Palit & Co | August 28, 2020| Revised Note

NTPC Limited v. Sri Avantika Contractors (I) Limited

FAO(OS)(COMM) No. 91/ 2020
(Appeal under Section 37 of Arbitration & Conciliation Act, 1996 against Judgment dated June 8, 2020 in O.M.P. (COMM) No. 370/2017)

I. LIST OF DATES
Date Particulars
February 27, 2012 NTPC Limited (‘Appellant Employer’) issued Letter of Award for site levelling and infrastructure works package for Kudgi Super Thermal
Power Plant Stage-I (3x800MW) in favour of Sri Avantika Contractors (India) Limited (‘Respondent Contractor’) for a value of Rs.154 Crores.
April to September 2012 The Appellant Employer issued letters for progressive handing over of various sites. In all these letters, the Respondent Contractor highlights
the absence of unhindered physical access to execute the said Project. (Refer Annexure-A4)
February 2013 Respondent Contractor shared the entire set of Initial Levels/ OGL records with Appellant Employer
June 15, 2013 The Appellant Employer issued a letter disputing the OGL records of the Respondent Contractor. Pertinently, the letter mentioned that
Appellant was itself maintaining the initial levels records which they stored in the system in presence of engineer of Appellant Employer and
Respondent Contractor, and subsequently, these records were downloaded and self-certified by the 2 officers of Appellant Employer. It is
pertinent to note the OGL records maintained by Appellant did not bear any signature of the Respondent Contractor (which is violative of
Clause 2.9 of Technical Specifications)
June 21, 2013 The Respondent Contractor alleged violation on the part of Appellant Employer inasmuch as the records of spot levels or initial levels
indicated in letter dated June 21, 2013 were not jointly signed by the authorised representative of both the parties. It further shared jointly
signed records of spot levels maintained and asked the Appellant Employer to verify the same.
August 5, 2013 The NGT vide its Order banned the mining or removal of sand from river beds across the country without a specific licence or order of
(NGT sand-mining Ban) environmental clearance from Ministry of Environment and Forestry (‘MoEF’). This severely impacted the progress of said Project.
November 9, 2013 Appellant vide its letter dated November 9, 2013, extended the completion period for a further period of 6 months’ time till Feb 2015.
(6 months Extension)
February 19, 2014 The Appellant Employer issued drawings for construction (excavation) of raw water reservoirs (plans and sections).The Appellant Employer
also issued a separate letter alleging delays on the part of Respondent Contractor.
February 27, 2014 The Appellant Employer issued 7 day’s show cause notice under Clause 51.3.1(a) of the GCC alleging delays in execution of said Project and
(7 Day Show Cause directing the Respondent Contractor to mobilise men and machinery and re-start the work.
Notice)
February 28, 2014 The Appellant Employer issued Amendment No. 2 to the LoA whereby it increased the contract value from Rs.154 Crores to Rs.189 Crores on
account of extra-works undertaken and substitutions made by Appellant Employer.
March 4, 2014 The Respondent Contractor issued a reply letter to the Appellant Employer’s 7days’s show cause notice dated February 27, 2014 summarising
(1st reply to Show cause) the reasons for delay in execution of said Project.
March 6, 2014 Respondent Contractor raised R.A. Bill No. 15 for an amount of Rs 47.15 Crores. The quantification of work done was based on OGL’s.
(RA Bill 15)
March 13, 2014 The National Green Tribunal (‘NGT’) passed an Order in the matter of M.P. Patil v. UoI & Ors. (including the Appellant Employer). The NGT
vide its Order set aside the environmental clearance granted by MoEF for the said Project, and remanded the issue back to MoEF for fresh
 Palit & Co | August 28, 2020| Revised Note

consideration. It further issued orders for status quo till further orders by the MoEF.
March 13, 2014 The Respondent Contractor issued another letter in reply to the Appellant Employer’s 7days’s show cause notice dated February 27, 2014
nd
(2 reply to Show cause) summarising the reasons for delay in execution of said Project.
March 14, 2014 The Appellant Employer issued letter to all its contractors, including the Respondent Contractor, intimating the order of status quo issued by
NGT. Apropos the said order, the Appellant Employer in its letter directed the Respondent Contractor to temporarily halt the construction
activities.
March 24, 2014 The Appellant Employer issued a letter terminating the contract for said Project, i.e. LOA, executed with Respondent Contractor. The
Appellant Employer in its letter attributed the delays in execution of said Project to Respondent Contractor.
March 25, 2014 The Supreme Court of India vide its Order in an appeal filed by Appellant Employer stayed the operation of NGT’s Order dated March 13,
2014.
July 20, 2014 16th & Final Bill was raised by the Respondent Contractor.
(16th & Final Bill)
November 30, 2015 and The Respondent Contractor invoked the arbitration agreement and the Arbitral Tribunal was entered upon reference.
January 16, 2016
July 7, 2017 The Arbitral Tribunal passed Arbitral Award whereby a sum of Rs.47 Crores was awarded to the Respondent Contractor along with post
(ARBITRAL AWARD) award interest of 8.9%.
August 27, 2017 NTPC filed a complaint before the Anti-Corruption Branch, CBI, Bangalore, alleging collusion and foul play between Respondent Contractor’s
(CBI F.I.R) representatives and NTPC representatives and forgery of initial levels / OGLs. FIR No. R.C.15(A)/2017 was registered under Section 420, 468
of Indian Penal Code, 1860 and Section 13 of Prevention of Corruption Act, 1988.
October 26, 2017 The Appellant Employer filed a petition challenging the Arbitral Award under Section 34 of the Arbitration and Conciliation Act, 1996
(‘Arbitration Act’). The Ld. Single Judge was pleased to stay the Arbitral Award subject to deposit of 50 per cent. of the awarded amount. The
aforesaid amount was deposited on November 16, 2017.

*Along with the Section 34 petition, The Appellant Employer had filed an interlocutory application being I A No. 11990 of 2017, praying for
taking cognizance of FIR dated 27.08.2017 registered by the CBI, however the application was not pressed by the Appellant Employer and
was directed to be ‘dismissed as withdrawn’ with a liberty to file afresh if required.
February 9, 2018 The Respondent Contractor preferred an application under Section 9 of the Arbitration Act being OMP(I) (COMM) 75 of 2018, seeking release
of the deposited sum.
April 18, 2018 The Ld. Single Judge in Section 9 petition was pleased to release the deposited sum subject to furnishing of bank guarantee.
(RELEASE OF DESPOSIT)
May 7, 2018 The Appellant Employer preferred an appeal being FAO(OS) 94 of 2018 against the Order of Ld. Single Judge in Section 9 petition directing
(STAY ON RELEASE) release of deposited sum. The Ld. Division Bench vide its Order stayed the release of deposited sum.
March 3, 2019 The Ld. Division Bench disposed of the appeal i.e. FAO(OS) 94 of 2018, considering that the Section 34 challenge petition was at the stage of
final arguments and therefore, directed the continuance of the interim stay order till the conclusion of the Section 34 petition and
further directed that the orders in relation to release of deposited amount will be passed at the time of final disposal of the said challenge
petition.
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June 8, 2020 The Ld. Single Judge of the Delhi High Court passed Impugned Judgment in the petition challenging the Arbitral Award, upholding the same in
(IMPUGNED JUDGMENT) respect of all issues, except insofar as the award of claim for loss of profit is concerned.
No directions in relation to the release of the deposited sum was contained in the Judgment, as directed of the Ld. Division Bench in FAO(OS)
94 of 2018 in its aforesaid Order dated March 3, 2019.
July 3, 2020 Respondent Contractor filed Execution Petition seeking enforcement of Judgment dated June 8, 2020 along with an application for release of
deposited sum in in terms of Ld. Division Bench’s Order dated March 3, 2019. Notice was issued to the Appellant Employer. Ld Senior Counsel
appearing for Appellant Employer expressed that they are contemplating to file an appeal against Impugned Judgment and therefore
opposed the prayer for release of deposited sum. Accordingly, the Ld. Judge was pleased to defer the hearing to August 6, 2020.

II. DETAILS OF CONTRACT

 Date of Contract – 27.02.2012

 Scope of Work : Contract for site levelling and infrastructure works (Description at: Para 3, Pg. 996)
 Contract period – 30 months (i.e. till 26 August 2014)
 Contract amount – 154.34 Crores
Increased to 183.54 Crores vide Amendment–1 dated 18.11.2013
Increased to 189.03 Crores vide Amendment–2 dated 28.02.2014
 Extension of Contract for a period by 6 months’ till 25th Feb 2015 vide NTPC’s letter dated 09.11.2013
 Date of termination of contract – 24.03.2014

III. DETAILS OF ARBITRAL PROCEEDINGS

 Invocation of Arbitration Clause – 30.11.2015

 Date of reference to Arbitral Tribunal – 23.01.2016
 First arbitral hearing- 15.02.2016
 Date of Arbitral Award – 7th July 2017

IV. DETAILS OF ARBITRAL AWARD (Pg No. 992 to 1151)

 Claims filed by Respondent Contractor/ Claimant - 36 claims for a total amount of INR 139.14 crores (Pg. 1000)
 Counter claims filed by Appellant Employer - 16 counter claims for a total amount of INR 185,82 crores (Pg. 1001)
 Issues framed by AT (Pg. 1002)
A. Issue No. 1 – Whether the Respondent is liable for the various delays as set out in the Statement of Claims and if so, to what extent?
B. Issue No. 2 – Whether the Claimant is liable for various delays as set out in the Statement of Defence/ Counter Claims and if so, to what extent?
C. Issue No. 3 – Whether the termination of the Contract by the Respondent at the risk and cost of the Claimant is contractually and legally sustainable?
D. Issue No. 4 – Whether the issue of measurements fall within the jurisdiction of the Arbitral Tribunal to adjudicate?
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E. Issue No. 5 – Whether the Claimant is entitled to the claims from Claim-1 to Claim- 36 as set out in the Statement of Claim and if so, to what amounts?
F. Issue No. 6 – Whether the Respondent is entitled to its counter-claims from Counter-Claim-1 to Counter-Claim- 16 as set out in the Statement of Counter
Claims and if so, to what amounts?

 Award – AT awarded a total amount of INR 50,21,54,497/- towards the Claims No. 2, 4, 5, 6 and 24 and rejected the other claims of the Respondent Contractor.
(Ref: Pg No. 1127, Para 328) Further AT awarded a total sum of INR 2,67,23,699/- to Appellant Employer towards Counter Claims No. 3, 4, 5 and 6. (Ref: Pg No.
1150, Para 413). After set off- an award of INR 47, 54,30,798/- in favour of Respondent Contractor along with an future interest @ 8.9% simple interest (Ref: Pg
No. 1151, Para 415)

Claim Awarded to Respondent Contractor Amount claimed Amount awarded by Total awarded amount
by Appellant/ Arbitral Tribunal including pre-award interest at
Contractor the rate of 14% per annum
CLAIM NO. 2 3,08,69,089/- 3,08,69,089/- 4,48,05,003/-
Refund of Performance Bank amount illegally encashed by the Respondent
(Pg No. 1072, Para 182 to Pg No. 1073, Para 186)
CLAIM NO. 4 5,94,98,878/- 5,94,98,878/- 8,63,59,769/-
Refund of retention money withheld at 10% of the Gross Running Account
Bills
(Pg No. 1076, Para 193 to Pg No. 1077, Para 197)
CLAIM NO. 5 1,08,74,198/- 1,08,74,198/- 1,57,83,377/-
Refund of Mobilization Advance Recovered from R.A. Bill
(Pg No. 1077, Para 198 to Pg No. 1079, Para 203)
CLAIM NO. 6 57,01,01,198/- 13,17,67,675/- 19,12,54,463/-
Payment of Total Work Done Bills
(Pg No. 1079, Para 204 to Pg No. 1101, Para 241)
CLAIM NO. 24 11,89,52,804/- 11,29,57,149/- 16,39,51,886/-
Payment towards overheads and profits
Pg No. 1114, Para 286 to Pg No. 1121, Para 307)

V. JUDGMENT DATED 8TH JUNE 2020 IN OMP (COMM) 370 of 2017 (‘IMPUGNED JUDGMENT’)

 The Ld. Single Judge has partly allowed the Section 34 petition while upholding the claims awarded in favour of the Appellant Contractor by AT under Claim No. 2, 4,
5, 6 and further only allowing Claim No. 24 to the extent of ‘overheads’ awarded however, setting aside the claim awarded to towards ‘Loss of Profit’ Appellant
Contractor, holding that no proof for loss suffered was provided to sustain the claim.
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 AT had awarded an amount of Rs 11,14,21,440/- (i.e. principal amount of Rs 7, 68,00,000/- plus simple interest of Rs 3,46,21,440/- @ 14%) towards ‘Loss of Profit’.

 Pursuant to the Impugned Judgment dated 8 th June 2020, upon deducting the amount of Rs 11,14,21,440/- awarded by AT towards ‘Loss of Profit’, the Respondent
is entitled to receive an amount of Rs 36,40,09,358/- along with post Award simple interest @ 8.9 %, from the date of the Award i.e. 07.07.2017 till payment.

VI. SUMMARY OF PROCEEDINGS

S. Appellant Employer’s grounds taken in Findings of Ld. Single Judge in

Issue Findings of Arbitral Tribunal
No. the Amended Appeal under Section 37
1 ISSUE NO. 1 & 2 DELAY IN HANDING OVER (DELAY 1)
(DELAYS) - AT held that Appellant reliance on Clause 20.2 of GCC
[Page 1004 to to argue that the Appellant has the right to hand over
1052] lands in parts and no delay can be attributable to
them, to be unsustainable.
- AT held that Clause 20.2 cannot be read in isolation
and whereas all relevant provisions of the contract has
to be read be read conjointly and in entirety to bring
homogeneity to the contract and arrive at a correct
interpretation. AT read and interpreted Clauses 20.1.,
20.2, 20.3, 29.5 and 29.7 of GCC and concluded that
the Appellant cannot have a unfettered right to hand
over the site at any time it wishes. (Ref: Pg 1010,
Para 30 of Award)
- The AT interpreted the provisions of the contract and
further examined and appraised various 2. On the issue of increase in contract
contemporaneous documents such as Joint Protocol
statements recording the dates of handing over of
various site areas, Minutes of Meetings,
correspondence exchanged between parties, L2
Network Schedule (i.e. agreed schedule of work
indicating the start dates and end dates) and various
other project site records, to determine who caused
the delay and gave following findings:
Impugned Judgment
The Ld. Single Judge has dealt with
Issue 1, 2 and 3 in combined manner:
(Pg No. 208 to 225)
1. In respect of Delay 1, the Tribunal
has given well-reasoned findings, in
accordance with law and
interpretation of the Contract, which
is not open for examination under
Section 34 of the Arbitration and
Conciliation Act, 1996. For this
reliance was placed upon Kabil
Pawan & Associates, 2012 SCC
OnLine Del 5665 (pp. 44 and 45 –
internal page no. of impugned
judgment);
value in context of permissible
deviations, the contention of
Petitioner cannot be accepted as the
Tribunal has considered this aspect
in light of various other delays
attributable to the Petitioner.
Reliance placed upon CDMR SP Puri,
2008 SCC OnLine Del 985 (pp. 45 to
4745 – internal page no. of

I. Handing over of site progressively under Clause 20
can only be construed to mean that site should be
handed over as per L2 Schedule otherwise the
obligation of completion of work cannot be fulfilled by
Respondent Contractor. (Ref: Pg 1015, Top Para
above Para 38 of Award)
II. There was initial delay of 6 months in handing over
of the site by the Appellant as per the agreed date of
commencement of works provided in the L2 Network
Schedule. (Ref: Pg 1018, Para 42 of Award)
III. AT held the Appellant’s allegation regarding delay in
mobilisation of manpower and equipment by the
Respondent to be unsustainable. (Ref: Pg 1015, Para
38 of Award)
IV. It was observed 28% area of Lagoon 1 and 70% area
of Lagoon 2 was not handed over on 24.09.2013.
Lagoon 1 & 2 (reservoirs) were observed to be longest
time consuming work. Therefore, extension of time of
6 months was not not enough considering Lagoon land
was handed over after 6 months delay and further the
entire lagoon land was not even provided. (Ref: Pg
1017)
V. Appellant Employer itself admitted that 100% land
was handed over in January 2014. AT concluded that
‘having admitted that 100% land was handed over in
Jan 2014 and to allege delay in execution and contend
that the Claimant has failed to complete the work as
per L2 Schedule is not sustainable’. (Ref: Pg 1017, Para
40 & 41 of Award)
In view thereof, Respondent Contractor was entitled to
the legitimate extension of contract by 13.5 months ,
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impugned judgment);
3. On the issue of drawings, it was
observed that Tribunal has given a
categorical finding that modified
drawings for reservoir embankments
could be given only February 19,
2014;
4. The Petitioner’s contention that no
formal notification for termination of
contract was required as owing to
lapse of 7 days’ time the contract
had itself come to an end on March
5, 2014 is not tenable. Pursuant to
NGT’s order, the Petitioner had
asked all the subsisting contractors,
including SACIL / Respondent, to
stop the work on March 14, 2014. In
terms of Clause 51.3.1, the Petitioner
was required to issue a formal letter
duly signed by the Competent
Authority for termination of
contract.;
5. On the issue of whether time was
essence of contract, reliance was
placed on the judgment of Gujarat
Cooperative Grain Growers
Federation Limited, 2009 SCC OnLine
Del 3979, wherein it was held that
where a contract provides for levy of
liquidated damages, time cannot be
said to be the essence of contract.
(pp. 49 and 50 45 – internal page no.
of impugned judgment);

thereby the contract ought to have been extended till
11.10.2015 in view of the delay in handing over of site
areas by the Petitioner/ NTPC (Ref: Pg 1018, Para 42,
43, 44 of Award)
DELAY 2 to 9 – AT held these delays to be either
concurrent with Delay 1 period or not attributable to
Appellant Employer
Issue of AT held the termination of contract by the Appellant
Termination Employer on 24.03.2014 to be unlawful, wrongful and
(Issue 3) unsustainable based on the following findings:
I. In view the decision of the under Issue 1 & 2
wherein, in light of the various delays held to be
attributable to the Appellant, AT held that Respondent
Contractor was entitled to a extension of 13.5 months
beyond original contract completion date and further
in view of the fact the Appellant instead of granting
such extension, in fact terminated the contract within
the original contract period, found the action of
termination to be wrongful. (Ref: Pg 1053, Para 136 to
151 of Award)
II. The Appellant’s 7 day show cause notice dated
27.02.2014 was replied by the Respondent vide 2
letters dated 04.03.2014 and 13.03.2014. The
termination letter dated 24.03.2014 did not take
cognizance of letter dated 04.03.2014 (reference to
only 13.03.2014 letter made in the termination letter),
whereby the Respondent had its detailed response
with facts against all allegations levelled against it.
Therefore, the Appellant was in breach of the
principles of natural justice. (Ref: Pg 1059, Para 151,
152 & 153 of Award)
III. Termination Letter dated 24.03.2014 was signed /
issued by an officer who had no authorisation. This was
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6. The Tribunal has given a detailed
factual finding that Petitioner does
not advert to SACIL / Respondent’s
letters dated March 4, 2014 and
February 27, 2014. No interference is
required in terms of Som Dutt
Builders, 2018 SCC OnLine Del 10783
(pp. 50 to 5345 – internal page no.
of impugned judgment);
7. The Tribunal has interpreted the
contract, appreciated in detail the
relevant facts and documents, and
thereafter passed the observation
that Termination Letter was not
signed by authorised person. No
legal infirmity in Tribunal’s findings
which can be challenged under
Section 34 of the Arbitration and
Conciliation Act, 1996. Reliance
placed upon Rajasthan State Mines
and Minerals Limited, (1999) 9 SCC
283 (pp. 54 to 5645 – internal page
no. of impugned judgment);
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in violation of Clause 5.1 of GCC (i.e. Instructions &

Notices under Contract) which required all actions/
notices to be made by Engineer-in-charge or any
person authorised by EIC . (Ref: Pg 1062, Para 157 &
158 of Award)

IV. The termination was done amidst the operation of

stay order of NGT dated 13.03.2014 whereby the NGT
had directed to maintain status quo in relation to the
project. (Ref: Pg 1056, Para 142, 143 & 144 of Award)

V. Termination Letter stated that “…It is regretted that

despite the 7 days’ notice you have neither started the
work in right earnest till date nor shown any sign of
improvement. Instead of showing any improvement
you have sent a letter dated 13.03.2014 citing
irrelevant issues which are not factually correct and far
from truth…”. AT held that since there was an
operative NGT stay order on project, the Appellant
Employer’s contention that no work progress was
made from 13.03.2014 (i.e. NGT stay order) to
24.03.2014 (i.e. Termination Order) is legally not
sustainable. (Ref: Pg 1061, Para 155 to 159 of Award)

Once under Issue 3, the termination was held to be

Claims awarded
wrongful, the AT held the instant claims to be a rightful
(Claim 2,4,5 and
consequential entitlement of Respondent Contractor
6)
and awarded the same.

Our Submissions: The findings and conclusions of the AT are based on detailed appreciation and appraisement of the evidence on record and the interpretation of the
contractual provisions. It is settled law that the arbitrator is the sole judge of the quantity and quality of evidence and the Hon’ble Court doesn’t possess the power to re-
appreciate the evidence once the arbitrator has provided its reasons in relation to arriving at its conclusions. In the present case, the conclusions of AT are unanimous
and supported with facts and reasons. The decision on issues are plausible views which could not be interfered by the Hon’ble court as the Ld. Single Judge has rightly
observed in the Impugned Judgment. The scope of appeal under Section 37 of the 1996 Act is even more narrow than Section 34 where a Court is not permitted to
interfere in an award unless the award is so perverse that it shocks the conscience of the Court. It is also equally settled that a Court cannot act as a court of appeal qua
an arbitral award challenged before it. In fact, it has also been held by various Courts including the Hon’ble Supreme Court of India that even errors of facts cannot be
corrected under Section 34 of the 1996 Act, which the Ld. Single Judge has correctly appreciated. Therefore, none of the grounds raised by the Petitioner fall within the
 Palit & Co | August 28, 2020| Revised Note

ambit of Section 37 and therefore the present appeal is not maintainable. The Appellant Employer is solely attempting to have a re-trial of the disputes and issues which
have already dealt with in elaborate detail by the Arbitral Tribunal and conclusions given, which are upheld by the Ld. Single Judge. The same cannot be interfered with
by this Hon’ble Court under the Section 37 of the Act.

(Reliance is placed on Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (NHAI), 2019 SCC OnLine SC 677; Associate Builders v
Delhi Development Authority, (2015) 3 SCC 49; Madhya Pradesh Power Generation Company & Anr vs Ansaldo Energia SPA & Anr, (2018) 16 SCC 661; Municipal
Corporation of Delhi vs Jagan Nath Ashok Kumar & Anr, (1987) 4 SCC 497; Sudarshan Trading Co. vs State of Kerela & Anr, (1989) 2 SCC 38)

2. Issue of excepted 1. OGL forms part of the measurements ISSUE NO. 4 (EXCEPTED MATTER) (Ref. Paragraph 164 1. The Tribunal had conspicuously
matter- Whether which falls within the list of excepted to 174 of the Award) observed that in respect initial levels
issue of matters as per Clause 37.6 of the GCC. not only the quantity, but also the
measurements 1. Appellant Employer relied on Clause 37.6 (i.e. signatures of authorised representative
fall within the 2. Single judge merely states that the Measurements) contending the initial levels/OGL’s are of the Respondent on the records
jurisdiction of AT issue is technical and falls within the form of measurements and therefore, is excepted furnished by Petitioner, were in
(Issue 4) domain of arbitrator. matter which is outside the jurisdiction of AT. dispute. Accordingly, Harsha
Construction was distinguishable on
AND 3. Claim No. 6 dealt with total work 2. AT ruled that dispute is in relation to authenticity of facts;
done till the date of termination and records of initial levels/ OGL’s and not measurements.
Claim for total had nothing to do with OGLs. AT observed that the Clause 37.6 being relied by NTPC 2. The Tribunal further drew a
works done relates to measurements and not initial levels and distinction between measurements
(Claim No. 6) 4. Judgment in the case of Madnani therefore, the dispute doesn’t fall within the scope of outside the purview in terms of Clause
Construction cannot be relied was Clause 37.6. AT observed: “..taking initial levels is a 37.6 and initial levels, and held that
peculiar to the facts involved as the preliminary task for measurement and cannot be initial levels did not qualify as excepted
procedure involving excepted matter construed as measurement of quantity as matter. It held that determination of
was not scrupulously followed. contemplated under Clause 37..” initial levels was preliminary task
undertaken prior to commencement of
5. Clause 2.9.0 of Technical 3. The Arbitral Tribunal derives authority from works, the measurement of which
Specifications merely provides detailed Arbitration Clause (i.e. Clause 7 of the GCC), which is qualifies as excepted matter under
procedure for taking measurements, worded in widest manner and gives authority to AT to Clause 37.6;
which is an excepted matter under adjudicate ‘any dispute and difference’ without any
Clause 37.6 of GCC. Thus, Clause 37.6 exceptions. Further Arbitration Clause 7 provides for a 3. The Tribunal (comprising of
was applicable on OGLs. three-tier dispute resolution system, which allows the technical experts) arrived at above
AT to have jurisdiction on all matters which could not findings based on interpretation of
6. Heavy reliance placed upon be resolved by DRB. The instant issue was in fact contractual clauses as well as technical
judgement in the case of Harsha referred to DRB where it could not be resolved. interpretations of initial levels, used in
Constructions. field of construction contracts. These
4. AT ruled that the reliance of Appellant on the case of findings are not open to Court under
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7. Respondent Contractor never claimed Harsha Contractors is incorrect since arbitration clause Section 34, and Tribunal is master of
that 15th and 16th RA bill represented in the said case expressly provided for the matters quality and quantity of evidence.
total works done. The AT erred in which shall not be within the AT’s jurisdiction. Reliance was placed upon Madnani
reopening the entire computation. Construction (pp. 65 to 66) and Country
In view of the above, AT ruled that the dispute Club India Limited, 2016 SCC OnLine
8. Claim No. 6 is subject matter of FIR regarding the initial levels falls within the AR’s Bom 8993 (pp. 67);
whereunder the OGLs furnished by jurisdiction to arbitrate.
Respondent Contractor and signature 4. The Tribunal has applied
appended thereto are subject matter of CLAIM NO. 6 (CLAIM FOR TOTAL WORKS DONE) (Ref. Simpson’s formula to quantify the total
investigation by the CBI. Accordingly, Paragraph 204 to 241 of the Award) works done. It is completely a domain
the grant of claim computed on the of the arbitrator. Reliance was placed
basis of such OGLs unjustly enriches the1. AT found the correct provision in the contract for upon McDermott International, (2006)
Respondent Contractor. recording initial levels was Clause 2.9 of Section II Part 11 SCC 181 (SC) (pp. 68 and 69);
B, Detailed Technical Specifications, (2.0.0 Technical
9. The Arbitral Tribunal completely Specification for Excavation and Filling for Site 5. The Tribunal examined facts
overlooked the set of OGLs furnished by Levelling Works) (Extracted in Pg 90, Para 208 of and based on that gave findings on the
Appellant Employer basis frivolous Award). The provision provided that spot levels (i.e. issue of relevant measurements and
ground that Augustine was not initial level & final level) shall be signed jointly by both whether Mr. Augustine was authorised
authorised person. Notably, Augustine contractor and EIC of Appellant. As per Clause 2.9, final representative. The Tribunal has
was part of the survey team and had measurement of the volume of the total excavation undertaken in-depth study of the issue
been deployed at site since the and filling for site levelling works was to be conducted and observed that initial levels were to
beginning. for the purpose of payment for work. be jointly recorded. The examination of
initial records revealed discrepancies as
10. The AT observed that Respondent 2. AT observed that initial levels/OGL’s form the datum records did not bear the signature of
Contractor had excavated 15 lakhs cum for all excavations and therefore in engineering authorised person of the SACIL /
during October 2013 to March 2014. practice all excavation works have to have joint Respondent. The Appellant / Petitioner
Notable that prior to that the signatures of both contractor and EIC to avoid dispute in his letter dated June 15, 2013 also
Respondent Contractor had excavated at a later date, since OGL’s become non-susceptible claimed that initial level records were
46 lakh cum in 18 months. Given the and non-existent physical form after excavation and self-certified without signatures of
resources deployed were poor, the can’t be remeasured (Para 212, Pg 92 of Award). Respondent. This could have been
Respondent Contractor could not have shared initially, and there was
3. Now in the present case, there was no dispute on
excavated any more than 2 lakh cum. requirement to produce them only at a
the final levels reached on the date of termination of
The Single Judge completely ignored the later stage;
contract, however the dispute was with respect to
same.
initial levels. Both parties had produced a different set
6. Calculation was done on the
of OGL’s which they were relying for calculation and
11. If the set of OGLs furnished by basis of time-tested Simpson’s.
disputing the other party’s set of OGL’s. AT examined
Respondent Contractor were recorded Formula. Volume of RRB was deducted

in 2012, why were they furnished only in
February 2013.
12. Judgment in the case of McDermott
is an authority on use of established
methods wherein damages cannot be
computed. Its use for justifying use of
Simpsons rule for determination of total
works done is erroneous.
Palit & Co | August 28, 2020| Revised Note
the OGL records of both parties (Para 212 to 216 Pg from the volume of excavation so
93 to 97 of Award) and concluded that the calculated. The amount which had been
Respondent Contractors OGL records were genuine paid to the Respondent against RA Bills
and set produced by Appellant cannot be relied upon. 1 to 14 was also deducted and then the
AT conclusion was based on the following broad final Award was made;
observations:
The issue is completely beyond the
I. NTPC OGL’s signed by unauthorised representative domain of examination under Section
34 of Arbitration and Conciliation Act,
OGL records produced by both parties were signed by
1996, and as such no infirmity can be
Mr Praveen on behalf of Appellant Employer.
found in the award. The Court cannot
However, for the Respondent Contractor, NTPC’s
intervene unless it patently illegal or
records contained signature of one, Mr Augustine who
shocks the conscience of the Court.
was a lower level member of the Respondent’s survey
Reliance placed upon Associate
team, who had no authorisation to sign. On the other
Builders, (2015) 3 SCC 49.
hand, records produced by Respondent was signed by
Mr Prashant Konda Reddy, in whose favour the
Respondent produced authorisation (Pg 98-99, Paras
217 to 219 of Award).
II. NTPC’s stand was self-contradictory
- The Respondent Contractor had furnished its set of
OGLs in February 2013 to the Appellant, which were
disputed by the Appellant vide its letter dated June 15,
2013 (Page 99, Para 220 of Award). In the said letter,
Appellant claimed it was maintaining OGL records in its
system, which were printed and signed by NTPC’s Site
engineer and counter signed NTPC’s site engineer.
Further, NTPC claimed that quantities of earthwork
indicated in RA Bills 1 to 14 were paid based on the
said OGL records of NTPC.
- The Respondent Contractor replied to the aforesaid
letter vide its letter dated June 21, 2013, whereby it
was pointed out that OGL records require to the jointly
signed and self-certified OGL records are against
contract. In view thereof, Respondent requested to
 Palit & Co | August 28, 2020| Revised Note

verify the records again. No Response to the said letter

from NTPC was received.

Therefore, AT observed from 15.06.2013 letter, NTPC

revealed that the OGL records were being maintained
on self-certification of NTPC officials and as such it
was clear NTPC’s OGL records didn’t bear
Respondent’s signatures. On the other hand, before
AT, NTPC had filed a set of OGL records claiming the
same to be jointly signed records, which has
signatures of an unauthorised representative of
Respondent, Mr Augustine. AT found the contentions
of Appellant/NTPC before AT to be contradictory to
the position emerging from the Appellant/NTPC’s
Letter dated 15.06.2013. (Ref. Page 102 and 103,
Paragraph 224 and 225 of the Award)

Secondly, AT held that in case the initial levels relied

by Appellant/ NTPC were available on 15.06.2013, it
was their responsibility to produce the same to
Respondent Contractor to demonstrate its contention
that initial levels filed in Book 12 to Book 16 are the
correct levels and not the levels produced the
Respondent/ Contractor in Feb 2013. Further, the
Arbitral Tribunal observed that Appellant /NTPC did
not even find it necessary to produce their set of
initial level records even after the submission of RA
bill 15 and 16 by the Respondent/ Contractor which
was based on the Initial levels filed and relied upon
by the Respondent/ Contractor and chose to withhold
the documents for reasons best known to them. (Ref.
Page 103 and 104, Paragraph 225 and 226 of the
Award)

QUANTIFICATION OF CLAIM NO. 6 (Para 231 to 241 of

Award, Pg 105 to 110)

1. AT observed that in RA bill no. 15 and 16, Contractor

 Palit & Co | August 28, 2020| Revised Note

had claimed quantity for work considering final levels

were reached, when in fact final levels were not
reached on the date of termination.

2. AT considered the calculation of total volume of

excavation done on the basis of time tested Simpson’
Rule filed by Claimant Witness-1, which consisted of
calculation from OGL to final level. AT deducted the
volume of unexecuted work from the said volume
calculation to arrive at the actual volume of work
executed.

3. From the aforesaid volume, AT deducted the volume

of RRB work. Now this volume was multipled with BOQ
rate to arrive at total price for actual work executed.

4. AT deducted the amount paid under RA Bill 1 to 14

and awarded the balance unpaid amount to
contractor.

Our Submissions:
Clause 37.6 and 2.9.0 are two separate and distinct clauses. While Clause 37.6 provides for joint measurements on daily basis in Measurements Book, Clause 2.9.0
provides for recording of spot levels only twice, i.e. initial level/OGL (i.e. recorded before start of work) and final levels (i.e. recorded once work is done to finished levels
as per engg. drawings). These initial levels are recorded on the Field Book.

Clause 37.6 is a provision under which volume of daily work is recorded in Measurement Book, basis which RA bills raised and paid. Clause 37.6 is indeed a excepted
matter, so as to avoid disputes in relation to daily volume of calculation, which potentially can lead to unnecessary delays in execution. Whereas Clause 2.9.0 is the
provision under which final payment of total work is calculated based on OGLs/ initial levels (recorded jointly in field book) and final levels to be achieved. Since, the
dispute is in relation to initial levels recordings, which is provided under Clause 2.9 of Section II Part B, Detailed Technical Specifications, (2.0.0 Technical Specification for
Excavation and Filling for Site Levelling Works) and not Clause 37.6 of GCC (Measurements), the same was held to be not an excepted matter and therefore, a subject
matter which could be adjudicated by AT. Further, the arbitration clause is a separate agreement which is crafted in widest manner to include jurisdiction over all
disputes and differences, including dispute pertaining to ‘initial levels/ OGL recordings’, which is not an excepted matter.

Further, the Single Judge also observed that Clause 37.6 was not scrupulously followed (based on statements of NTPC in its Letter dated 15.06.2013- self certification of
records) . Hence, the Single Judge held Madnani Construction to be applicable which held that the procedure laid out under the excepted matter clause is required to be
scrupulously adhered to, in order to take advantage of the same.

Further, the question which is set of OGL records is genuine is a pure question of fact to be determined basis examination of evidence, therefore under the sole domain
 Palit & Co | August 28, 2020| Revised Note

of arbitrators. The determination of total works done is a technical exercise, which the Arbitral Tribunal comprising of three senior technical experts undertook based on
the evidence, site records etc. The appraisement and appreciation of the evidence is within the sole domain of arbitrator and cannot be interfered with by court under
Section 34 as correctly held by the Single Judge, far less in Section 37 appeal proceedings.

3 Loss of overheads 1. The Respondent Contractor has not 1. The overheads cost is a time related cost which is 1. Arbitral Tribunal had made a detailed
(Claim-24) led any evidence to prove the loss of incurred independent of the progress achieved. consideration of the overheads.
overheads. (para. ttt at pg. 149) Manner of computation completely
2. Consequential to the delay in execution of project. falls in the domain of Arbitral Tribunal.
2. The AT has adopted 6 per cent. as the
rate for loss of overheads. In toto, the 3. Calculated in following manner: 2. Arbitral Tribunal awarded overheads
AT allowed 16 per cent. toward loss of (i) Compute 6 per cent. of Rs.154 Crores to compute cost relying upon its findings on Issue 1
overheads and loss of profit. As per total overheads cost attributable to said Project; and Issue 2. No legal infirmity.
CPWD guidelines, maximum 15 per cent. (ii) Compute proportionate overheads cost for the
can be allowed towards loss of contract period of 30 months. Deduct proportionate
overheads and profit in building overheads cost for 5 months (representing the period
construction works in plain areas. (para. post termination of contract) from total overheads
www pg. 151) cost.
(iii) Deducting 6 per cent. of the RA bills raised from
3. The overhead costs saved by the aforesaid value.
Respondent Contractor by delaying
mobilisation till December 2012 were
not reckoned. (para. yyy at pg. 152)
Our Submissions:
The cost of overheads (indirect cost) continuously borne by a contractor. The contractor whilst bidding for the project attributes certain part of the overhead cost in the
contract value. When a contract is wrongfully terminated by the employer, the contractor should be entitled to recover the overhead cost proportionate the period
during which contract subsisted, provided the same could not be recovered in the RA bills.
This overheads cost is generally expressed as specified percentage points of contract value, say 6 per cent. The Arbitral Tribunal comprised of 3 arbitrators who were
experts in the field, which had unanimously adopted rate of 6 per cent. to compute the cost of overheads. The manner of computation is a technical issue which falls
completely within the domain of AT.

VII. SUBMISSIONS FOR RELEASE OF DEPOSITED SUM VIS A VIS NTPC’s CONTENTION OF PENDENCY OF CRIMINAL PROCEEDINGS UNDER CBI FIR DATED AUGUST 27, 2017

 AMOUNT DEPOSITED: 50% OF THE AWARDED AMOUNT = INR 23,77,15,399/-

1. Order dated 26.10.2017 in OMP(COMM) 370 of 2017 i.e. Section 34 Stay on operation of the arbitral award was granted subject to deposit of 50% of the
challenge petition filed by NTPC) awarded amount i.e. 23.77 crores by NTPC with the Registrar General of HC.
 Palit & Co | August 28, 2020| Revised Note

2 Order dated 18.04.2018 in OMP (I) (COMM) 75 of 2018 (i.e. Section
9 petition filed by Sri Avantika/client seeking release of money
deposit)
3 Order dated 07.05.2018 in FAO(OS) 94 of 2018 (i.e. Appeal filed by
NTPC against the aforesaid order dated 18.04.2018)
4 Order dated 26.03.2019 in FAO(OS) 94 of 2018
Ld. Single Judge allowed the release of INR 23.77 Crores to Respondent Contractor subject to
deposit of bank guarantee.
Ld. Division Bench stayed the Order of release of money.
Ld. Division Bench disposed of the appeal, considering that the Section 34 challenge petition
was at the stage of final arguments and therefore, directed the continuance of the interim
stay order till the conclusion of the Section 34 petition and further directed that the orders in
relation to release of deposited amount will be passed at the time of final disposal of the said
challenge petition.

SUBMISSIONS

I. Application seeking cognizance of CBI FIR was not pressed and was ‘dismissed as withdrawn’ vide Order dated October, 26 2017 in OMP (COMM) 370 of 2017 [i.e.
Section 34 petition]

Appellant Employer along with the petition had filed an Interlocutory Application (IA No. 11990/ 2017) praying for taking cognizance of FIR dated 27.08.2017 registered
by the CBI, however Appellant Employer did not press the application and sought to withdraw it. Application was directed to be ‘dismissed as withdrawn’ with a liberty
to file afresh if required. The Appellant Employer has never preferred any application seeking cognizance of the FIR subsequently.

II. Ld. Division Bench vide its Order dated March 26, 2019 in FAO (OS) (COMM) 94 of 2018 directed the Section 34 Court to pass orders in relation to release of
deposited sum at time to disposal of Section 34 challenge petition.

 Vide Order dated October 26, 2017, Appellant Employer was directed to deposit 50% of Award Money i.e. INR 23, 77 Crores with HC registry.

 Respondent Contractor filed Section 9 Arbitration Petition [i.e. OMP (I) (COMM) 75 of 2018) seeking release of the deposited sum which was allowed by the Single
Judge vide Order dated April 18, 2018.

 NTPC filed appeal [i.e. FAO (OS) (COMM) 94 of 2018] against the said order before the Ld. Division Bench wherein an interim stay order was passed against the release
of deposited sum vide Order dated May 7, 2018.

 Vide Order dated March 26, 2019, considering that the Section 34 challenge petition was at the stage of final arguments, the Ld. Division Bench was pleased to dispose
of the appeal without going into merits of the matter, while directing the continuance of the interim stay order till the conclusion of the Section 34 petition and further
directing the Section 34 court to necessary pass orders in relation to release of deposited amount at the time of final disposal of the Section 34 challenge petition (NTPC
also agrees and admits to this understanding of the Order dated in the Appeal (Pg 50, para xlxii of the Amended Appeal) .
 Palit & Co | August 28, 2020| Revised Note

 Ld. Single Judge in the Impugned Judgment has not passed the necessary directions in relation to the deposited sum in its Judgment, thus failing to give effect the
directions of the Ld. Division Bench given in the March 3, 2019 Order.

III. FIR was filed merely based on an afterthought as a counterblast to the Arbitral Award, which held Respondent Contractor’s OGL’s to be the genuine set of records

The OGL records relied upon by the Respondent Contractor were available with Appellant Employer since February 2013, when the Respondent shared the same for the
records of Appellant. This is evident from Appellant’s Letter dated 15.06.2013, wherein Appellant raised allegations and disputed the genuineness of Respondent’s set
of OGL records. (Ref: Pg 220 of Award) However, the Respondent neither shared their set of OGL records with Respondent nor initiated any criminal action seeking
enquiry into the allegations, during the duration of contract or the arbitral proceedings. Only when the Arbitral Tribunal in its Award dated 7 th July 2017 after due
consideration of both sets of OGL’s concluded the Respondent’s OGL set to be genuine, the Respondent as an afterthought filed the complaint to CBI alleging collusion
and forgery of OGL records, pursuant to which FIR was registered on August 27, 2017. This action was merely to derail the Arbitral Award where threadbare assessment
of the issue was undertaken.

IV. F.I.R. has remained in cold storage

FIR was registered on August 27, 2017. It’s been 3 years and no charge sheet has been filed. (FIR at Pg No. 1152 of Appeal Documents)

V. Arbitral Tribunal has concluded appellant’s OGL records to be unreliable after conducting a detailed analysis of evidence, which has been upheld by the Single Judge
in the Impugned Judgment