Overview
In this case, the Delhi High Court came before a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996. The petitioner, National Highways and Infrastructure Development Corp. Ltd. (NHIDCL), challenged an award dated 2 January 2023, which was passed in the favour of the respondent.
The dispute arose in relation to the suspension of consultancy services to a highway project relating to Zojila tunnel. It was held by the arbitrator that the suspension which was imposed by the petitioner was illegal and ?5.44 crores were awarded for the period of suspension along with cost for litigation and interest.
It was on the High Court to determine whether the award suffered from any perversity warranting interference under Section 34 of the Act.
Facts of the Case
A contract agreement on 22 February 2021, was entered into by both the parties. The respondent, Intercontinental Consultants, was appointed as the authorities engineer for supervising work pertaining to Zojila tunnel project and the roads connected through the same.
On 9 April 2021, the petitioner suspended the services of the respondent soon after the project commenced and a show cause notice for termination was issued which alleged fraudulent practices during the bidding process.
This was challenged by the respondent which proposed re-tender proceedings before the Delhi High Court through a petition. During the proceedings, the petitioner agreed to revoke the fresh tender process and allowed the respondent to continue with the contract and the suspension was withdrawn on 22 September 2021.
Following the same, disputes arose as to payments which were claimed for the suspension period between April and August 2021. The arbitration proceedings were initiated by the respondent seeking payment as to withheld dues and compensation for the period of suspension.
It was held by the arbitrator that the suspension was not covered under Clause 2.8 of the General Conditions of Contract and therefore did not have any contractual basis. Compensation, litigation costs, and interest was thereby awarded in favour of the respondent. Aggrieved by the same, the petitioner approached the Delhi High Court under Section 34 of the Act.
Legal Issues
Decision
The petition was dismissed by the Delhi High Court and the award was upheld in its entirety. The Court agreed with the arbitrator as to the suspension being illegal because Clause 2.8 was the only provision which permitted the suspension and admittedly did not apply in the present case. It was further observed by the Court that once the petitioner revoked the suspension and allowed the continuation of work, argument as to the bona-fide vigilance lost its relevance.
The Court also noted that the respondent had produced records such as attendance registers, hotel records, vehicle logbooks, etc. showing the continued presence at the site of the project. These were never specifically disputed by the petitioner.
It was held that an arbitral award is not expected to give a certain resemblance to a court judgement as long as the reasoning is intelligible and clear.
Finding no perversity in the opinion of the arbitrator, the Court refused to interfere with the award, including the grant of compensation, costs as to litigation and interests.
Case Reference :- National Highways and Infrastructure Development Corporation Limited Vs. Intercontinental Consultants and Technocrats Private Limited O.M.P. (Comm) 173/2023, I.A. 8628/2023, I.A. 10083/2023 and I.A. 21689/2025 (SJB, Before Avneesh Jhingan, J.)
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