GAIL INDIA LIMITED FORMERLY KNOWN AS GAS AUTHORITY OF INDIA LTD Vs. HINDUSTAN CONSTRUCTION CORPORATION

JUDGEMENT

(1.) GAIL (India ) Ltd. (formerly Gas Authority of India Limited) (hereafter 'GAIL') has, in this petition under Section 34 of the Arbitration and Conciliation Act, 1996 ('Act') challenged an Award dated 11 th August 2003 passed by the learned Sole Arbitrator in the dispute between GAIL and Hindustan Construction Corporation ('HCC').

(2.) On 6 th July 1994 GAIL awarded HCC a contract for upgradation of the Auraiya Gas Compressor Station for HBJ Pipeline. The contract was to be completed by 27 th February 1995. However, the contract was actually completed on 31 st October 1996 with a delay of about twenty months. It is claimed by GAIL that HCC was not serious about the execution of the job awarded to it and various notices/letters were issued to HCC by GAIL, and also by Engineers India Ltd. ('EIL') who were the Engineer-in-charge of the project. It is stated that under Clause 27 of the General Conditions of Contract ('GCC'), GAIL was entitled to liquidated damages ('LD') for the delay in HCC completing the work. GAIL states that after great persuasion HCC completed the work on 31 st October 1996 and submitted its final bill. Since HCC had already submitted its 'no claim certificate' ('NCC') while requesting extension of the period of conclusion of contract by the letter dated 7 th March 1997, GAIL by its letter dated 14 th January 1998 requested HCC to submit a fresh NCC. This was done by the HCC on 16 th January 1998. GAIL claims that apart from the above NCC, HCC also issued another letter dated 16 th April 1999 nearly fourteen months after the receipt of the final payment confirming that no further amount is due to it under the contract in question.

(3.) According to the GAIL, under Clause 91 (i) of Volume I of GCC, HCC had to raise any objection as regards payments due to it by giving a written notice within ten days of the final payment. However, HCC for a period of over 1 years, after receipt of final payment, did not raise any claim. On 6 th October 1999 HCC filed its claims before the learned Arbitrator. GAIL in its reply raised the question of maintainability of the claim on the ground that HCC had on two occasions, i.e., 7 th March 1997 and 16 th July 1998 submitted NCCs voluntarily. Further, at the time of acceptance of the final payment, no protest had been raised by HCC. The claim was also resisted on merits.