THDC INDIA LTD. Vs. JAIPRAKASH ASSOCIATES LTD.

JUDGEMENT

(1.) This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") has been filed by the petitioner challenging the Arbitral Award dated 14.04.2016 passed by the Arbitral Tribunal adjudicating the disputes that have arisen between the parties in relation to the Agreement for "Construction of Tehri Dam and Associated works" dated 24.01.1997 executed between the parties.

(2.) The dispute between the parties was confined to a narrow compass. In terms of Clause 36 of the General Conditions of Contract (GCC),the respondent was entitled to a Price Adjustment for increase or decrease in rates of raw material, labour etc. The Price Adjustment was to be calculated quarterly but was to be paid once a year to the respondent. Clause 36(i)(f) of the GCC further stated that the Base Date for indices for price adjustment shall be 01.04.1996. Admittedly the petitioner made entire payment including the Final Bill to the respondent on the basis that, as the indices as on 01.04.1996, that is, a specific date, were not available, for indices of labour, All India Consumer Price Index for Industrial Workers, General Index published in the Indian Labour Journal of Labour Bureau, Ministry of Labour, Government of India, for the months of March, 1996 and April, 1996 would be relevant and an average was take to determine the same. Equally, for the construction material, the Average Index Number of Wholesale Price in India for all commodities published by Economic Advisor, Ministry of Industries, Government of India, New Delhi, for the last week of March, 1996 and first week of April, 1996, was taken with certain modification. The Final Bill was paid to the respondent on 06.03.2009 and the Bank Guarantees as well as the Retention Money were also released to the respondent. By a letter dated 15.11.2010, that is, after a period of more than 1 1/2 years, the petitioner called upon the respondent to pay an amount of approximately Rs.9.06 crores, claiming that the basis on which the payment of Price Adjustment had been made was incorrect. This claim was based on the interpretation put by the petitioner on Clause 36(i)(f) to the effect that the Price Index for labour and material being published on monthly basis, index published for the month of April, 1996 should have been considered while making payment for the Price Adjustment under Clause 36 of the GCC. As this was objected by the respondent, the disputes were referred to the Arbitral Tribunal.

(3.) The Arbitral Tribunal consisted of three members and almost on all the issues, the majority opinion was rendered by a ratio of 2:1. As far as the interpretation of Clause 36 is concerned, the majority of the Arbitral Tribunal agreed with the interpretation of the clause sought to be placed by the petitioner that the monthly Index published for April, 1996 was to be taken for determining the claim of Price Adjustment on labour under Clause 36 of the Agreement. The Arbitral Tribunal further held that the interpretation to Clause 36 adopted in 1998 was ad-hoc in nature or made under a mutual mistake. The majority disagreed with the submission of the respondent that upon payment of the running bills on a different basis and the subsequent conduct of the parties, a new contract by sub-silentio came into existence. It further did not agree with the respondent that the payment so made created any rights in favour of the respondent or disallowed the petitioner for making recovery of such amount. The claim of the petitioner was also held not to be barred by law of limitation. However, the majority agreed with the submission of the respondent that by raising a demand of such amount in March/April, 2008 and thereafter not pursuing it any further, but in fact making the payment of the Final Bill, releasing the Performance Bank Guarantee and the Retention Money, the petitioner waived its rights that it had for seeking a recovery of such amount.