ENNORE PORT LIMITED Vs. HCC

JUDGEMENT

(1.) The petitioner herein, the Ennore Port Limited, was the applicant before the arbitral tribunal.

(2.) The Chennai Port Trust was appointed as an executing agency by the Government of India for the construction of Ennore Coal Port located near the Ennore Creek. The petitioner herein awarded the contract for the construction of the breakwaters for the Ennore Port Project to Hindustan Construction Company Limited and Van Oord ACZ, a Dutch company as a joint venture contract. The agreement was entered into on 22.08.1997. The work to be executed comprised of construction of two rubble mound type breakwaters approximately of total length of 4 km. in water depths up to 12m CD partly with Accropode armouring units. The total cost of the work entrusted was to the tune of Rs. 2,32,86,74,685. The date of completion was stated to be 15.08.2000. The contract contemplated supply of rock by the petitioner from the Port site for the breakwater construction. The contractor was to use the rock supplied by the petitioner kept in the stock pile in the port yard. The term of the agreement was that on the removal of the rocks from the stock pile on the basis of the weight measured in the weigh bridge kept, the cost of the rock would be calculated at the rate of Rs. 250 per tonne and deducted from contractor's monthly statements. The payments to the contractor were governed by the provisions set out in the conditions of particular applications on the basis of volume of the rock determined in accordance with the measuring principles enunciated in the contract. Although, the petitioner contended that the C-l contract pertaining to the supply of the rock from the Karaikal quarry to the port trust stock pile was made by the contractor as a proprietary concern, it is an admitted fact that the supply of rock under a separate contract and the execution of the work under the C-4 contract with which the contractor was concerned had nothing to do with the supply contract.

(3.) The first respondent herein (hereinafter referred to as 'the contractor') made a claim for additional cost incurred on account of increase in the specific density of the rock provided by the petitioner herein from the stock pile. The contractor took the stand that the density of the rock used in the contract differed from the rock density average specified at 2.60 tonnes/cubic metre given at the time of tender on which basis alone the pricing was done by the contractor. Consequently, the increased tonnage of rock consumed led to higher recovery. In terms of Clause 67, the contractor sought a reference of the dispute arising on account of the density issue to the Dispute Review Board (hereinafter referred to as 'DRB') claiming refund of the amount of Rs. 10,07,36,760. By proceedings dated 24.03.2001, the Dispute Review Board recommended payment of amount of Rs. 4,75,29,491 with interest at 18% payable to the contractor. The petitioner herein did not accept the recommendations of the Dispute Review Board. Hence, as provided under the contractual terms, the arbitration clause was invoked at the instance of the petitioner herein. The contractor also invoked the arbitration clause having regard to the fact that the petitioner failed to respect the recommendations of the DRB. Accordingly, on 31.03.2001, the contractor submitted his claim before the arbitral tribunal making a specific plea as to whether specific density could form a vital specification under the contract. It is stated that in the meantime, in terms of Sec. 43(3) of the Arbitration and Conciliation Act, 1996, the petitioner approached this court to condone the delay in invoking of the arbitration clauses under the contract. On the delay condoned by this court, the petitioner filed the statement of claim before the arbitral tribunal.