Full Text
HIGH COURT OF DELHI
Date of Decision: 25.01.2023
INDIAN OIL CORPORATION LTD. ..... Appellant
Through: Mr. Sandeep Sethi, Sr.
Advocate with Mrs. Paramjeet Benipal, Mrs. Shanik Koura and Mr. Nirbhay Narain Singh, Advocates.
(Mob. No. 9810037778)
Through: Mr. Rajiv Nayar, Sr. Advocate with Mr. Dhirendra Negi, Ms. Pragya Chauhan and Mr. Saurabh Seth, Advocates.
(Mob. No. 9717911677)
HON'BLE MR. JUSTICE SUDHIR KUMAR JAIN NAJMI WAZIRI, J (ORAL)
The hearing has been conducted through hybrid mode
(physical and virtual hearing).
JUDGMENT
1. This appeal under section 37 of the Arbitration and Conciliation Act, 1996 has been pending for the last 5 years. It impugns the judgment passed on 01.06.2018 by the learned Single Judge in O.M.P. (COMM) 366/2017 which has upheld the arbitral award dated 18.05.2017 awarding Rs.115,11,28,129/- along with simple interest @9% p.a., to the respondent along with costs from the date commencing on expiry of 84 days from 18.05.2012. The said amounts were deposited before this court by the appellant and have been released to the respondent. Notice is yet to be issued in this appeal.
2. Mr. Sandeep Sethi, the learned Senior Advocate for the appellant contends that the delay on account of the respondent/claimant/L&T, having been noted both by the Arbitral Tribunal as well as in the impugned order, has not been effectively apportioned to L&T. Instead, the entire delay has been held to be on account of the appellant/IOCL resulting in erroneous apportionment of liabilities and costs upon the appellant.
3. The facts of the case are that under a contract an infrastructure was to be created by L&T for the benefit of IOCL, within a certain time period. There was a delay in supply of the main fuel- RLNG, which led to the delay in completion of part of the project. This delay has been noted in the award as under:
4. Apropos the issue of delay, the learned Single Judge has observed as under:
37. Clauses 4.3.5.0 and 4.3.6.0 which provide for extension of time are all related to this Progress Schedule which is duly approved by the owner. Therefore, the contention of the counsel for the petitioner that the Progress Schedule has no relevance to the issue of extension of time or for levy of price discount cannot be accepted.
38. As far as reliance on clauses 1.0.60.0 and 3.0.1.0 of the GCC is concerned, the Tribunal rejects the same observing as under:-
294. RW-1 has admitted in her cross examination that RLNG Skid/Fuel Conditioning Skid could be commissioned only with the use of RLNG. RW-1 also admitted that BOP could not be commissioned till RLNG was made available to L&T.
295. The testimony of RW-1 demolishes IOCL‟s stand that commissioning could have been completed by L&T using only the alternate fuels. Even otherwise, this stand of IOCL is contrary to the provisions made in the Technical Specifications, particularly Clause 15.0, Clause 15.5, Section C1-21 of Technical Specifications. xxxxxxxx No merit in IOCL's argument that unless and until L&T had completed all obligations upto the stage of Module 1 and Module 2, IOCL had no obligation to supply the concerned fuel
330. The Tribunal finds it difficult to accept the argument advanced on behalf of IOCL that unless and until L&T had completed all obligations of Module 1 upto the stage of commissioning, the question of IOCL's obligation to supply fuel to fire the UB for commissioning Module 1 would not arise and likewise until L&T had completed all obligations of Module 2, upto the stage of commissioning, the question of IOCL being obliged to supply fuel to firing the GTGs or the HRSGs for commissioning Module 2 would not arise. This argument cannot be accepted principally for five reasons.
331. First, neither the Contract nor L[2] Schedule or any other document forming part of Contract suggests so.
332. Second, a contract, such as the one, under consideration by the Tribunal, before it is entered into by the parties, is preceded by comprehensive submission and exchange of documents touching upon all material aspects and requirements of the project that brings complete clarity on all relevant matters so that parties are well aware of the respective obligations right from the commencement until completion of the project. All requirements are fully envisaged in such contract as both parties being well versed with a subject would not leave anything to chance or scope of interpretation that may make it difficult to maintain timelines resulting the project not being completed on time. Viewed thus, nothing is found in the contract documents that supports the argument of the Respondent that unless and until L&T had completed all its obligations of Module 1 and Module 2 upto the stage of commissioning, IOCL was not obliged to supply for firing UB (for commissioning of Module 1) and for firing of GTGs or HRSGs (for commissioning Module 2).
333. Third, the necessity of supply of fuel for firing UB for commissioning Module 1 and supply of fuel for firing GTGs or HRSGs for commissioning of Module 2 cannot be overlooked. A condition cannot be read into the contract which does not exist. There is no stipulation in the Contract that unless and until the Claimant had completed all obligations of Module 1 and Module 2 upto the stage of commissioning, the obligation of IOCL to supply fuel would not arise. How can the stage of commissioning of Module 1 or Module 2 be reached without completion of pre-commissioning activities which necessarily required making available fuel by IOCL to L&T.
334. Fourth, IOCL having accepted the responsibility of making available the requisite fuel on particular dates cannot dishonor its obligations under the pretext that unless and until L&T had completed its obligation of Module 1 and 2 upto the stage of commissioning, it had no obligation to supply fuel for the purposes of firing UB for commissioning Module 1 and for the purposes of firing GTGs or HRSGs for commissioning of Module 2.
335. Fifth, IOCL had at no time stated or expressed that its acceptance of obligation of making available fuel for commissioning of Module 1 and Module 2 was dependant on completion of all obligations by L&T of Module 1 and Module 2 upto the stage of commissioning.
336. It also appears from the record that steam or condensate was also not made available by IOCL to L&T when requested and that resulted in delay of completion of project.”
39. I do not find the above reasoning of the Arbitral Tribunal to be unreasonable or perverse so as to warrant interference of this Court in exercise of its powers under Section 34 of the Act. xxx
44. I do not find any such case warranting an interference with the Impugned Arbitral Award having been made out by the petitioner in the present case.
45. Counsel for the petitioner has made further submissions on the alleged delays of the respondent in commissioning Module 1 and 2. He submits that Module 1 includes RLNG‟s Skid, which was part of the Balance of Plant and was commissioned only on 28th August, 2010. He submits that the delay up to 28th August, 2010 in commissioning Module 1 was, therefore, attributable only to the respondent. Similarly, for mechanical completion of Module 2, as RLNG was not required, delay till the date of completion, that is 30th June, 2010, was attributable solely to the respondent.
46. The Arbitral Tribunal has considered the above submissions of the petitioner and has held that in terms of L[2] Progress Schedule, there was an obligation on the petitioner to provide/make available the diverse components/activities and some of the components/activities which the petitioner was to provide were critical components and commissioning of Modules 1 and 2 were dependent on them. The Arbitral Tribunal further found that there was delay on part of the respondent in completion of diverse tasks, however, at the same time, there was delay on part of the petitioner in making available/providing some of the components/activities which led to the delay in commissioning of Modules 1 and 2. The Tribunal holds that the delay therefore, was not fully attributable to the respondent alone. Paras 311 and 312 of the Impugned Award are relevant and are reproduced hereinbelow:-
47. The above being a finding of fact, this Court in exercise of its powers under Section 34 of the Act cannot sit as a Court of appeal to arrive at a different conclusion. The Arbitral Tribunal further observed as under:-
294. RW-1 has admitted in her cross examination that RLNG Skid/Fuel Conditioning Skid could be commissioned only with the use of RLNG. RW-1 also admitted that BOP could not be commissioned till RLNG was made available to L&T.
295. The testimony of RW-1 demolishes IOCL‟s stand that commissioning could have been completed by L&T using only the alternate fuels. Even otherwise, this stand of IOCL is contrary to the provisions made in the Technical Specifications, particularly Clause 15.0, Clause 15.5, Section C1-21 of Technical Specifications.” …”
5. The contention now raised was never an issue before the Arbitral Tribunal nor was it argued before the learned Single Judge. It is an evident afterthought, on the basis of which the appellant would want interference of the court u/s 37 of the Act. However, the jurisdiction of this court under section 37 of Arbitration and Conciliation Act is limited and would not extend to deciding an issue for the first time. In any case, the view taken both by the Tribunal and by the learned Single Judge is a plausible view and it has taken into consideration the fact that the delay in discharge of obligations by IOCL led to further spiral of delays. This view apropos spiralling on cascading effect of delay occasioned, in the first instance, by the IOCL is a plausible view and cannot be said to be contrary to public policy.
6. The learned Senior Advocate for the appellant refers to a decision of this court in CCI Ltd. vs. Alstom Power Boilers Ltd. 2011 SCC Online Del 735. He refers to para 19 which reads as under: “19. No doubt, the findings of fact returned by them with regard to the delay on both the sides would not be interfered by this court as they are based on evidence brought before them. However, that is not the end of the matter. Clauses 10.[5] and 6.2, as aforesaid, entitle the respondent-contractor for extension of time for the period for which the petitioner has caused the delay. The liquidated damages to which the petitioner is entitled has been set out in Clause 10 of the contract, as extracted above. The learned Arbitrators have themselves returned a finding that the respondent was also liable for some delays. However, the learned Arbitrators have disallowed the claim for liquidated damages on the assumption that the said damages could be awarded to the petitioner only if the respondent was solely responsible for the delay. With due respect to the Tribunal, there is no basis for such an assumption. The meaning of the expression „delay‟ in the context of Clause 10.[5] & 6.2, as aforesaid, would mean the delay over and above the delay for which the petitioner was responsible, i.e., the total delay vis-à-vis the contractual period minus the delay for which the petitioner was responsible. As the Tribunal has proceeded on the assumption that liquidated damages would be payable by the respondent-contractor only if the contractor was solely responsible for the delay, even though the tribunal finds that the delay was on both sides, it has not proceeded to apportion the delays for which the petitioner was responsible and the delays for which the respondent was responsible. The claim of the petitioner for liquidated damages ought to have been considered after quantification of the quantum of delay for which the respondent was responsible, and for which the petitioner was not responsible. For the sake of clarity, I may take an illustration. Supposing, under the contract, a particular aspect of the work had to be completed in a span of four weeks. The petitioner by not performing its obligations (which, in turn, prevented the respondent from performing its obligations) caused a delay of two weeks, and the said aspect of work gets completed in eight weeks, then by application of clauses 10.[5] and 6.2, the respondent contractor would be entitled to extension of time by two weeks. The delay attributable to the respondent would then be: total time taken, i.e. eight weeks minus (originally stipulated period, i.e. four weeks plus the extension of time granted, i.e. two weeks), equal to two weeks.”
7. The court is of the view that it is in the facts and circumstances of the complex nature of the case, that the view was taken by the Tribunal and has been rightly upheld by the learned Single Judge. Therefore, we see no cause to interfere with it. The said contention is therefore rejected. Indeed, the aforesaid judgment of CCI Ltd. (supra) itself refers to a decision of the Supreme Court in K.V. Mohammed Zakir vs. Regional Sports Centre, 2009 9 SCC 357, which observed as under:
8. For the aforesaid reasons, the court is not persuaded by the arguments on behalf of the appellant. We see no reason to interfere with the impugned award or the judgment dated 01.06.2018. The appeal is without merit and is dismissed.
NAJMI WAZIRI, J SUDHIR KUMAR JAIN, J JANUARY 25, 2023