against the contract in awarding pre- and pendente lite interest and that the award of interest on the entire award was against applicable law and the contract. The petitioner relied on ONGC v. Wig Brothers Builders and Engineers Private Limited (2010) 13 SCC 377.