Mr. Praveen Chauhan, Mr. Parth Awasthi, Ms. Malvica Satija, Mr. Sarthak Swahney and Mr v. M/S SIMPLEX PROJECTS LIMITED

Judgment

1. The present petition is instituted under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter, referred to as the „A&C Act‟) thereby seeking part setting aside of the arbitral award dated 13.07.2024 (hereinafter, „impugned award‟) delivered by the Arbitral Tribunal comprising of Sole Arbitrator (hereinafter, „AT‟) in respect of Issue Nos. 1 and 2 as framed by the AT.

2. The impugned award came to be delivered in the context of Contract Agreement No. JKUSDIP Srinagar/UT/02 dated 02.04.2013 (hereinafter, „subject contract‟) which came to be executed between the parties in O.M.P. (COMM) 60/2025 Page 1 of 17 Signed By:GAUTAM ASWAL Signing Date:20.05.2025 17:06:55 Signature Not Verified consequence of Letter of Acceptance dated 06.03.2018 issued by the petitioner in pursuance of the respondent/claimant submitting its bid on

04.12.2012 against the petitioner‟s tender dated 15.10.2012 inviting bids for „Construction of Multi-Storied Mechanized Parking Facility on MA near Lal Chowk, Srinagar‟ (hereinafter, „subject project’).

3. Pertinently, the scope of work under the subject contract also included the Operation & Maintenance (O&M) of the multi-level car parking for a period of three years from the date of the Defect Liability Period ending. It is the case of the petitioner that the stipulated dates of commencement and completion of the subject project were 06.05.2013 and 05.11.2014, respectively, and that the initial period of completion of the subject project was 549 days. On the contrary, it is the respondent/claimant‟s case that the stipulated date for completion of the said project as per the subject contract was 24.02.2015. Indisputably, the construction work was completed on

30.04.2017, after eight Extensions of Time (hereinafter, „EOT‟) granted to the Petitioner. DISPUTES BEFORE THE ARBITRAL TRIBUNAL

4. The respondent/claimant made various claims pertaining to the works in question. It filed its Statement of Claim (hereinafter, „SOC‟) before the AT on 28.01.2023, which was responded to by the Counter-Claims filed by Petitioner along with its Statement of Defence (hereinafter, „SOD‟) on

03.03.2023.

5. In its SOC, respondent raised 9 claims in all and the petitioner raised a

total of 3 Counter Claims. O.M.P. (COMM) 60/2025 Page 2 of 17 Signed By:GAUTAM ASWAL Signing Date:20.05.2025 17:06:55 Signature Not Verified

6. Of the 9 claims, the Respondent, did not press Claim Nos. 2 and 8, which consequently, were not dealt with by the AT in its award. Additionally, during the course of the arbitral proceedings, the Petitioner conceded Claim No 1, 4 and 6 and requested the AT to adjust the same from its Counter Claim of Liquidated Damages, that might be awarded in its favour.

7. Claim No 1 of the Respondent pertained to outstanding payments under various RA bills raised by it, amounting to Rs.1,44,85,305/-. Under Claim No.3, the respondent claimed a sum of Rs.2,25,12,541/- towards unpaid price adjustment/escalation, it claimed to be entitled to. Vide Claim No.4, an amount of Rs.43,08,586/- was claimed towards refund of the excess deduction of CWST made by the Petitioner. Vide Claim No.5, pertained to a reimbursement of Rs 1276387/- it claimed towards service tax, after the introduction of GST regime w.e.f. 08.07.2017. Claim No.6 pertained to return of security deposit/retention money amounting to Rs. 90,89,152/-. Claim No.7, amounting to Rs.2,93,98,658.05/- pertained to loss claimed to have been incurred on account of stoppage of work due to unrest in the Kashmir Valley for the period between 09.07.2016 and

09.11.2016. Additionally, the respondent claimed a sum of Rs.3,17,88,740/- towards interest on the claim amounts @ 12% per annum for the pre- reference period and pende-lite and future interest.

8. On the other hand, Petitioner raised three Counter Claims before the AT, namely; Counter Claim No 1 for Rs. 6,54,25,280/-, towards loss of earnings in the form of car parking charges potentially it could earn if the parking project was completed by the Respondent in the stipulated time. O.M.P. (COMM) 60/2025 Page 3 of 17 Signed By:GAUTAM ASWAL Signing Date:20.05.2025 17:06:55 Signature Not Verified Counter Claim No. 2 for Rs. 71,87,715/- pertained to idling of manpower during the period of delay and, Counter Claim No.3 for Rs. 4,20,42,924/- pertained to interest claimed @ 10% p.a. on the claim amount, for all three periods, namely, pre-reference, pendent-lite and future.

9. Besides the three Counter Claims, the Petitioner also defended the unilateral adjustment it carried out in the accounts to recover is claim of Liquidated Damages. It adjusted a sum of Rs 27514796/-, claimed towards Liquidated Damages, payable by the Respondent under Clauses 8.7 and

14.15(b) of the GCC, on account of delay in the completion of works, from the sums payable to the Respondent for the work done. As per Clause 8.7 of GCC, a sum equivalent to 10 % of the project cost was payable towards LD IMPUGNED AWARD

10. AT framed and determined the following four issues/points of determination in its award, dealing with the Claims and Counter Claims: (i) (ii) (iii) “First considering the Counter Claim of the petitioner for liquidated damages on account of delay of the claimant in performance of its obligations. Thereafter considering the claims No. 3, 5 and 7 of respondent; Thereafter considering the Counter Claim of the petitioner towards idling charges; and, (iv) Lastly considering the claims for interest and costs of arbitration proceedings. “

11. During the course of the arbitral proceedings, the Petitioner conceded Claim No 1, 4 and 6 of the Respondent and requested the AT to adjust the same from its Counter Claim of Liquidated Damages, that might be awarded in its favour. Consequently, the AT dealt with the LD claim of the Petitioner, both in the form of Counter Claim raised by it, and the pre- O.M.P. (COMM) 60/2025 Page 4 of 17 Signed By:GAUTAM ASWAL Signing Date:20.05.2025 17:06:55 Signature Not Verified emptory adjustment of accounts carried out by it towards its LD.

12. AT rejected the adjustment carried out by the Petitioner towards its LD claim. AT held that the Petitioner did not make a counter claim before the AT, for adjudication of LD amount recovered by it by way of adjustment from the pending bills of the Respondent. AT was of the view that unilateral adjustment was not permissible and the Petitioner was legally required to get its LD claim adjudicated by the AT. In addition thereto, the AT interpreted Clauses 8.7 and 14.15(b) of the GCC to hold that the same were not a genuine pre-estimate of damages mutually agreed to by the parties, for it to qualify as LD. AT held that the abovementioned clauses were part of the standard form of contract adopted by the Petitioner with no evidence of any mutual estimation of damages carried out by the parties.

13. Similarly, the AT also rejected Counter claim No. 1 towards "Loss to Exchequer on account of Car Parking Charges" of the Petitioner holding that there was no evidence of any loss suffered by the Petitioner in the form of loss of parking charges earnings due to delay in the completion of project.

14. After having rejected the Petitioner‟s claim of LD and other losses suffered by it on account of delay, purely on the basis of legal principles governing LD, the AT did not consider it necessary to find out if the delay was attributable to the Respondent or not.

15. Consequently, AT awarded the contested claims of the respondent, i.e. Claims 3, 5, 7 in the following manner:  Claim 5: AT noted that the petitioner did not deny their liability to pay to the respondent any additional amount which the respondent has had to bear on account of change in legislation i.e. the tax regime. O.M.P. (COMM) 60/2025 Page 5 of 17 Signed By:GAUTAM ASWAL Signing Date:20.05.2025 17:06:55 Signature Not Verified The only dispute between the parties was whether the rate of GST at relevant time was 18%, as claimed by the respondent or 12% as per the petitioners. Since the petitioner was not able to verify whether the respondent had paid GST@ 18% or not, the respondent was found entitled to claim no. 5 in the sum of Rs. 12,76,387/-.  Claim 3: As regards Claim No. 3 for price adjustment, the AT, while noting that the EoTs granted were without price escalation, held that the respondent was estopped from making a claim for price escalation after completion of the project. Considering that the petitioner did not dispute its liability to pay Rs.15,50,306/-, any claim beyond that amount was declined.  Claim No. 7: with the same was rejected on the grounds of lack of any evidence led by the respondent and the absence of any evidence of loss/costs incurred. SUBMISSIONS BEFORE THIS COURT

16. The petitioner assails the impugned award on the grounds that the said award is patently illegal and against the terms of the subject contract. At the outset, learned counsel for the petitioner submitted that the petitioner restricts its challenge of the impugned award to Issue Nos. 1 and 2, i.e., in respect of whether the stated delay was attributable to the petitioner and the petitioner‟s entitlement to levy and recover liquidated damages under the subject contract.

17. As regards the first issue, it is the case of the petitioner that the commencement and completion of the subject project was stipulated for

06.05.2013 and 05.11.2014, respectively, however, the work actually O.M.P. (COMM) 60/2025 Page 6 of 17 Signed By:GAUTAM ASWAL Signing Date:20.05.2025 17:06:55 Signature Not Verified commenced on 24.08.2013 and was completed on 30.04.2017. Therefore, there was a delay of 1003 days, out of which concededly, respondent/claimant was not responsible for 326 days, however, the remaining 677 days of delay were attributed to the respondent/claimant. In the meantime, is stated that 8 EoTs were granted respondent/claimant by the petitioner, keeping in view the prevailing situation in the Kashmir valley and the related difficulties faced by the respondent/claimant. It is contended that the petitioner duly issued notices of non-compliance and delay in terms of Clause 15.1 of the General Conditions of Contract (hereinafter, „GCC‟), which were not acknowledged by the respondent. Consequently, in line with the decision of the Tender Approval Committee (TAC) held on 03.08.2017, the petitioner was constrained to impose LD of 10% of the final contract amount upon the respondent, as stipulated in Clause 8.7 of the subject contract, which expressly provided for damages at the rate of 0.05% of the final contract price for each day of delay, with a ceiling of 10%. It is further pointed out that the AT has failed to adjudicate as to which party the delay was attributable to and it is contended that without delving into the same, the AT could not have fairly dealt with the question of LD, thus, there was a non-application of mind on part of the AT in terms of Issue Nos. 1 and 2.

18. Moreover, it is contended that the AT erred in concluding that, in the context of public contracts, government or government agencies do not suffer any loss or damage due to delays in construction. In support of his contention, reliance is placed on the decision of this Court in Cobra O.M.P. (COMM) 60/2025 Page 7 of 17 Signed By:GAUTAM ASWAL Signing Date:20.05.2025 17:06:55 Signature Not Verified Instalaciones Y Servicios, S.A. & Shyam Indus Power Solution (P) Ltd. v. Haryana Vidyut Prasaran Nigam Ltd.1 which in turn relied on the decision of Supreme Court in Construction & Design Services v. DDA2. It is further submitted that Clauses 8.7 and 14.15(b) of the GCC form genuine pre- estimate between the parties for relief and that the petitioner is entitled to damages even in the absence of proof of loss on the basis of the ceiling limit provided in the aforesaid clauses. It is stated that the AT has completely disregarded the fact that both parties had admitted that the project was delayed by 1,003 days, and that Clauses 8.7 and 14.15(b) of the subject contract specifically provided for the imposition of damages in the event of such delays.

19. Per contra, the respondent defends the impugned award and submits that it has been rightly held by the AT that no Counter claim related to liquidated damages was ever pleaded and that the petitioner attempted to merely unilaterally adjust it against the undisputed claims of the respondent, without taking the respondent‟s consent. It is also submitted that up till the subject project was completed and handed over, no LD was imposed and that the petitioner‟s stand of adjusting the LD against the admitted claims came for the first time at the stage of filing of the SOD and Counter claims.

20. It is further submitted that, for the sake of argument, if challenge against Issue Nos. 1 and 2 was to be considered, the damages contemplated under Clause 8.7 are in the nature of penalty and not liquidated damages, contrary to the petitioner‟s submissions. Attention of this Court is drawn to Clause 8.7 of GCC as well as Section 8 of the Particular Conditions of 1 2024 SCC OnLine Del 2755. 2 (2015) 14 SCC 263. O.M.P. (COMM) 60/2025 Page 8 of 17 Signed By:GAUTAM ASWAL Signing Date:20.05.2025 17:06:55 Signature Not Verified Contract (PCC) (Part A – Contract Data), wherein in the case of delay damages, Clauses 8.7 and 14.15(b) are referred to and it is mentioned that the said delay damages would be charged at 0.05% of the final contract price per day and in case of previous milestones not being achieved during the subsequent milestones, the penalty will continue alongwith penalty for non- achieved milestones till it is achieved. Thus, it is submitted that the word “penalty” is specifically used in the context of damages under Clause 8.7.

21. Moreover, it is an admitted fact that 8 EoTs were granted by the petitioner to the respondent. However, it is the respondent‟s case that the first 7 EoTs were granted without imposition of LD for the delay, and that the same resulted in condoning the delay as the alleged delay was beyond the control of the respondent due to the unrest and inclement weather in Kashmir Valley. The same was also duly communicated to the petitioner vide multiple letters/communications. Reference is specifically made to the 8th EoT, i.e., the final EoT granted, whereby, for the first time, a delay of 677 days was stated to be directly attributed to the respondent and liable for damages and an imposition of damages at the rate of 0.05% per day up to 10% of the contract amount was recommended. It is also pointed out that even in the 8th EoT, no loss was mentioned to be suffered by the petitioner which can justify the imposition of LD. While placing reliance on decisions of the Apex Court in Kailash Nath Associates v. DDA,3 Fateh Chand v. Balkishan Dass,4 and Maula Bux v. Union of India,5 as well as decisions of