Mr. Lovkesh Sawhney, Senior Advocate with Mr. Rohit Kumar, Advocate v. M/S NHPC LIMITED

Judgment

1. The present Petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter 'Act of 1996') by the Petitioner seeking recommencement of the arbitration and appointment of nominee Arbitrator on behalf of the Respondent to adjudicate upon the disputes which have arisen between the Parties.

2. Shorn of unnecessary details, the facts leading to the present petition are as under:- i. The Respondent invited bids with regard to execution of Dulhasti Hydro Electric Project on river Chenab at Kishtwar, Jammu and Kashmir. Tenders were invited since the same had been abandoned by a previous awardee namely M/s. Dumaz-Sogea Borie SAE. Signature Not Verified Digitally Signed By:RAHUL SINGH Signing Date:17.01.2025 12:54:24 ARB.P. 1061/2023 Page 1 of 24 The balance work was continued by the Petitioner between 1992 to 1995. ii. Similarly, the work was done by the joint venture of M/s Jaiprakash Industries Limited and M/s Statkraft Anlegg AS. Subsequently, it was amalgamated with M/s Jaypee Cement Limited which came to be known as M/s Jaiprakash Associates Limited, the Petitioner herein and submitted its bid to the tender floated by the Respondent. iii. It is stated that in the second phase, the work was divided into two packages, one for Upstream Area Works (Package 1) and the other for Downstream Area Works (Package 2). Both the phases were awarded to the Petitioner. iv.

It is stated that a Contract was entered into between the parties on

09.04.1997. The Contract dated 09.04.1997 stipulated that the work should be completed within 33 months but the work could not be completed within the stipulated term of 33 months. Extension was granted to complete the work. The project which was to be completed in the year 2000, was extended till 2007. v. It is stated that on 11.05.2007, the certificate of completion was issued by the Respondent. The Petitioner raised bills for the two packages. It is stated that in the Bills of the Petitioner, certain additional costs which were said to have been incurred by the Petitioner on account of overstaying at the site were included. Signature Not Verified Digitally Signed By:RAHUL SINGH Signing Date:17.01.2025 12:54:24 ARB.P. 1061/2023 Page 2 of 24 vi. It is stated that the total claim amount towards these additional costs was Rs. 360.56 crores. It is stated that the claim was rejected by the Respondent herein. Since there was an Arbitration Clause in the Contract dated 09.04.1997, the Arbitration Clause, i.e., Clause 39.2, was invoked and the Arbitral Tribunal consisting of three Arbitrators was constituted. vii. It is stated that in the majority Award, even though it was found that no evidence has been led by the Petitioner herein to substantiate the claim on the ground of cost incurred due to the delay, yet amount of Rs. 60 crore was awarded on the principle of good conscience and reasonable and proper estimate. viii. The Award was challenged by both the Petitioner and the Respondent herein by filing O.M.P. (COMM) 505/2020 and O.M.P. (COMM) 482/2020 respectively. It is the case of the Respondent that the Award of Rs. 60 crores was unsustainable whereas, the Petitioner herein made a claim for enhancement of the said amount. ix. The Learned Single Judge vide Judgment dated 26.05.2023 in O.M.P. (COMM) 482/2020, set aside the Majority Award and quashed the finding qua the grant of Rs 60 crores as additional compensation. It is held by the Learned Single Judge that on one hand the Tribunal had held that the Petitioner herein had failed to produce any material to substantiate its claim but on the other hand the Tribunal awarded a sum of Rs.60 crores on the basis of good conscience which is opposed to public policy. Signature Not Verified Digitally Signed By:RAHUL SINGH Signing Date:17.01.2025 12:54:24 ARB.P. 1061/2023 Page 3 of 24 x. The Learned Single Judge was of the opinion that since the parties had not expressly authorized the Tribunal to apply the principle of good conscience and equity, it could not award the said amount as it is contrary to Section 28(2) of the Act of 1996. Since the Award has been set aside by the judgment of even date in O.M.P. (COMM) 505/2020 filed by the Petitioner herein, the Petitioner has approached this Court for appointment of an Arbitral Tribunal to adjudicate the disputes between the parties.

3. Notice in the instant petition was issued on 14.02.2024. Pleadings are complete.

4. Learned Senior Counsel appearing for the Petitioner contends that the Award does not decide the underlying dispute and has not dealt with the merits of the dispute and therefore, an Arbitral Tribunal has to be appointed to adjudicate the disputes between the parties. He further contends that Section 43(4) of the Act of 1996 provides that where the Court orders an arbitral award to be set aside, then fresh proceedings can be initiated within the timeline prescribed under Section 43(4) of the Act of 1996. He, therefore, states that this Petition is maintainable. The Learned Senior Counsel for the Petitioner places reliance on the judgments of the Apex Court in McDermott International Inc v. Burn Standard Co. Ltd., (2006) 11 SCC 181, Dakshin Haryana Bijli Vitran Nigam Ltd v. Navigant Tech. (P)