IRCON INTERNATIONAL LIMITED Vs. JAIPRAKASH ASSOCIATES LTD

JUDGEMENT

(1.) The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 ("the Act") challenges the impugned award dated 15th April, 2010 whereby the Ld. Sole Arbitrator has awarded the claims raised on behalf of M/s. Jaiprakash Associates Ltd. (hereinafter "the Contractor") against IRCON International Limited (hereinafter "IRCON").

(2.) Ircon awarded contract dated 15th March, 2004 to the Contractor, for "construction of civil works including tunnels, bridges, earthwork etc. in Zone-III (KM 134-142) of Laole Quaziund Section of Udhampur, Srinagar, Baramulla New B.G Railway Line Project ('work')." The total period for completion of the work was 36 months. However, it is the admitted position that during the said period, the Contractor could execute a part of the work, to the tune of Rs. 26.44 crores as against the total project cost of Rs.168.46 crores. Due to the slow progress of work, IRCON issued a show cause notice on 12th January, 2007. In response to this show cause notice, the Contractor replied on 18th January, 2007 and alleged that the delays were due to IRCON's breaches, including non-handing over of the site in time, not providing safe working conditions in terrorist affected areas etc. The Contractor, thus, requested for an extension of 840 days without levy of penalty, subject to certain conditions. These conditions were not found to be acceptable to IRCON and, accordingly, the parties agreed for a time extension of 3 months without levy of liquidated damages. Thereafter, correspondence was exchanged between the parties and IRCON on 22nd February, 2007 suggested foreclosure of the contract on some conditions. A counter proposal was received from the Contractor on 1st March, 2007 for foreclosure. Finally, the parties signed a 'foreclosure document' on 29th/30th March, 2007 agreeing to foreclosure. As per the foreclosure document, IRCON agreed to reimburse 'a reasonable claim' of expenditure incurred towards mobilisation etc. Pursuant to the foreclosure document, the Contractor raised several claims in respect of the expenses incurred by it, for which it claimed reimbursement on 29th May, 2007. The claims raised were to the tune of Rs. 35.71 crores. The claims were rejected by IRCON on 23rd July, 2007 and on 3rd October, 2007, the Ld. Sole Arbitrator was appointed to adjudicate the dispute between the parties.

(3.) Before the Ld. Arbitrator, the main claims raised were in respect of reimbursement of expenditure incurred, loss of profit and other losses incurred by the Contractor. The Ld. Arbitrator awarded a sum of Rs.16.97 crores towards compensation and Rs.4.85 crores as interest. The counter claims raised by IRCON were rejected. The operative portion of the award is set out hereinbelow.