Excelsior Correspondent
JAMMU, Mar 22: In a major relief to the State in the Mughal Road arbitration case, the State High Court has quashed the order of trial court whereby huge amount was awarded in the favour of Hindustan Construction Company Ltd (HCCL) and directed for deciding the cash afresh within a period of three months.
The brief facts of the case are that on February 8, 2006 the Government entered into an agreement with HCCL for execution of Mughal Road project within a period of three years—upto February 28, 2009. The total contract price as per the original agreement was Rs 214,40,00,000.
In the agreement, it was mentioned that in the event of ‘compensation events’ or ‘delays in completion of the works, the contractor will be entitled to ‘extension of time’. On January 25, 2010 a supplementary agreement was executed whereby date of completion was fixed as March 31, 2011 and the value of supplementary agreement was fixed Rs 126,64,00,000. Because of different reasons the contractor was granted extension of time thrice and finally HCCL completed the work on February 15, 2012.
The agreement executed between the parties, contained the arbitration clause and the dispute between the parties was referred to the Arbitral Tribunal comprises of three Arbitrators. The Arbitral Tribunal delivered the award on December 28, 2014. The majority award was given by Presiding Arbitrator and another Arbitrator by which claim of the HCC in respect of one dispute was decreed and a sum of Rs 78,92,73,307 was awarded along with interest, whereas another Arbitrator gave a dissent award and awarded a sum of Rs 41.1641 crore.
Aggrieved over this decision, the State filed an objection before the trial court on March 23, 2015 in which challenge was made to the award on various grounds. However, the trial court while taking into consideration the supervisory role of court under Section 34 of Arbitration and Conciliation Act, 1997 for review of award to ensure fairness, said that award of Arbitral Tribunal was not against the public policy and the arbitrator has not gone beyond the terms of the contract.
Thereafter, the State filed an arbitration appeal in the High Court challenging the decision of the trial court.
During the course of arguments, Advocate General Jahangir Iqbal Ganai submitted that the trial court ought to have appreciated that the impugned award dated 28.12.2014 was contrary to the specific terms of the contract insofar as it deals with the extended period of contract. “The impugned award is patently illegal as the issues have been decided in cursory and perfunctory manner by the Tribunal. The inference has been drawn from the document which is not legally permissible”, he added.
On the other hand, Senior Advocate Muzaffar Hussain Beigh appearing for HCCL referred to the award in extenso and submitted that the Tribunal has explained the difference between the price adjustment/ escalation of cost and time related costs and has also dealt with legal basis of the claim and entitlement to additional costs under various sub-heads.
“The award is well reasoned, coherent on facts, consistent on reasoning, based on undisputed evidence of documents and is guided by binding judicial precedents. Moreover, the parties were given full opportunity to present their cases and due consideration has been given to the material available on record and the appellant has failed to substantiate the plea that the award in question violates any ingredients of public policy or the same suffers from legal infirmity”, he added.
After hearing Advocate General Jahangir Iqbal Ganai assisted as Deputy AG Ehsan Mirza appearing for the State whereas Senior Advocate Muzaffar Hussain Beigh (who is MP of PDP) with Advocate Aruna Thakur appearing for the Hindustan Construction Company Ltd, Justice Alok Aradhe quashed the trial court (District Court Shopian) order dated April 2, 2016 and the matter was remanded to the trial court to decide the same afresh by taking into account the grounds raised by the Government by a speaking order.
“To cut short the delay, the trial court shall decide the objections preferred by the appellant after hearing both the parties within a period of three months”, the High Court directed.
“It is evident that the objections raised by the appellant to the impugned award have not been adjudicated upon by the trial court. One of the claims has been dealt with by the trial court in a casual and perfunctory manner which exhibits non-application of mind”, High Court said, adding “the impugned order insofar as it pertains to claim No.2 is cryptic and suffers from vice of non-application of mind”.
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