Award

AWARD
1. CONSTITUTION OF THE Tribunal
1.1 The Hon’ble High Court of Delhi, in Arbitration Petition being Arb.
P. No. 632 of 2017, passed an order dated 13.08.2020 vide which it
appointed the undersigned as the Sole Arbitrator to adjudicate upon
the dispute between the Parties herein.
1.2 It would be relevant to mention here itself that when the disputes
arose between the parties, the Claimant made a request dated
06.03.2016 to the Respondent to consider its various claims raised
vide its letter dated 15.01.2016 and refer the same for adjudication
by the Disputes Resolution Committee (DRC). Such a request was
made having regard to Clause 46 of the Special Conditions of
Contract (SCC), which provides for settlement of disputes by the
DRC comprising of representatives of the Claimant and the Chief
Engineer, MCD. DRC was constituted which held the proceedings
on several dates. It gave its decision on 29.05.2017 directing the
Respondent to pay an amount of INR 69,13,247 and INR 11,15,841
along with interest @ 7.5% p.a. with effect from 24.09.2015 to the
Claimant. This order was, however, signed only by the Chief
Engineer of the Respondent as the representative of the Claimant
refused to accept the aforesaid decision and sign the same.
According to the Claimant, the disputes remained unresolved and
therefore, it sent the notice dated 03.06.2017 to the Respondent
invoking the Arbitration Agreement. The Respondent, however, did
not appoint an Arbitrator because of which the Claimant filed the
Petition under section 11(6) of the Act before the High Court. It is
in this petition, as mentioned above, the matter was referred to the
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present Arbitrator. It may be mentioned that one of the issues
raised by the Respondent in contesting the said petition was that
Clause 46 of SCC on which reliance was placed by the Claimant for
invoking arbitration, could not be construed as an Arbitration
clause. In nutshell, it was argued that there was no Arbitration
Agreement and therefore, the petition was not maintainable. This
objection was repelled by the Hon’ble High Court in its order dated
13.08.2020 while allowing the petition and constituting the present
Arbitral Tribunal.
1.3 In the first procedural hearing held on 07.09.2020, the Learned

Counsel for the Respondent made a statement to the effect that the
Respondent was intending to challenge the aforesaid order of the
High Court. This statement was taken on record. It is a matter of
record that a Special Leave Petition was filed in the Hon’ble
Supreme Court of India in the matter, which stood dismissed on
05.01.2021.
2. ARBITRATION PROCEEDINGS
2.1 After receiving a copy of the order dated 13.08.2020 passed by the
Hon’ble High Court of Delhi, the Arbitral Tribunal issued notice
dated 25.08.2020 to the parties notifying them that the first
procedural hearing shall be conducted on 07.09.2020 at 4 p.m. It
was decided to conduct the hearing via video conferencing as
physical hearing was not possible due to Covid -19 pandemic. It may
be stated that all the hearings thereafter were also conducted in
virtual mode upto the stage of final arguments, with the consent of
the parties.
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2.2 In the procedural hearing held on 07.09.2020, the time table for
completion of pleadings was fixed. The procedure for conduct of the
arbitral proceedings was also laid down in consultation with the
learned Counsel for the parties. The Arbitrator also gave
declaration under Section 12 of the Arbitration and Conciliation Act
1996 (the Act). On the completion of pleadings, second procedural
hearing was conducted on 23.11.2020.
2.3 In the meantime, the Claimant filed an application under Section 17

of the Act and arguments on that application were heard on that
date (order in that application was pronounced on 04.12.2020). In
this second procedural hearing, Counsel for both the parties also
stated that there was no need to lead any oral evidence as the matter
could be argued on the basis of documentary evidence. In that view
of the matter, the dates for final hearings were fixed from 06.01.2021
onwards. The final arguments hearings in the matter commenced
on 06.01.2021 when Mr. Sachin Datta, Learned Senior Counsel for
the Claimant started his arguments. His arguments continued on
16.01.2021 and he concluded his arguments on the next date i.e.,
19.02.2021. Mr. Sandeep Bajaj, Learned Counsel for the
Respondent commenced his arguments on 19.02.2021. He argued
the matter on 20.02.2021 also, on which date he completed his
arguments. Rejoinder arguments of the Claimant were heard on
08.03.2021 and on that day, the Award was reserved.
2.4 The Counsel for the parties had requested for three weeks time to
file their written submissions as well which opportunity was
granted. The Respondent submitted its written arguments vide e-
mail dated 07.04.2021 and the Claimant filed its written
submissions on 08.04.2021. Here it may be mentioned that while
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reserving the Award, the Arbitral Tribunal directed the parties to
deposit the balance arbitral fee within three weeks. However, this
fee was not deposited for substantial time. Vide communication
dated 14.05.2021, the Arbitral Tribunal communicated to the parties
that the Award is likely to be pronounced within May 2021 and
directed both the parties to deposit the balance fee immediately.
Without going into the details, it may be mentioned that the
Claimant, thereafter, deposited the balance fee on 21.05.2021 and
the Respondent has remitted its share of fee on 26.06.2021,
intimation whereof was given by the counsel for the Respondent on
29.06.2021. Accordingly, this Award is being pronounced.
3. CASE OF THE CLAIMANT
3.1 In the Statement of Claim filed by the Claimant, it has given its own
version of factual matrix in detail. However, those facts which are
necessary for adjudication of the claims are noted while stating the
case of the Claimant.
Nature of Work
3.2 The Claimant received a Letter of Acceptance (“LOA”) dated

14.08.2012 stating that value of the contrat would be INR
163,20,52,681/-, from the Respondent upon acceptance of the bid
submitted by the Claimant on 30.01.2012 in the tender dated
23.12.2011, according to which the effective date of start of the
Contract was calculated to be 08.09.2012. The due date of completion
of the work was calculated to be 10.03.2014. The work order was
given to the Claimant on 11.09.2012 and Clause 13 of the
Instructions to Bidder (“ITB”) required that the site full or in parts
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for the work shall be made available at the time of issuance of work
order.
3.3 The Claimant submits that it had taken all the necessary steps to
mobilize the resources at site with the intention to complete the
work and achieve the desired progress as per the milestones
mentioned in the Contract. However, the work could not be executed
at the desired speed pursuant to various reasons beyond the control
of the Claimant which, inter- alia, include unavailability of full site
pursuant to Clause 13 of the ITB, which led to underutilization of
Plant and Machinery and manpower and other deployed resources
until 15.10.2015.
3.4 The reasons attributed by the Complainant for subsequent delays

are:
i) Delay in issuance of Drawings by the Employer;
ii) Delay in removal of encroachment;
iii) Non-availability of tree cutting permission;
iv) Delay and financial loss due to obstruction created by DDA in
major part of the scope of work;
v) Non-availability of site for batching plant/yard for steel,
cement and other material;
vi) Delay due to non-availability of clear site – other contractor
work;
vii) Delay in deployment of third-party inspecting agency;
viii) Non-availability of drawing for parallel work – Road/drain
etc.;
ix) Delay in shifting of utilities;
x) Clearance and handing over of piecemeal front;
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3.5 When the project was underway, vide letter dated 21.10.2013 of the
Respondent, the Claimant was informed not to execute any further
work at the site as the National Green Tribunal (NGT) had passed
restraint order dated 21.10.2013 in this behalf. On various
occasions, the Claimant expressed the difficulties in commencement
of works and underutilization of resources at site, the particulars of
which may not be necessary. Suffice is to mention that upon
exchange of various correspondence between the Parties, extension
was granted until 06.07.2014. The contract was further extended
till 30.09.2014 vide letters of the Respondent dated 14.02.2014 and
30.06.2014.
3.6 The NGT by its Final Order dated 13.01.2015 held that no
construction is permissible on the drain, subject matter of the
present Contract which led the Respondent to close the Contract
under Clause 13 vide letter dated 23.09.2015. The Claimant objected
and submitted that the Respondent had failed to mitigate the losses.
3.7 Disputes arose between the Parties which were sought to be

adjudicated by Dispute Resolution Committee (“DRC”) which
passed an Order dated 29.05.2017. Thereafter, the Claimant served
the notice of arbitration dated 03.06.2017, hence, the present
proceedings.
4. CLAIMS OF THE CLAIMANT
The Claimant claims financial compensation for the suspension of

work from 08.09.2012 till 15.10.2015, and its aftermath and has
accordingly put forth the following claims:
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4.1 Claim No. 1: Compensation towards idling of Plants and
Machinery.
The Claimant claims a total compensation of INR 26,80,10,995 [INR

6,56,69,160/- (Claim No. 1A) + INR 20,23,41,835/- (Claim No. 1B)].
The Claims 1A and 1B as raised by the Claimant are in the following

manner:
4.1.1 Claim No. 1A: Unrecovered Plant & Machinery cost due to
underutilization from 08.09.2012 to 21.10.2013.
i) The Claimant claims an amount of INR 6,56,69,160/- as dry hire
charges and underutilization of the Plant & Machinery.
ii) The Claimant submits that despite the mobilisation of Plant &
Machinery on the site, there was slow progress of works due to
the reasons attributed to the Respondent. The number of Plant
& Machinery deployed was arrived on basis of Monthly Progress
Reports. The deployed Plant & Machinery has resulted in
productivity of 22.21% and 77.79% has been stated to be the
underutilization percentage.
iii) To compute the abovementioned amount, the underutilization
percentage is multiplied with the total cost of Plant &
Machinery and is further quantified along with an interest of
12% p.a.
4.1.2 Claim No. 1B: Unrecovered cost of Plant & Machinery due to
idling in suspended period from 21.10.2013 to 15.10.2015
i) According to the Claimant, the Respondent has failed to
mitigate the losses for resources and material lying idle at the
site, hence claims an amount of INR 20,23,41,835/- as
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compensation for the period of suspension i.e., from 21.10.2013
to 15.10.2015.
ii) The quantum of compensation has been calculated on basis on
available Plant & Machinery on the Project site. It is further
quantified along with an interest of 12% p.a.
4.2 Claim No. 2: Compensation towards cost of labour incurred

during the suspension period from 21.10.2013 to 15.10.2015
i) The Claimant claims an amount of INR 3,71,62,914/- towards
reimbursement of total cost towards labours available during
the period of suspension, i.e., from 21.10.2013 to 15.10.2015.
ii) According to the Complainant, the computation of the
abovementioned price is made as per the Minimum wages
notification pertaining to Industrial Workers for construction or
maintenance of Roads or Runways or in Building Operations
etc. for Area ‘A’ (Delhi).
4.3 Claim No. 3: Compensation for SITE OVERHEAD EXPENSES

excluding Head Office and Regional Office expenses:
i) The Claimant submits the Site Overheads to be the costs
incurred for running the Project including costs for
Employee/staff salary & allowance, insurance charges, Bank
Guarantee charges, office maintenance, guest house rents, site
expenses, security expenses, vehicle running expenses etc.,
which were submitted to be time related.
ii) The Claimant claims a total amount of INR 34,40,86,690/- as
claimed under the following subheads:
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4.3.1 Claim No.3A: Unrecovered Site Overheads during the period
from 08.09.2012 to 21.10.2013
1) The Claimant claims the unrecovered portion of Site Overheads
amounting to INR 7,77,18,414/- for this period.
2) The Claimant has computed the claim using the Emden
Formula. The average yearly Site Overhead cost of
Infrastructure division for Financial years 2012-13 and 2013-14
constituted 6.69% of the turnover achieved by Infrastructure
division. An additional time of 8.18 months was taken to
complete the work. The quantum is noted to be the difference of
total site overheads and Site overheads recovered through
actual work done along with 12% interest.
4.3.2 Claim No.3B: Compensation of Site Overheads cost during

the period of suspension from 21.10.2013 to 19.01.2015
1) The Claimant claims the unrecovered Site Overheads for the
aforementioned period (14.96 months) amounting to INR
16,03,73,042/-.
2) According to the Claimant, the average yearly Site Overhead
cost of Infrastructure division for Financial years 2013-14 and
2014-15 constituted 10.07% of the turnover achieved by
Infrastructure division. The computation of the claim was using
the Emden Formula, considered to be 75% of 10.07%,
amounting to 7.55%. It is further quantified along with an
interest of 12%.
4.3.3 Claim No.3C: Compensation of Site Overheads cost during

the period of suspension from 19.01.2015 to 15.10.2015
i) The Claimant claims unrecovered Site Overheads for the
aforementioned period (8.84 months) amounting to INR
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10,59,95,234/-. The basis of Turnover and Site Overhead
expenses are the certificates issued by an Independent
Chartered Accountant.
ii) According to the Claimant, the average yearly Site Overhead
cost of Infrastructure division for Financial years 2014-15 and
2015-16 constituted 16.89% of the turnover achieved by
Infrastructure division. The computation of the claim was using
the Emden Formula, considered to be 50% of 16.89%,
amounting to 8.45%. It is further quantified along with an
interest of 12%.
4.4 Claim No.4: Head Office and Regional Office Overhead

Expenses as per Emden Formula:
The Claimant claims the costs incurred by the Regional Office and
the Head Office of the Claimant which, according to the Claimant
were to be recovered by generating revenue received upon the
execution of the work.
The Claimant claims a total amount of INR 18,16,00,558/- under the

following subheads:
4.4.1 Claim No.4A: Unrecovered Regional Office & Head Office

Overheads due to under-utilization during the period from
08.09.2012 to 21.10.2013:
i) The Claimant claims compensation under this head amounting
to INR 5,32,60,097/-. The basis of the turnover and the claimed
costs is the certificate issued by an independent Chartered
Accountant.
ii) According to the Claimant, the average yearly Regional and
Head Office Overhead cost of Infrastructure division for
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Financial years 2012-13 and 2013-14 constituted 4.59% of the
turnover achieved [Head Office percentage: 3.29% and Regional
Office percentage: 1.29%]
iii) The compensation has been claimed for an additional time of
8.18 months, which, according to the Complainant was not a
time attributable to itself. The computation of the claim was
using the Emden Formula and was further quantified along
with an interest of 12%.
4.4.2 Claim No. 4B: Unrecovered Regional Office & Head Office
21.10.2013 to 19.01.2015:
Accountant.
iii) The compensation has been claimed for the suspension period
of 14.96 months, which, according to the Complainant was not
a time attributable to the itself. The computation of the claim
was using the Emden Formula, considered as 75% of 5.22%,
amounting to 3.92% and was further quantified along with an
interest of 12%.
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4.4.3 Claim No. 4C: Unrecovered Regional Office & Head Office
19.01.2015 to 15.10.2015:
Accountant.
iii) The compensation has been claimed for the suspension period
of 8.84 months, which, according to the Complainant was not a
time attributable to itself. The computation of the claim was
using the Emden Formula, considered as 50% of 7.20%,
amounting to 3.60% and was further quantified along with an
interest of 12%.
4.5 Claim No.5: Loss of Profits

i. According to the Claimant, the foreclosure of the Contract has
resulted in loss of profits and business opportunity. The work
completed was reduced by INR 136.20 Cr in Contract Price. The
Claimant, claiming compensation on such amounting,
amounting to INR 7,74,39,924/- relies on the Loss of Profit to be
a form of damages under Section 73 of the Indian Contract Act,
1872.
ii. The Claimants submits the use of Hudson’s formula, i.e., profit
percentage multiplied by the reduced Contract sum, along with
12% interest. The average profit percentage of the Claimant is
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considered as average of the profit percentage earned during the
period from FY 2009-10 to FY 2011-12 as certified by
Independent Chartered Accountant.
4.6 Claim No. 6: Compensation for cost unrecovered due to fall

in market price of reinforcement Steel:
i. The Claimant claims compensation under this head in the
tune of INR 1,08,22,546/-
ii. According to the Claimant, reinforcement steel could not be
utilized due to suspension and subsequent foreclosing the
Project. The cost remained unrecovered due to a drastic fall in
the price of reinforcement steel. This claim was also put forth
before the DRC which was accepted and recommended an
amount of INR 69,13,247 to the paid by the Respondent, vide
letter dated 29.05.2017.
In totality, the Claimant has sought and prayed before the Sole
Arbitrator to pass an award in the sum of INR 91,91,23,626/-, as
revealed from an addition of the above-mentioned Claims, along
with an interest of 15% for delay in making the timely payments, as
payable from the due dates of the aforementioned amounts to the
actual date of payment.
In addition to the aforementioned Claims, the Claimant submits the

Respondent to be liable to pay the cost of the present arbitration
proceedings along with the costs incurred in the execution
proceedings of the Award, as may be passed in the present
proceedings, the counsel’s fee, the Arbitrator’s fee, or any other
incidental costs attached to present or future proceedings of the
present arbitration.
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5. CASE OF THE RESPONDENT
5.1 In the Statement of Defence cum Counter Claim filed by the

Respondent, it submits that the Project was affected by the
directions of Hon’ble NGT due to no fault of the Respondent. The
preliminary objections and submissions filed by the Respondent are
noted in brief hereinbelow:
5.1.1 The Respondent challenges the jurisdiction of the present Tribunal

and contends the absence of an arbitration agreement between the
Parties. The Respondent further challenges the maintainability of
certain claims by contending that numerous claims of the Claimant
are beyond the scope of the Contract.
5.1.2 The Respondent has also challenged the veracity of the claims filed
by the Claimant, contending the same to be not maintainable being:
unsubstantiated and uncertified. It has been submitted that the
Claimant has merely estimated the claims without any basis by
placing reliance on one chartered accountant’s certificate and
balance sheets, for which, no evidence, proof of actual payment has
been shown. The Claimant fails to follow the procedure provided in
the Contract for certification. Apart from contending the above, the
Respondent also submits that almost all men and machinery was
removed by the Claimant after the order dated 21.10.2013 of the
NGT.
5.1.3 The Respondent submits that the Claimant has itself failed to meet
the prescribed milestones and the uncompleted work cannot be
attributed to the Respondent. In this behalf, the Respondent has
referred to Schedule F of the Tender which prescribed the Table of
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Milestones that were to be achieved by the specific dates and the
same reads as under :
Sl. Financial Time allowed Amount to be withheld in case of non-
No. Progress (from date of achievement of Milestone
start
1. 1/8th (of 1/4th (of whole In the event of not achieving the
whole work) work) necessary progress as assessed from the
2. 3/8th (of 1/2nd (of whole running payment, 1% of the tendered
whole work) work) value of work will be withheld for failure
3. 3/4th (of 3/4th (of whole of each mile stone. The withheld amount
whole work) work) may be released against bank guarantee/
4. Full Full FDR of the equal amount.
The Respondent also contends that in light of the stay order passed
by the NGT, according to the Respondent when no work was carried
out and there was no labour or staff deployed on sites and that the
Claimant has failed to mitigate the losses and unrequired expenses.
5.1.4 Apart from submissions challenging the merits and the jurisdiction,
the Respondent also challenges the permissibility of some claims as
being barred by limitation, by effect of not mentioning in the notice
of arbitration dated 03.06.2017, and by being blown out of proportion
in their quantification.
5.1.5 The Respondent also brings to the Tribunal’s notice that time is of
essence of the Contract as per Clause 40 of ITB and Clause 5 of GCC.
The Respondent further highlights that the Claimant has failed to
substantiate the reasons for delay.
5.1.6 The Respondent rejects its liability to pay interest by relying on

Clause 29 of the GCC, according to which, if any amount is withheld
by the Respondent in light of amounts due and payable by Claimant,
no interest can be claimed on the said sum. The Respondent also
highlights the inconsistency in claiming interest @12% and @15% in
the Statement of Claims.
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5.1.7 The Respondent has also given its detailed version/reply to each of
the claims. As those aspects were pointed out at the time of
arguments, the same would be taken note of while analysing the
claims.
6. COUNTER CLAIMS OF THE RESPONDENT
Instead, the Respondent counter claims from the Claimant the

following :
i. Refund of the mobilisation advance wrongfully not repaid by

the Claimant despite foreclosure of the Contract, amounting
to INR 7,14,22,487/-;
Insofar as this counter claim of the Respondent is concerned,

it is stated that the Claimant has failed to show the utilization
of the mobilisation advanced and is thus liable to return
interest-bearing Advanced Mobilisation fund. According to
the Respondent, the Claimant has already accepted the
liability for payment at 10% p.a. as per 10B of GCC. The same
is computed as follows:
Date Category Amount Paid Income Tax Other Cumulative
Deductions Payment
a) 04.12.2012 1st Mobili- 7,83,52,000/- 16,00,000/- 48,000/- 8,00,00,000/-
sation
Advance
b) 31.12.2012 2nd 5% 6,36,61,000/- 13,00,000/- 39,000/- 6,50,00,000/-
Mobilisation
Advance
TOTAL [A] 14,50,00,000/-
c) 15.10.2013/ 3rd RA Bill Amount Recovered in respect of the 3,16,30,000/-
27.03.2014 Mobilisation Advance
[INR 86,26,674/- +INR 2,30,00,000/- =B]
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Interest at the rate of 10% p.a. from 69,26,027/-
01.12.2012 to 15.10.2013 on 1st
Mobilisation Advance [C]
Interest at the rate of 10% p.a from 50,75,342/-
04.01.2013 to 15.10.2013 on 2nd
Mobilisation Advance [C]
d) 20.03.2017 4th RA Bill Net amount of 4th RA Bill [1] 4,21,37,206/-
Balance amount of mobilisation advance 11,33,73,326/-
upto 3rd RA Bill [2]
Amount Recovered on respect of the 1,51,06,827/-
Mobilisation Advance [3]
Interest at the rate of 10% p.a. from 1,86,367/-
16.10.2013 to 21.10.2013 on 1st
Mobilisation Advance [4]
Net amount 1-3-4 [5] 2,68,44,012/-
Balance mobilisation advance to be 9,82,66,499/-
recovered from the contractor as on
20.03.2017 (11,33,73,326-1,51,06,827) [6]
Balance amount to be recovered from 7,14,22,487/-
contractor after considering 4th RA Bill
INR 9,82,66,499-2,68,44,012 [7]
Interest for the period 21.10.2013 to 2,44,02,683/-
20.03.2017 ie 41 months on 1st Mobilisation
Advance [8]
Total amount due towards the contractor 9,58,25,170/-
as on 20.03.17 [9]
e) Principal Amount of outstanding Mobilisation Advance 7,14,22,487/-
f) Interest at the rate of 10% p.a. from 21.10.2013 to 20.10.2020 on 4,99,95,741/-
Outstanding Mobilisation Advance [H]
CUMULATIVE AMOUNT OUTSTANDING [G+H] 12,14,18,228/-
ii. Liquidated Damages for delay payable under Clause 2 of

GCC, amounting to INR 16,32,00,000/-; The status of work
completed, as recorded by the Respondent, is as follows:
No. Date Particulars Amount Paid Gross Work

Completed
3546 16.04.2013 1ST RA Bill 8,34,01,249/- 8,34,01,249/-
7529 31.05.2013 2nd RA Bill 3,46,40,816/- 12,82,44,155/-
3155 15.10.2013/ 3rd RA Bill 3,08,72,306/- 21,87,63,745/-
27.03.2014
In MB 20.03.2017 4th RA Bill 4,21,37,206/- 26,89,53,056/-
No. 865
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7. RELEVANT CONTRACTUAL PROVISONS
7.1 It would be apposite to take note of certain contractual provisions

which were referred to by the Counsel for both sides during
arguments. Contract Agreement dated 24.09.2012 was signed
between the parties and the First Recital thereto mentions the scope
of the work which was to be executed by the Claimant and it reads
as under :
“Scope of the work: Whereas the Employer is desirous that certain works
should be executed viz., Covering of Nallah from Pushp Vihar, Press
Enclave road passing through Sheikh Sarai – Chirag Delhi – Panchsheel
Enclave-GK I – Andrews Ganj upto Ring Road behind Police Station,
Defence Colony (except the stretch of Nallah in GK-I in a length of 1000
mtr.) under JNNURM for providing parking/road-cum-parking under the
jurisdiction of MCD.”
7.2 The Contract Price agreed to between the parties, as stipulated in

the Contract, was INR 163,20,52,681. In terms of the Contract, the
the Claimant had provided Performance Security Guarantee in the
sum of INR 8,16,02,635 to the Respondent Corporation, which has
been extended from time to time. It may be mentioned that in the
application filed by the Claimant under Section 17 of the Act, the
Claimant had sought an interim measure to the effect that it need
not be extended further. However, this application was rejected vide
letter dated 04.12.2020, as already noted above, primarily on the
ground that the Claimant had been extending this Bank Guarantee
even after the foreclosure of the contract, which was valid till
31.12.2020 and since the matter was likely to be concluded within a
few months, the direction was given to extend the Bank Guarantee
till 30.06.2021.
7.3 As per the Contract Agreement, the date of commencement of work

was 08.09.2012 and the stipulated date of completion was
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10.03.2014, which means that the contract period was 18 months
when counted from the date of LOA i.e., 14.08.2012.
7.4 The Contract is governed by General Conditions of Contract (GCC

and Special Conditions of Contract (SCC). After stating General
Rule and directions, conditions of contract start with definitions,
scope and performance, etc. Thereafter, terms are provided under
the captioned “Clauses of Contract”. Some of the relevant terms of
GCC are as under:
Clauses of Contract:
General Conditions of Contract (GCC):
“Clause 1: Performance Guarantee:
i. The contractor shall submit an Irrevocable Performance Guarantee of 5%

(Five percent) of the tendered amount in addition to other deposit
mentioned elsewhere in the contract for his performance of the contract
agreement, (notwithstanding and/or without prejudice to any other
provisions in the contract) within period specified in Schedule-F from the
date of issue of Letter of Acceptance. This period can be further extended
by the Engineer-in-Charge upto a maximum period as specified in
Schedule-F on written request of the contractor stating the reason for
delays in procuring the Performance Guarantee to the satisfaction of the
Engineer-in-Charge. This Guarantee shall be in the form of Cash (in case
guarantee amount is less than INR 10,000) or deposit at Call Receipt of
any Scheduled Bank/Banker’s Cheque of any scheduled bank/Demand
Draft of any scheduled bank/Pay Order of any scheduled bank (in case
guarantee amount is less than INR 1,00,000) or Government Security or
Fixed Deposit Receipt or Guarantee Bonds of any scheduled Bank or the
State Bank of India in accordance with the form annexed hereto. In case
a Fixed Deposit Receipt of any bank is furnished by the contractor to the
Government as part of the Performance Guarantee and the Bank is
unable to make payment against the said Fixed Deposit Receipt, the loss
caused thereby shall fall on the contractor and the contractor shall
forthwith on demand furnish additional security to the Government to
make good the deficit.
ii. The Performance Guarantee shall be initially valid upto the stipulated
date of completion plus 60 days beyond that. In case the time for
completion of work gets enlarged, the contractor shall get the validity of
Performance Guarantee extended to cover such enlarged time for
completion of work. After recording of the completion certificates for the
work by the competent authority, the Performance Guarantee shall be
returned to the contractor, without any interest.
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iii. The Engineer-in-Charge shall not make a claim under the Performance
Guarantee except for amounts to which the Commissioner, MCD is
entitled under the contract (notwithstanding and/or without prejudice to
any other provisions in the contract agreement) in the event of :
a) Failure by the contractor to extend the validity of the Performance
Guarantee as described hereinabove, in which event the Engineer-
in-Charge may claim the full amount of the Performance Guarantee;
b) Failure by the contractor to pay Commissioner, MCD any amount
due, either as agreed by the contractor or determined under any of
the Clause/conditions of the agreement, within 30 days of the service
of notice of this effect by Engineer-in-Charge.
iv. In the event of the contract being determined or rescinded under

provision of any of the Clause/conditions of the agreement, the
Performance Guarantee shall stand forfeited in full and shall be
absolutely at the disposal of the Commissioner, MCD.
Clause 2: Compensation for Delay
If the Contractor fails to maintain the required progress in terms of Clause

5 or to complete the work and clear the site on or before the contract or
extended date of completion, he shall, without prejudice to any other right or
remedy available under the law to the MCD on account of such breach, pay
as agreed compensation the amount calculated at the rates stipulated below
as the Superintending Engineer (whose decision in writing shall be final and
binding) may decide on the amount of tendered value of the work for every
completed day/month (as applicable) that the progress remains below that
specified in Clause 5 or that the works remain in complete.
This will also apply to items or group of items for which a separate period of
completion has been specified:
i) Compensation - @ 1.5% per month of delay

for delay of work to be computed on per day basis
Provided always that the total amount of compensation for delay to be paid
under this Condition shall not exceed 10% of the Tendered Value of work or
of the Tendered Value of the item or group of items of work for which a
separate period of completion is originally given.
The amount of compensation may be adjusted or set-off against any sum

payable to the Contractor under this or any other contract with the MCD. In
case the contractor does not achieve a particular milestone mentioned in
Schedule-F, or the re-scheduled milestone(s) in terms of Clause 5.4, the
amount shown against that milestone shall be withheld, to be adjusted
against the compensation levied at the final grant of Extension of Time.
Withholding of this amount on failure to achieve a milestone, shall be
automatic without any notice to the contractor. However, if the contractor
catches up with the progress of work on the subsequent milestone(s), the
withheld amount shall be released. In case the contractor fails to make up
for the delay in subsequent milestone(s), amount mentioned against each
Page 21 of 133
milestone missed subsequently also shall be withheld. However, no interest,
whatsoever, shall be payable on such withheld amount.
Clause 3: When Contract can be determined
Subject to other provisions contained in this Clause, the Engineer-in-Charge

may, without prejudice to his any other rights or remedy against the
contractor in respect of any delay inferior workmanship any claims for
damages and/or any other provisions of this contract or otherwise, and
whether the date of completion has or has not elapsed, by notice in writing
absolutely determine the contract if any of the following cases :
i) .........
ii) .........
iii) .........
iv) If the contractor persistently neglects to carry out his obligations
under the contract and/or commits default in complying with any of
the terms and conditions of the contract and does not remedy, or take
effective steps to remedy it within 7 days after a notice in writing is
given to him in that behalf by the Engineer-in-Charge.
v) .........
Clause 5: Time and Extension for Delay
The time allowed for execution of the works as specified in Schedule-F or the
extended time in accordance with these conditions shall be the essence of the
Contract. The execution of the works shall commence from such time period
as mentioned in Schedule-F or from the date of handing over of the site,
whichever is later. If the Contractor commits default in commencing the
execution of the work as aforesaid, MCD shall without prejudice to any other
right or remedy available in law, be at liberty to forfeit the earnest money
absolutely.
5.1 As soon as possible, after the Contract is concluded, the Contractor shall
submit a Time and Progress Chart for each milestone and get it
approved by the Department. The chart shall be prepared in direct
relation to the time stated in the Contract documents for completion of
items of the works. It shall indicate the forecast of the dates of
commencement and completion of various trades of sections of the work
and may be amended as necessary by agreement between the Engineer-
in-Charge and the Contractor within the limitations of time imposed in
the Contract documents, and further to ensure good progress during the
execution of the work, the contractor shall in all cases in which the time
allowed for any work, exceeds one month (save for special jobs for which
a separate programme has been agreed upon) complete the work as per
milestones given in Schedule-F.
5.2 If the work(s) be delayed by:

i. Force Majeure or
ii. Abnormally bad weather or
iii. Serious loss or damage by fire, or
iv. Civil commotion, local commotion of workmen, strike or lockout,
affecting any of the trades employed on the work or
Page 22 of 133
v. Delay on the part of other contractors or tradesmen engaged by
Engineer-in-Charge in executing work not forming part of the
Contract; or
vi. Non-availability of stores, which are the responsibility of MCD
to supply; or
vii. Non-availability or breakdown of tools and Plant to be supplied
or supplied by MCD; or
viii. Any other cause, which, in the absolute discretion of the
Engineer-in-Charge is beyond the Contractor’s control.
Then, upon the happening of any such event causing delay, the
contractor shall immediately give notice thereof in writing to the
Engineer-in-Charge but shall nevertheless use constantly his best
endeavours to prevent or make good the delay and shall do all that
may be reasonably required to the satisfaction of the Engineer-in-
Charge to proceed with the works.
5.3 Request for re-scheduling of milestones and extension of time, to be

eligible for consideration, shall be made by the Contractor in writing
within fourteen days of the happening of the event causing delay on the
prescribed form. The Contractor may also, if practicable, indicate in
such a request the period for which extension is desired.
5.4 In any such case, the Engineer-in-Charge may give a fair and
reasonable extension of time and re-schedule the milestones for
completion of work. Such extension shall be communicated to the
Contractor by the Engineer-in-Charge in writing, within three months
of the date of receipt of such request. Non-application by the contractor
for extension of time shall not be a bar for giving a fair and reasonable
extension by the Engineer-in-Charge and this shall be binding on the
contractor.”
Clause 10B (ii) – Mobilization Advance
“Mobilization advance not exceeding 10% of the tendered value may be

given, if requested by the Contractor in writing within one month of the
order to commence the work. In such a case, the Contractor shall
execute a Bank Guarantee Bond from a Scheduled Bank as specified by
the Engineer-in-Charge for the full amount of mobilization advance
before such advance is released. Such advance shall be in two or more
instalments to be determined by the Engineer-in-Charge at his sole
discretion. The First instalment of such advance shall be released by
the Engineer-in-Charge to the Contractor on a request made by the
Contractor to the Engineer-in-Charge in this behalf. The second and
subsequent instalments shall be released by the Engineer-in-Charge
only after the Contractor furnishes a proof of the satisfactory utilisation
of the earlier instalment to the entire satisfaction of the Engineer-in-
Charge.”
Provided always that provision of Clause 10B(ii) shall be applicable only

when so provided in Schedule-F.
Page 23 of 133
Plant machinery and Shuttering Material Advance
Interest and Recovery
(iv) The mobilization advance and Plant and Machinery Advance in (ii) and
(iii) above bear simple interest at the rate of 10 per cent per annum and
shall be calculated from the date of payment to the date of recovery,
both days inclusive on the outstanding amount of advance. Recovery of
such sums advanced shall be made by the deduction from the
Contractor’s bills commencing after first ten per cent of the gross value
of the work is executed and paid, on pro rate percentage basis to the
gross value of the work bills beyond 10% in such a way that the entire
advance is recovered by the time eight percent of the gross value of the
Contract is executed and paid, together with interest due on the entire
outstanding amount upto the date of recovery of the authorized.
Clause 11: Work to be executed in accordance with specifications, drawings,

orders, etc.
“The Contractor shall execute the whole and every part of the work in
the most substantial and workmanlike manner both as regards
materials and otherwise in every respects in strict accordance with the
specifications. The Contractor shall also conform exactly, fully and
faithfully to the design, drawings and instructions in writing in respect
of the work signed by the Engineer-in-Charge and the Contractor shall
be furnished free of charge one copy of the contract documents together
with specifications, design, drawings and instructions as are not
included in the standard specifications of Central Public Works
Department specified in Schedule-F or in any Bureau of Indian
Standards or any other, published standard or code or schedule of rates
or any other printed publications referred to elsewhere in the contract.”
Clause 13: Foreclosure of contract due to abandonment or reduction in Scope

of work
If, at any time, after acceptance of the tender, Government shall decide
to abandon or reduce the scope of the work for any reason whatsoever
and hence not require the whole or any part of the works to be carried
out, the Engineer-in-Charge shall give notice in writing to that effect to
the Contractor and the Contractor shall act accordingly in the matter.
The Contractor shall have no claim to any payment of compensation or
otherwise whatsoever, on account of any profit or advantage which he
might have derived from the execution of the works in full but which he
did not derive in consequences of the foreclosure of the whole or part of
the works. The Contractor shall be paid at contract rates, full amount
for works executed at site and, in addition a reasonable amount as
certified by the Engineer-in-Charge for the items hereunder mentioned
which could not be utilized on the work to the full extent in view of the
foreclosure:
Page 24 of 133
i) Any expenditure incurred on preliminary site work, e.g., temporary
access roads, temporary labour huts, staff quarters and site office;
storage accommodation and water storage tanks;
ii) Government shall have the option to take over Contractor’s materials
or any part thereof either brought to site or of which the Contractor is
legally bound to accept delivery from suppliers (for incorporation in or
incidental to the work) provided, however, Government shall be
bound to take over the materials or such portions thereof as the
Contractor does not desire to retain. For materials taken over or to
be taken over by Government, cost of such materials as detailed by
Engineer-in-Charge shall be paid. The cost shall, however, take into
account purchase price, cost of transportation and deterioration or
damage which may have been caused to materials whilst in the
custody of the Contractor.
iii) If any material supplied by MCD are rendered surplus, the same
except normal wastage shall be returned by the contractor to MCD at
rates not exceeding those at which these were originally issued, less
allowance for any deterioration or damage which may have been
caused whilst the materials were in the custody of the contractor. In
addition, cost of transporting such materials from site to MCD stores,
if so required by MCD, shall be paid.
iv) Reasonable compensation for transfer of T&P from site to contractor’s

permanent stores or to his other works, whichever is less. If T&P are
not transported to either of the said places, no cost of transportation
shall be payable.
v) Reasonable compensation for repatriation of contractor’s site staff and

imported labour to the extent necessary.
vi) Reasonable compensation for repatriation of contractor’s site staff and

imported labour to the extent necessary.
The Contractor shall, if required by the Engineer-in-Charge, furnish

to him, books of account, wage books, time sheets and other relevant
documents and evidence as may be necessary to enable him to certify
the reasonable amount payable under this condition.
The reasonable amount of items on (i), (iv) and (v) above shall not be
in excess of 2% of the cost of the work remaining incomplete on the
date of closure i.e., total stipulated cost of the work as per accepted
tender less the cost of work actually executed under the Contract and
less the cost of Contractor’s materials at site taken over by the MCD
as per item (ii) above. Provided always that against any payments
due to the Contractor on this account or otherwise, the Engineer-in-
Charge shall be entitled to recover or be credited with any
outstanding balances due from the contractor for advance paid in
respect of any tool, plants and materials and any other sums which at
the date of termination were recoverable by the MCD from the
Contractor under the terms of the contract.
Page 25 of 133
Clause 15: Suspension of work
i) The contractor shall, on receipt of the order in writing of the Engineer-

in-Charge (whose decision shall be final and binding on the
Contractor) suspend the progress of the works or any part thereof for
such time and in such manner as the Engineer-in-Charge may
consider necessary so as not to cause any damage or injury to the work
already done or endanger the safety thereof for any of the following
reasons :
a) On account of any default on the part of the Contractor or;

b) For proper execution of the works or part thereof for reason other
than the default of the contractor; or
c) For safety of the works or part thereof.
The contractor shall, during such suspension, properly protect and

secure the works to the extent necessary and carry out the
instructions given in that behalf by the Engineer-in-Charge.
ii) If the suspension is ordered for reasons (b) and (c) in sub-para(i)
above:
a) The contractor shall be entitled to an extension of time equal to

the period of every such suspension PLUS 25% for completion of
the item or group of items of work for which a separate period of
completion is specified in the contract and of which the suspended
work forms a part, and;
b) If the total period of all such suspension in respect of an item or

group of items or work for which a separate period of completion
is specified in the contract exceeds thirty days, the contractor
shall, in addition, be entitled to such compensation as the
Engineer-in-Charge may consider reasonable in respect of salaries
and/or wages paid by the contrctor to his employees and labour at
site, remaining idle during the period of suspension, adding
thereto 2% to cover indirect expenses of the contractor. Provided
the contractor submits his claim supported by details to the
Engineer-in-Charge within fifteen days of the expiry of the period
of 30 days.
iii) If the works or part thereof is suspended on the orders of the

Engineer-in-Charge for more than three months at a time, except
when suspension is ordered for reason (a) in sub-para (i) above, the
contractor may, after receipt of such order serve a written notice on
the Engineer-in-Charge requiring permission within 15 days from
receipt by the Engineer-in-Charge of the said notice, to proceed with
the work or part thereof in regard to which progress has been
suspended and if such permission is not granted within that time, the
contractor, if he intends to treat the suspension, where it affects only
a part of the works as an omission of such part by MCD or where it
affects whole of the works, as an abandonment of the works by MCD,
Page 26 of 133
shall within ten days of expiry of such period of 15 days give notice in
writing of his intention to the Engineer-in-Charge. If the event of the
contractor treating the suspension as an abandonment of the contract
by MCD, he shall have no claim to payment of any compensation on
account of any profit or advantage which he might have derived from
the execution of the work in full but which he could not derive in
consequence of the abandonment. He shall, however, be entitled to
such compensation as the Engineer-in-Charge may consider
reasonable, in respect of salaries and/or wages paid by him to his
employees and labour at site, remaining idle in consequences adding
to the total thereof 2% to cover indirect expenses of the contractor
provided the contractor submits his claim supported by details to the
Engineer-in-Charge within 30 days of the expiry of the period of three
months.
Provided, further, that the contractor shall not be entitled to claim

any compensation from MCD for the loss suffered by him on account
of delay by MCD in the supply of materials in Schedule-B where such
delay is covered by difficulties relating to the supply of wagons, force
majeure including non-allotment of such materials by controlling
authorities, acts of God, acts of enemies of the State/Country or any
reasonable cause beyond the control of the MCD.”
Special Conditions of Contract (SCC)
“8. Progress of work:

Contractor shall give the Engineer-in-Charge on the 10th day of each
month, 4 copies of progress report of the work done during the previous
month. Such progress report will include the quantum of work done,
important materials consumed, and materials at site at the beginning
of the month of report, materials consumed during the month and the
balance quantities at the end of month and Digital photographs of
important activities as well as showing progress of the work. For delay
in submission of the progress report, a compensation @ Two thousand
(INR2000) only per day of delay will be recovered from the dues of the
Contractor.”
“12. Existing Services: Existing drains, pipes, cables, overhead

wires, sewer lines, water lines and similar services encountered in the
course of the execution of the work shall be protected/ maintained
against the damage by the contractor. The contractor shall not store
materials or otherwise occupy any part of the site in a manner likely to
hinder the operation of such services. In case temporary
supporting/shifting of such services is required to facilitate the work,
the same shall be done by the contractor at no extra cost. For any
permanent shifting, MCD shall arrange to shift the underground
services as and when required. However, in the interest of work, if
MCD decides to get it shifted by the contractor, then contractor shall be
paid separately at the rates as decided by the Engineer-in-Charge based
on the actual observations of the work involved in shifting such
utilities/services. The decision of the Engineer-in-Charge in this regard
shall be final and binding.”
Page 27 of 133
“14. The Contractor will not have any claim in case of any delay by
the Engineer-in-Charge in removal of trees or shifting, raising,
removing of telegraph,m telephone or electric lines (over head or
underground), water and sewer lines and other structures etc., if any,
which may come in the way of the work. However, suitable extension
of time will be granted to cover such delays.”
7.5 The Technical Bid mentioned the list of documents to be submitted

which included Equipment Capability undertaking and Personnel
Capability undertaking, which were to be given in the following
format:
Equipment capabilities
Undertaking
I, the undersigned, do hereby undertake that our firm M/s.............
shall deploy all plants and machinery/equipment required for
implementation of the project as per technical specifications. I also
undertake to either own or have assured access through hire or
lease all the plant and machinery/equipment.
................................................
Signed by an Authorised Officer of the Firm
................................................
Title of Officer
................................................
Name of Firm
................................................
Date
Personnel capabilities
Undertaking
I, the undersigned, do hereby undertake that our firm M/s.............
shall make provision for suitably qualified personnel to carry out
the work, namely........................... as required during contract
implementation.
................................................
Signed by an Authorised Officer of the Firm
Page 28 of 133
................................................
Title of Officer
................................................
Name of Firm
................................................
Date
8. TRIBUNAL’S ANALYSIS
8.1 Before coming to the discussion on each of the Claims and Counter-
Claims preferred by the parties, it would be necessary to deal with
some of the preliminary aspects which have been raised by the
Respondent.
Preliminary submissions
1. Jurisdiction of the Arbitral Tribunal to adjudicate upon the

dispute between the parties
8.2 As already noticed while mentioning the case of the Respondent, the
Respondent argues that there is no valid arbitration clause in the
contract. Therefore, the Tribunal has not been constituted
appropriately.
8.3 Though detailed submissions are made by the parties in this behalf,
and the Respondent has referred to a judgment of the Supreme
Court as well [Jagdish Chander v. Ramesh Chander (2007) 5 SCC
719], it may not be necessary to go into this aspect in detail because
of the simple reason that this issue in the present case, inter-parties,
stands settled by the highest court. It is reiterated that this very
contention was taken by the Respondent before the Hon’ble High
Page 29 of 133
Court while contesting the application of the Claimant under
Section 11 of the Act i.e., appointment of an Arbitrator. The
contention was specifically turned down by the High Court giving
detailed reasons which can be found in paragraphs 27 to 40 of the
High Court’s order dated 13.08.2020. The Respondent challenged
the said decision by filing a Special Leave Petition before the Hon’ble
Supreme Court, which was also dismissed vide order dated
05.01.2021. The operative part of the order reads as under:
“In view of the above, we see no reason to interfere with the impugned
order passed by the High Court.
The SLP is, accordingly dismissed.
As a sequel to the above, pending Interlocutory applications also

stand disposed of. We make it clear that we have not expressed any
opinion on the merits of the case.”
8.4 Notwithstanding the above order, with specific observations to the

effect that no interference with the order passed by the High Court
is called for, the argument of jurisdiction is pressed before the
Arbitral Tribunal taking umbrage behind the last sentence in the
aforesaid order wherein the Hon’ble Supreme Court observed that it
has “not expressed any opinion on the merits of the case”. This is
totally misconceived. The question of law raised by the Respondent
was left open. That does not mean that Respondent can put another
life into the same argument and re-argue. Insofar as the issue raised
by the Respondent is concerned, that has attained finality in the
present case between the parties. It is no more res integra and is
barred by the principles of res judicata. This proposition of the
Respondent is accordingly rejected.
Page 30 of 133
2. Onus to prove breach of contract by the Respondent on
Claimant: Aspects of Delay
8.5 It is contended by the Respondent that Claimant had complete

knowledge of the project and proceedings which were going on before
the NGT as the said proceedings were public proceedings. In this
behalf, order dated 13.01.2015 passed by NGT was based upon the
recommendations made by the committee set up by NGT. As per the
Respondent, the said order does not render any finding that the
Respondent had not taken the required permission for commencing
project and hence, the requisite directions were being passed. Hence,
it is submitted by the Respondent that the occasion to pass such an
interim order/ final order by the NGT was not caused due to any
action/ omission of the Respondent and the reasons behind these
orders are due to unforeseen circumstances arising out of legal
proceedings. Therefore, no default/ breach can be attributed to the
Respondent.
8.6 As can be seen from the above, the proposition is predicated on the
submission that there is no fault on the part of the Respondent and
the Respondent has not committed any breach of contract. Further,
the Claimant has not been able to show such a breach on the part of
the Respondent. The argument is in two parts. In the first place, it
is mentioned that before awarding the contract to the Claimant, all
necessary permissions were taken from the concerned authorities
and on that basis, it is submitted that there is no failure on the part
of the Respondent in discharging its obligations under the contract.
The submission is that the work was halted at the direction of the
NGT for which the Respondent cannot be faulted with. Second limb
of the argument is that during the period when there was no stay,
the Claimant is to be blamed for slow progress of work.
Page 31 of 133
8.7 The case set up by the Claimant, on the other hand, is that breaches
of the Respondent are two-fold. In the first phase i.e., before the
order of the NGT, delay occurred because of various reasons which
are attributed to the Respondent, which amounts to breach of the
contract. Secondly, the NGT order clearly shows that the
Respondent had failed to comply with various legal formalities
which led to stoppage of the work.
8.8 Mr. Datta, Learned Senior counsel appearing for the Claimant
structured his submissions with the statement that having regard
to the event that took place during the execution of the contract, the
entire period could be bifurcated in two parts as under :
• First Period – From the commencement date till Interim
order dated 21.10.2013 passed by the National Green
Tribunal (NGT);
• Second Period - From 21.10.2013 till 23.09.2015 when the

Contract was foreclosed.
8.9 Mr. Datta pointed out that during the First period, which consists of
thirteen and a half months (approx.) [as against 18 months of
contractual period], only 16% of the work could be completed.
According to him, the delay in the completion of work was entirely
attributed to the Respondent, which failed to fulfil its obligations
under the contract. In this behalf, it was argued that the following
were the fundamental breaches attributable to the Respondent:
a) Delay in supplying the drawings by the Respondent to the
Claimant to enable the Claimant to execute the work;
b) Encroachments at Site;
c) Delay in seeking permissions from other Authorities which
were required for execution of the work.
8.10 To demonstrate the delay in supply of drawings, the Learned Senior

Counsel referred to letter dated 24.09.2012 (Page 321). So far as
Page 32 of 133
encroachments at site were concerned, attention of the Tribunal was
drawn to letters at pages 322, 323 and 324. It was argued that the
Respondent accepted the delay on its part as extension of time was
sought vide letter dated 06.03.2013 stating as many as eleven
reasons which were all attributed to the Respondent. It was
specifically mentioned therein that all these reasons for delay had
been recorded by the concerned officers from time to time. In this
letter, it was also mentioned that though there is a provision of
deducting/withholding 1% from the Running Bill on account of non-
achieving of the financial progress, request was made not to resort
to that provision as delays were not attributable to the Claimant.
Along with that letter, the Claimant had enclosed copy of
communication dated 02.03.2013 addressed by Deputy Director
(Horti.) Horticulture Division VI to Executive Engineer (Project-I)
wherein attention was drawn to the letter dated 31.01.2013 of the
Executive Engineer seeking temporary permission to access the site
for four months for undertaking the aforesaid work and by this
letter, the permission was granted on certain conditions. It was thus
pointed out that this permission came only in March 2013.
8.11 He also argued that while taking decision on the extension of time,
it was recorded by the concerned officials of the Respondent that the
delay in execution of the work leading to slippage of milestone may
not be completely attributed to the Contractor, which is clear from
its text as under:
“Municipal Corporation of Delhi
Subject:Covering of Nallah from Pushp Vihar, Press Enclave road

passing through Sheikh Sarai – Chirag Delhi- Panchsheel
Enclave, GK1 – Andrews Ganj upto Ring Road behind Police
Station, Defence Colony, (except the stretch of Nallah in GK 1 in
a length of 100 mtr) under JNNURM for providing parking/road-
cum-parking under jurisdiction of MCD – Revision of Milestone
Page 33 of 133
The subject work was awarded to M/s. JMC Projects (India) Limited by
South Delhi Municipal Corporation (SDMC) vide Letter of Acceptance
(LOA) No. D/EE(Pr)-I/CNZ/12-13/383 dated 18.08.2012 and
subsequently, the contract agreement for the said project was executed
on 24.09.2012 with time of completion of project as 18 months. As per
contract, the date of start and date of completion of the project are
08.09.12 and 07.03.14 respectively.
The agreement under Clause 5.3 and Schedule F provides the

milestones to be achieved by the contractor in respect to time period
and financial progress of the work. The provisions of the Agreement
are as under :
Financial Time allowed Amount to be withheld in case of non-

Progress (from date of achievement of Milestone
start
1 1/8th (of 1/4th (of whole In the event of not achieving the
whole work) work) necessary progress as assessed from the
2 3/8th (of 1/2nd (of whole running payment, 1% of the tendered
whole work) work) value of work will be withheld for failure
3 3/4th (of 3/4th (of whole of each mile stone. The withheld amount
whole work) work) may be released against bank guarantee/
4 Full Full FDR of the equal amount.
As on date, physical progress of the work is 8% approximately and 1st

RA bill is yet to be passed. From the above, it may be seen that the
contractor has missed the first milestone of achieving a financial
progress of 12.5% on 23.01.13 (1/4th of allotted time), hence 1% of the
contractual amount is liable to be deducted/retained from the Running
Bill of contractor.
Now, the contractor vide letter No.JMC/MCD/12-13/Site/31 dated

06.03.13 has made a request for revision of the milestones and
extension of time in accordance with Clause 5.3 of the contract
agreement on various grounds, such as delay in handing over of detailed
drawings, handing over of site, encroachment at site etc. The work was
stopped by the DDA staff as well and the same was resolved after lot of
persuasion from this office. Similarly, the work was held up in Andrews
Ganj are due to laying of DJB line by them in the Nallah itself.
The Contractor has further submitted that “the delay in execution of

work may not be attributed to us on the reasons explained above. It is
therefore, submitted that the said 1% may not be withheld/deducted
from our Running Bill as this lead to severe cash flow problems without
any fault of ours.
Since the delay in execution of the work leading to slippage of first

milestone may not be completely attributed on the part of the
contractor, approval of the competent authority is solicited for not
withholding 1% from the Running Bill of the contractor for the time
being. A copy of the hindrance register is placed in the file. The issue
of extension of time shall be dealt at the appropriate time. By doing so,
there is no financial loss to the Corporation.
Page 34 of 133
Submitted please.
Sd/- 8.3.2013
AE(Pr)-II Div Pr-I/CNZ”
The same is approved upto the level of Chief Engineer.
8.12 The learned Senior Counsel also referred to communication dated

24.05.2013 addressed by the Claimant to the Respondent wherein
the Claimant stated that a stretch of 1.30 km from Chainage 1742
to Chainage 3005 was got cleared only on 23.05.2013 by the
Executive Engineer when he visited the site on that day (This letter
is denied by the Respondent). Mr. Datta also referred to letter dated
26.09.2013 addressed by the Claimant to the Respondent wherein it
was pointed out that there were trees falling on the alignment of
Chainage 515-1142 i.e., from Pushp Vihar to Fish Market and tree-
cutting permission was required before taking up the work. Request
was made to arrange the said permission. It was pointed out that
permission for Greater Kailash-I to Ring Road was also awaited.
Reference was also made to letter dated 22.04.2013 by the Claimant
to the Respondent wherein it is pointed out that the water pipeline
work had been completed by Delhi Jal Board (DJB) near Andrews
Ganj Police Station (Chainage 5700) but still the Gas pipeline and
BSES Power line were obstructing the work since these were not
removed so far by the respective agencies. The Claimant had also
addressed letter dated 18.10.2013 to the Respondent wherein it had
mentioned in detail the various hindrances which were causing
obstruction in the work, and these hindrances were on the following
nature.
1) Delay in issue of design drawing;

2) Delay in removal of encroachment;
3) Non-availability of tree cutting permission;
Page 35 of 133
4) Delay and financial loss due to obstruction created by DDA in the major
part of the scope;
5) Non-availability of site for batching plant/yard for steel, cement and other
material;
6) Delay due to non-availability of clear site-other contractor work;
7) Delay in deployment of third party/inspecting agency;
8) Non-availability of drawing for parallel work-Road/Drain,etc.
9) Delay in shifting of utilities;
10) Clearance and handing over of piecemeal front;
11) Unpredicted heavy pre-monsoon rain and extended monsoon period.
After explaining the delay on each of the aforesaid counts, request

was made to defer the milestone dates based on the balance
programme that was to be submitted.
8.13 This letter was replied to by the Respondent vide its communication
dated 23.12.2013, inter-alia, stating that in general, the so called
hindrances mentioned prior to 14.06.2013 did not appear to be
hindrances on a particular stretch and that could not be a reason to
stop the work on the entire stretch of drain which was about 4.5 km
long and there were sufficient work fronts where work could be
taken up. As per the Respondent, the Claimant had not executed
the work even on the work fronts which were available, which
showed that the Claimant was not having either sufficient resources
or manpower. With regard to the hindrances pointed out by the
Claimant, some of these were refuted in the following manner:
“As per terms and conditions of the contract, the arrangement of site for
batching plant was to be arranged in the vicinity of the site by yourself.
SDMC was only to facilitate in this regard in case any site is available
with the SDMC. However, sole responsibility was yours to install the
batching plant. However, SDMC, keeping in view the progress of work
is not hindered, has allowed to procure the cement concrete from other
plants.
As regards tree cutting permission is concerned, there are only few

number of trees which are coming in the alignment in a small stretch
of the drain; however, due to these trees, the work of drain is not
hindered completely; however, in the same stretches, the part work of
drain can be taken up.
Page 36 of 133
The rain is very common environmental phenomena and it is expected
in the period of rainy weather. From the available record, it has been
seen that the work was not hindered in any abnormal manner due to
rains and the work has also been executed June-13 to October-12 except
few days.
Regarding slow progress of work, this office vide letter No. D/EE(Pr.)-
II/CNZ/13-14/314 dt. 02.09.13 has also informed you to expedite teh
work but no fruitful result was achieved. In spite of completion of 11
months time, the progress of work is about 15%; however, upto this
period, proportionate physical progress of the work should be 60%
approximately.”
8.14 Mr. Datta attempted to meet the averment in the aforesaid letter of
the Respondent by relying upon the Hindrance Register which is
signed by representatives of both the parties and inter-alia records
as under. He pointed out that the Hindrance Register clearly records
hindrances of following nature at certain areas/chainages and
mentioned the period during which the hindrances remained. He
stated that for certain period, work could not be executed as it was
stopped by DDA. Hindrance was also caused due to existence of
trees on a particular chainage.
• Chainage 1772 to 3055 – DDA had stopped the work on
25.07.2013 which position remained till 14.08.2013 and
because of this, no work could be executed during this
period.
• Existence of trees on Chainage 3247 to 3895 from

08.09.2012 and these trees were not removed at all.
Encroachment by residents on chainage 4806-5299 from
08.09.2012 to 12.09.2012.
On that basis, it was argued that actual site available for the work
was negligible.
8.15 The Ld. Senior Counsel also pointed out the extensions which were
granted from time to time were without the levy of Liquidated
Damages and submitted that this shows that the Respondent
accepted the delays were not on account of alleged slow progress of
Page 37 of 133
work on the part of the Claimant. Vide letter dated 14.02.2014,
extension was granted upto 06.07.2014, vide letter dated 30.06.2014,
extension was granted upto 30.09.2014.
8.16 On the basis of the aforesaid material, submission of the Claimant

is that during this First Period, slow progress of the work would
entirely be attributed to the Respondent for lack of permission from
the third parties which were to be obtained by the Respondent with
no fault of the Claimant. He also submitted that had there been no
such hindrances, the Claimant would have completed substantial
work during this period i.e., before the stay order dated 21.10.2013
was passed by the NGT.
8.17 Insofar as the Second period from 21.10.2013 i.e., from the date
when the stay order by NGT came to be passed till the closure of the
contract on 23.09.2015 is concerned, there is hardly any dispute on
facts. After the said stay order was passed, it was communicated by
the Respondent to the Claimant on the same day, and the Claimant
was directed not to execute any further work at site. The Claimant,
vide letter dated 29.10.2013, requested the Respondent to throw
light on the type and nature of the order issued by NGT so as to aid
the Claimant in assessing its effects on the project. It was also
stated that there was no clarity in respect of direction not to carry
out further work at site viz., whether it was time bound and/or
subject to official procedure of the Tribunal. The Claimant also
requested that it be conveyed the expected outcome of the case in
terms of timelines. This letter concluded with the following
assertion:
“We would like to inform you that we cannot continue to remain

oblivious to the facts of the case, as it involves substantial financial
resources, machinery and manpower resources along with time, which
Page 38 of 133
is a crucial factor of any Contract. Also, we cannot suffer unwarranted
costs as well as loss of time for no fault of ours and reasons which are
beyond our control.
We hereby state that we shall be entitled to and therefore, without

prejudice to our rights under the Contract Agreement, notify our right
to claim legitimate damages on account of such stoppage of works and
its effects, that would ensue, on the subject Project.”
8.18 The position about the case is mentioned in the letter dated
20.11.2013 addressed by Respondent in which the Respondent
informed its officers that a petition had been filed titled as Manoj
Kumar Mishra and Anr v. Union of India and Anr, before National
Green Tribunal in which Status Quo order had been passed by the
Tribunal. It was also informed that the matter was listed on
19.11.2015 when NGT desired a comprehensive report dealing with
Peak Storm Drainage, modified catchment area, percentage of open
area, land-use and channel design parameters and treatment, if any,
being provided to discharge made from these drains to River
Yamuna. NGT had also asked the Respondent as to whether it had
taken approval from the State Environmental Impact Assessment
Authority or Delhi Pollution Control Committee for carrying out this
work. The officials were asked to hand over the record so that the
Tribunal is informed accordingly.
8.19 The Claimant sent another communication dated 20.11.2013 to the

Respondent mentioning about the status of work and the reasons for
delay which had occurred earlier. In this letter, it also stated that
because of the order of the NGT, the work had come to a standstill,
leading to the Claimant’s resources including machinery, labour,
shuttering material, other materials like steel, cement, etc. and
supervisory, technical and management staff remaining idle. It also
mentioned that stoppage of work because of NGT order would cause
substantial delay and additional 350 days shall be required to
Page 39 of 133
complete the work beyond the originally stipulated date of
completion. Vide another letter dated 28.11.2013, the Claimant
submitted complete list of the resources in the form of Plant and
Machinery as well as manpower which were lying idle. It also made
a specific request to the Respondent to respond as to whether
Claimant should demobilise these resources. This requested was
repeated by another letter dated 13.12.2013, inter-alia, stated as
under :
“Taking into consideration the aforesaid circumstances, we would like

to communicate that we are suffering huge financial distress for no fault
of ours. We would, therefore, request you to kindly consider our request
pertaining to the rescheduling of milestones which shall, without
prejudice, take into account the period lost and which we are continuing
to lose on account of stoppage of works at site.
We would also hereby request you to release the running payments

immediately.
We also state that we shall continue to notify and claim the accruing
damages on account of the stoppage of works, without prejudice to our
entitlements under the Contract.
We assure you our full cooperation in executing the work.”
8.20 It was followed by communication dated 19.12.2013 pointing out

that details of the resources mobilised had been furnished earlier
which were resulting into continuous incurring of cost by the
Claimant. The Claimant requested the Respondent to intimate
regarding the possibility of resumption of work in near future or
“else allow us to demobilize the resources so that damages on
account of mobilization of those resources can be minimised”.
8.21 The Respondent gave one consolidated reply dated 23.12.2013 to

various communication of the Claimant. In this, apart from refuting
the allegations of hindrances on the part of the Respondent, it also
stated that the Claimant had not procured machinery for the
Page 40 of 133
mobilization advances and as such, second instalment of
mobilization advance was to be recovered as per the order of the
Chief Engineer already conveyed to the Claimant. It also mentioned
that the Claimant had not deployed proper machinery inputs which
had resulted in slow progress of work from 14.06.2013 to 21.10.2013.
It categorically stated that the deployment of machinery and
manpower which was allegedly shown was wrong and had not been
deployed. Insofar as resumption of work is concerned, it was pointed
out that the same could be done only after vacation of the stay order
by NGT.
8.22 The Claimant by another letter dated 31.12.2013, reiterated that the
suspension of work was causing substantial financial burden on the
Claimant due to idling of manpower and machinery deployed at the
site. This position was reiterated by the Claimant in subsequent
letter dated 01.12.2014, reiterating the plea that the Claimant
would be entitled to the damages on account of delay that was being
caused. Thereafter, by letter dated 05.06.2014, the Claimant even
requested the Respondent to foreclose the contract as the Status Quo
order of NGT was continuing for a long period. This request was
reiterated vide letters dated 21.07.2014, 13.08.2014 and 19.09.2014.
However, the Respondent did not take any action on these requests
as, perhaps, it wanted to wait for the outcome of the NGT
proceedings. NGT passed final order dated 19.01.2015 banning the
execution of the said project permanently. It is only thereafter, the
Respondent processed the matter and more than eight months from
the passing of the final order of the NGT, it decided to foreclose the
contract which decision was conveyed by the Respondent to the
Claimant vide letter dated 23.09.2015.
Page 41 of 133
8.23 From the aforesaid events mentioned in respect of the two periods,
it can be discerned that the parties are at variance on the following
two aspects :
i) During the First Period, when admittedly, the work

executed is worth INR 27.00 crore as against the contract
price of INR 163 crore and it could not be executed at the
desired pace, whether this delay had occurred on account
of the facts attributed to the Respondent or it is because
of non-deployment of sufficient machinery and manpower
by the Claimant for undertaking the work.
ii) In the Second Period, when the work could not be

executed as a result of the Stay Order passed by the NGT,
whether the Claimant had deployed the machinery and
manpower as per the details given by it, or there was no
such/negligible plant and machinery, manpower which
remained on site.
As the outcome of various claims depends on answer to

these questions, it would be in the fitness of things to
return findings on these two issues before proceeding
further.
8.24 The Respondent has rebutted the aforesaid submissions by giving

its explanation in respect of theee periods specifically as under:
8.25 Re First period i.e., From 08.09.2012 to 21.10.2013. It is submitted

that from 08.09.2012 till 21.10.2013, the Claimant had complete
access to the site, however, the Claimant had failed to perform work
as per Contract owing to its own faults. It is stated that out of the
Page 42 of 133
total period of the contract i.e., 18 months, the Claimant had worked
for a period of 13.40 months. But, it could only get completed
16.48% of the work, which shows slow progress of the work at the
instance of the Claimant.
8.26 The Respondent argued that the Claimant’s entire arguments for
failing in completion of work within the milestones prescribed under
the Contract are based upon the hindrance register reported to the
Respondent. However, the Claimant ignored that as per the tender
conditions, the Claimant was supposed to inspect the site and thus,
was fully aware about the hindrances existing on the ground, even
before submitting the bid for the work/project (Clause 15 of
Instructions to Bidder). On this premise, it is argued that the claims
of the Claimant in respect of losses suffered due to hindrances are
not acceptable. Commenting upon the Hindrance Register, the
learned counsel for the respondent argued that none of the
hindrances referred in the Hindrance Register could be attributed
solely to the Respondent. Further, as per Clause 28 of the Contract,
the Respondent cannot be held liable for any damages/ compensation
in case of delay caused in handing over the site because several
agencies were involved in the project. Thus, being aware about the
nature of work and these ground realities, the Claimant cannot later
in time seek to be compensated for the loss it suffered as a result of
the said risk. Further, so far as the alleged hindrances caused in
removing of trees is concerned, the same also cannot be used as a
reason to hold the Respondent liable in light of the express terms of
Clause 14 of the Contract Agreement. It is also submitted that the
Respondent had specifically raised the issue of delay in progress of
work in its various letters. The said letters are as following:
Page 43 of 133
a) The Respondent vide its letter dated 02.09.2013 apprised
the Claimant that 11 months had been passed and the
Claimant was only able to complete approximate 10-12 %
work, however in terms of the Contract the Claimant
should have been completed more than 50% of the work.
b) Thereafter, Respondent wrote another letter dated

04.10.2013, whereby Respondent again raised its concern
of slow progress at site and issued the show cause notice
for defaults on the part of the Claimant.
c) Further, relying on the Hindrance Register same as an

admission/waiver of delay is erroneous, especially when
the Claimant itself never objected to the extensions
granted by the Respondent vide letter dated 14.02.2014
and 30.06.2014. In these letters, it is recorded that the
extensions were granted without prejudice to the right of
the Respondent to recover the compensation for delay
under Clause 2 of the tender conditions.
d) The Respondent’s letter dated 17.10.2013 whereby

Respondent clarified that 1% is not being withhold for
time being/provisionally. This as well yet again cannot be
construed as acceptance of the hindrances in any term as
claimed by the Claimant.
Page 44 of 133
Tribunal’s findings qua First Period:
8.27 Insofar as First Period is concerned, after the scrutiny of the

documents placed on record, the Tribunal comes to the conclusion
that delay in the execution of the work occurred due to various
hindrances some of which are attributable to the Respondent and
others are caused by vagaries of nature with no fault of the
Claimant. It is not necessary for the Tribunal to undertake detailed
analysis relating to such hindrances or the correspondence
exchanged between the parties. We have before us the Hindrance
Register maintained by the Respondent itself at the site which is
signed by both the parties. It, therefore, becomes the most authentic
document. This Register, inter-alia, records that work at part of the
site could not executed for certain period because of existence of trees
which were not removed, part of the site had been encroached,
obstruction was created by DDA for some period, clear site was not
available for the Claimant to execute the work for certain period as
other contractor was working on the said part of the site, etc. There
was delay in issuing the design drawings as well as non-availability
of drawings for parallel work in road/drain, etc. The Claimant has
rightly emphasised that the entire stretch of drain that was under
Claimant’s scope of work was divided into Chainages. Hindrances
encountered in each Chainage have been recorded by the
Respondent in the Hindrance Register. The Chainage-wise details
given by the Claimant are as under :
Page 45 of 133
Page 46 of 133
Page 47 of 133
8.28 The period for which the work could not be executed at a particular
chainage due to one or the other reason mentioned in the Hindrance
Register, is demonstrated by the Claimant in the following manner :
8.29 Chainage 0-203: [Pg. 157 of the Rejoinder to SoD, Annexure – B

and Chart – I, Annexure – C] – from Pushp Vihar [Khanpur parking]
to Push Vihar Sector 3, there was encroachment by CPWD Field
Owners.
Cost of the stretch (approx. in crores) – Rs. 6.84 Cr. [length of the stretch
203 m]
Period during which work could not be executed – 08.09.2012 till

21.10.2013
Period when the work could be executed - Nil

Amount of work that could be executed - Nil
[This encroachment is pointed out in the letter dated 06.03.2013 {Pg.

331, Vol. C-2}]
8.30 Chainage 203 -504 – [Pg. 157 of the Rejoinder to SoD, Annexure –
B and Chart – I, Annexure – C] there was a delay in providing
structural drawings by the SDMC, which were received by the
Contractor / Claimant only on 15.10.2012.
Cost of the stretch (approx. in crores) – Rs. 10.14 Cr. [length of the
stretch 301m]
Period during which work could not be executed –

08-09-2012 till 15-10-2012
16-06-2013 till 01-10-2013
Period when the work could be executed –

16-10-2012 till 15-06-2013 – 242 days
02-10-2013 till 21-10-2013 – 19 days
Amount of work that could be executed – Rs. 4.84 Cr.
Page 48 of 133
8.31 It is stated that as against 548 days provided in the Contract to
complete the work of Rs. 10.14 Cr. in this particular stretch, work of
worth Rs. 4.84 Cr. could only be done as only 261 days [242 days +
19 days] were available with the Contractor.
8.32 Chainage 504-1195 [Pg. 157 of the Rejoinder to SoD, Annexure – B

and Chart – I, Annexure – C] – there was a delay in executing the
work in this stretch due to trees falling in the alignment of the drain.
691m]
Period during which work could not be executed – 08-09-2012 till 21-10-
2013
Period when the work could be executed – Nil

Amount of work that could be executed – Nil
8.33 Chainage 1195-1333 [Pg. 157 of the Rejoinder to SoD, Annexure –

B and Chart – I, Annexure – C] - there was a delay in executing the
work in this stretch due to trees falling in the alignment of the drain
and due to rain.
138m]

08-09-2012 till 15-05-2012
16-06-2013 till 01-10-2013

16-05-2013 till 15-06-2013 – 30 days
02-10-2013 till 21-10-2013 – 19 days
Page 49 of 133
B and Chart – I, Annexure – C] were affected due to trees falling in
the alignment of the drain and all the items of work were affected.
Cost of the stretch (approx. in crores) – Rs. 14.79 Cr. [length of the
stretch 439m]
2013

8.35 Vide one such letter dated 26.09.2012 [Vol. C-2, Pg. 323], the
Claimant requested the Respondent to arrange the necessary
permission for tree cutting and also requested for removal of
encroachment i.e. hutments etc. For this reason, the Claimant was
forced to select site where there were no trees, due to which, the
Claimant was unable to commence the work for 2.257 km of area:
CH 0 to CH 191
CH 527 to CH 1343
CH 3005 to CH 3747
CH 3747 to CH 3895
CH 5175 to CH 5535
8.36 The Claimant wrote to the Respondent seeking necessary

permission for cutting the trees from chainage 504 to 1333 near
Chirag Delhi vide letter dated 06.07.2013 [Vol. C-2, Pg. 340]. The
Claimant also sought the permission for chainage 515 – 1142 from
Pushp Vihar to fish market vide letter dated 26.09.2013 [Vol. C-2,
Pg. 344]. The permission for GK-1 to Ring Road was also not
provided by the Respondent.
Page 50 of 133
B and Chart – I, Annexure – C] - (Press Enclave Road to Outer Ring
road, Chirag Delhi) the DDA stopped the work on the plea that land
pertained to DDA and it was a green land and also due to rain. In
Chainage 1772-3055 the work at site was again stopped by DDA
from 25.7.2013 to 14.8.2013.
Cost of the stretch (approx. in crore) – Rs.43.23 Cr [length of the stretch

1283 m]

26-09-2012 till 15-03-2013
16-06-2013 till 01-10-2013

16-03-2013 till 15-06-2013 – 91 days
02-10-2013 till 21-10-2013 - 19 days
Amount of work that could be executed – Rs. 8.69 crore

B and Chart – I, Annexure – C] - (Outer ring road to BRT behind
Panchsheel, no work was allowed by DDA.
692m]
2013
8.39 The Claimant was deprived of any access to the site from Ch. 1742
to Ch. 3005 (Chirag Dilli) and Ch. 3005 to Ch. 3747 (behind
Panchsheel Enclave) due to the restrictions imposed by DDA since
December 2012. The Respondent was requested by the Claimant
vide letter dated 12.12.2012 [Vol. C-2, Pg. 325] to intervene in the
matter and resolve the issue with DDA, so that the Claimant be
allowed the access to site without any disruption and hindrance.
Page 51 of 133
8.40 The Claimant started the work in the area (CH 1742 – CH 3005) and
continued the work for 47 days. During this period, the following
works were carried out:
i. Hutment
ii. Office set up
iii. Cement store
iv. Foundation for batching plant and weigh bridge
v. Diversion / embankment of drain
vi. Drain excavation up to bed level for PCC / RCC (2 Boxes
10M width)
8.41 The said activity was stopped by the DDA suddenly and the
Claimant was asked to remove the construction and the access was
also closed by constructing a boundary wall. Again, vide letter dated
11.02.2013 [Vol. C-2, Pg. 328], the Claimant informed the
Respondent that the non-resolution of the dispute between MCD &
DDA over the land issue was causing severe distress to the
Claimant’s project as a whole. Referring to Respondent’s
communication dated 11.03.2013 [Vol. C-2, Pg. 333], whereby the
Respondent accepted that the delay cannot be attributed to the
Claimant / Contractor, the Claimant wrote to the Respondent on
24.05.2013 [Vol. C-2, Pg. 339] stating that the delay in handing over
the site / site –clearance shall be considered suitably under Clause 5
of the Contract Agreement since around 2/3 of the alignment was
under the hold of DDA and work could not be taken up as desired in
the contract. Further, the Respondent also asked the Claimant /
Contractor to submit a security deposit of Rs. 1 Lakh for according
permission for access to the construction site through the DDA land.
The same was provided by the Claimant vide demand draft (refer
SDMC’s letter dated 02.09.2013 [Vol. C-2, Pg. 341], JMC letter dated
Page 52 of 133
06.09.2013 [Vol. C-2, Pg. 342] and SDMC’s letter dated 06.09.2013
[Vol. C-2, Pg. 343].

B and Chart – I, Annexure – C] - (BRT Road to GK-1 B Block) there
was obstruction due to existing trees, sewer lines and manholes and
thus no item of work could be executed.
148m]
2013

8.43 Chainage 3895 – 4806 – 911 m in length, not in scope of work of the
present Contract.

B and Chart – I, Annexure – C] - (GK-I to BRT Road) there was
encroachment by Residents of B Block and thus no item of work was
possible.
493m]

08-09-2012 till 15-10-2012
16-06-2013 till 01-10-2013

16-10-2012 till 15-06-2013 – 242 days
02-10-2013 till 21-10-2013 – 19 days
8.45 Chainage 5299 – 5754 [Pg. 158 of the Rejoinder to SoD, Annexure
– B and Chart – I, Annexure – C] - (BRT to Ring Road) there was
Page 53 of 133
hindrances in the nature of encroachment by Jhuggis on both sides
of drain, DJB waterline falling in the alignment of Drain, and
electric lines passing through the drain due to which no work could
be possible nor any excavation could be executed.
Total Cost of the stretch (approx. in crores) – Rs. 15.33 Cr. [total length
of the stretch 455m]
Hindrances encountered in parts as under:
• 216 m- Encroachment in the shape of Jhuggis

08-09-2012 till 25-01-2013

26-01-2013 till 21-10-2013 – 268 days
• 131 m – DJB water line falling in the alignment of the drain.

08-09-2012 till 31-03-2013

01-04-2013 till 21-10-2013 – 203 days
• 108 m – live electric cable passing through the drain

08-09-2012 till 21-10-2013

8.46 In Chainage 3747-3895, Chainage 4806-5299 and Chainage

5299 – 5754, the major reasons for slow progress were as
under:
Page 54 of 133
• Delay in removal of encroachment and other things so as to provide
the Claimant with an encumbrance free site by the Respondent –
The Claimant was made to face the problem of encroachment since
the beginning of the work near Andrews Ganj due to the existence
of the kutcha hutments in both banks of the drain. Due to the said
hindrance the work progress got reduced from CH.5549 to CH
5754. In Greater Kailash – 1, there were obstructions as the
several house owners had encroached the nallah by extending their
rear courtyard and objected to excavate the nallah. The Claimant,
vide separate letter dated 26.09.2012 [Vol. C-2, Pg. 324] had
requested the Respondent to allocate the suitable land nearby the
construction site for store yard and for setting up the RMC plant.
Vide letter dated 26.09.2012 [Vol. C-2, Pg. 323], the Claimant
requested the Respondent to arrange the necessary permission for
tree cutting and also requested for removal of encroachment i.e.
hutments etc. Also, vide letter dated 26.09.2012 [Vol. C-2, Pg. 322],
the Claimant requested the Respondent for allocation of dumping
yard. Despite such requests, an encumbrance free site was not
provided to the Claimant / Contractor. The progress of the work
was adversely affected due to such hindrances.
• Delay due to non-availability of clear front – site was occupied by

other agency - Work between Ch. 5549 to Ch. 5754 was adversely
affected due to preoccupation of the site by some other agency.
Nallah banks were occupied by the DJB pipe line contractor. Vide
letter dated 12.02.2013 [Vol. C-2, Pg. 330], the Claimant informed
the Respondent about such activity by an another agency and also
requested the Respondent to make necessary arrangements so that
the work could be done without further delay. The entire area was
Page 55 of 133
covered with piling work for pipe line pedestals and equipment
deployed by the other contractor.
8.47 Delay in shifting of utilities - The Claimant submits that a lot of

pipelines of DJB were crossing the nallah at several points and there
was no decision by the Employer for shifting the same. The Claimant
had to leave gaps and then, proceed with the work. Presence of one
cable near Andrews Ganj, delayed the work since BSES took time to
shift the cable. Thus, the delay in shifting these utilities led to
unnecessary delay in progressing with the work. The Claimant
communicated the same to the Respondent vide letter dated
22.04.2013 [Vol. C-2, Pg. 338].
8.48 In view of the aforesaid factual position appearing on record, and in

particular acceptances of causes for delay as recorded in the
Hindrance Register, many of which are attributable to the
Respondent and none to theClaimant, the position taken by the
Respondent that the progress of work by the Claimant was slow does
not cut much ice. It is also a matter of record that extensions have
been granted to the Claimant. No doubt, in the communications
conveying extention, the Respondent had stated that these were
granted without prejudice to the right of the Respondent to levy
Liquidated Damages, fact remains that no such Liquidated
Damages were imposed till the closure of the contrct. Likewise, in
letter dated 07.10.2013, the Respondent had had also stated that 1%
amount was not being withheld for timebeing, provisionally. Here
again, no further steps were taken by the Respondent in this behalf.
Therefore, it is difficult on the part of the Respondent to now say
that hindrances mentioned in the Hindrance Register cannot be
construed as acceptance by the Respondent. The Tribunal will also
Page 56 of 133
like to observe that whereas the Claimant has given in detail its
version about the position at various chainages, no such exercise is
conducted by the Respondent in rebuttal.
8.49 Therefore, the Tribunal arrives at a conclusion that insofar as First

Period is concerned, slow progress of the work is attributed to
various hindrances for which the Claimant is not responsible and
many of these delays can be attributed to the Respondent.
Findings on Second Period
8.50 So far as the Second Period, which is from the date of passing of the
Interim Order by the NGT, the submission of the Respondent is two-
fold, which is recapitulated below:
(a) First submission of the Claimant is that the Respondent had

not taken required permissions from the concerned authorities
in respect of the Project. It is stated by the Respondent that the
project in respect of which the present dispute arises, was
floated under JNNURM, Ministry of Urban Development,
Government of India. The said project was being monitored at
the highest level at Government of India and Government of
Delhi. Further the Respondent had also taken the permission
from Hon’ble L.G. before initiating the project which was
highest permission required for commencing the work at site
and for that purpose, it has relied upon the Status report dated
17.10.2013 at page No. 45 of SOD Documents. It is further
argued that in the said period, the work could not be proceeded
in compliance of the directions passed by NGT and the Claimant
was fully aware of the proceedings which were going on before
the NGT because the said proceedings were in public domain.
Page 57 of 133
On this premise, it is contended that the Claimant cannot take
defence that the Claimant could not foreclose contract because
the Claimant was not aware of the proceedings.
(b) The second submission is that in any case, because of the said
stay for a long period, it is inconceivable that the Claimant kept
the site mobilized. It also not acceptable to the Respondent, by
standards of a reasonable man, that a company having its
annual average turnover for the year 2014-2015 around INR
2000 crore would keep the site deployed to 100% capacity, when
no work was going on. It is not the case of the Claimant this was
their only site in Delhi and hence the site had to be deployed
and there was no alternative use for the items deployed. In such
a scenario, as per settled principles of law, it is the duty of a
party suffering a lost to mitigate the same and it cannot
luxuriously claim losses without taking any steps to control the
ripple effect.
8.51 Insofar as the second limb of the submission at para (b) above is
concerned, that would be considered while discussing the claim of
the Claimant on merits. As far as the submission of the Respondent
that it had taken all permissions necessary before starting of the
work, such a wholesome argument may not be acceptable. May be,
the clearance for going ahead with the project was taken by the
Respondent from the authorities at the highest level of the
Government of India or Government of Delhi. The harsh truth,
however, is that NGT found that such a Project was impermissible
in law and stopped the execution thereof. The project belonged to
the Respondent and therefore, it was for the Respondent to take all
necessary precautions and ensure that it meets all the requirements
Page 58 of 133
of environmental laws before awarding the work. Once NGT has
found the Project to be lacking in this behalf, it is the Respondent or
the Government authorities which have to bear the responsibility
thereof. By no stretch of imagination, the Claimant can be faulted
for the same. More over, after the passing order of the final order
by NGT on 13.01.2015, the Respondent took more than eight months
to take the decision for the closure of the contract. The Respondent,
therefore, cannot shut the Claimant for raising the claims by taking
such a plea. The claims for this period, therefore, will need
adjudication on merits.
3. Effect of “Exclusionary Clauses” in the Contract
8.52 One more aspect which needs to be considered at a preliminary stage

pertains to exclusionary clauses in the contract. It is argued by the
Respondent that all the Claimant’s claims are for
damages/compensatory in nature. None of the claim arises from the
terms of the Contract or on the basis of RA Bills raised by the
Claimant. Clause 13 of the contract deals with “Foreclosure of
contract due to abandonment or reduction of scope of work”. As per
this clause, the contractor shall have no claim to any amount of
compensation or otherwise whatsoever if the contract is foreclosed
for the aforesaid reasons. Clause 14 of the SCC states that the
contractor would not be entitled to any claim in case of any delay by
the Engineer-in-Charge in removal of trees or shifting, raising,
removing of telegraph, telephone or electric lines (overhead or
underground), water and sewer lines and/or structures, etc. if any,
which may come in the way of the work. As per this clause, only
suitable extension of time would be granted to cover such delays. A
poser that arises is: whether the Claimant is debarred from raising
claims in view of the aforesaid clauses?
Page 59 of 133
8.53 It is submitted by Mr. Sachin Datta, Ld. Senior Counsel for the
Claimant that there are numerous judicial pronouncements which
hold that right of the Claimant to claim damages is not constricted
by mere insertion of such clauses.
8.54 Clause 13, deals with, “Foreclosure of Contract due to abandonment

or reduction of scope of work” [Pg.131, Vol. C-1]. As per this clause,
the Contractor shall have “no claim to any payment of compensation
or otherwise whatsoever,…” Further, as mandated in this clause,
the Engineer-in-Charge is supposed to give a notice in writing to the
Contractor. The Claimant submits that after the Status-quo Order
passed by NGT, there is no notice by SDMC to Contractor to
demobilize. The Claimant as well as the Respondent had no choice
but to obey the NGT Order. But, it is an admitted fact that the
foreclosure happened after almost two years of the status-quo order
passed by the NGT. Meanwhile, the Respondent did not give any
instruction to the Contractor to demobilize its resources. Even after
the final order dated 13.01.2015, the Respondent took almost 09
months to foreclose the contract. [23.09.2015]. The Claimant
submits that the NGT was concerned with environmental clearances
and that there was a fundamental breach on part of SDMC on not
being able to take such clearances prior to the commencement of the
work. Sub-clause (iv) and (v) are relevant for the present case. The
clause contemplates compensation of 2% being paid to the
Contractor. However, this artificial restriction of compensation that
the Contractor is entitled to is inconsistent with Section 73 of the
Contract Act, 1872. Thus, even if the contract gives the right to
Respondent to curtail the work, it carries with it a reasonable
compensation to be paid to the Contractor. There cannot be such an
Page 60 of 133
artificial curtailment of the compensation that is otherwise legally
due and payable to the Contractor as the same is contrary to law. It
is also argued that the said clause clearly applies only in the event
of “abandonment” or “reduction in scope” necessitated due to site
conditions and cannot possibly apply to a situation where the entire
work is brought to an unceremonious grinding halt.
8.55 It is argued that the delay was not on account of any default or
breach of contract on the part of the Claimant, and therefore, a rigid
interpretation of the terms of contract is not warranted. In support
of this proposition, the Ld. Senior Counsel has relied upon the
judgment in the case of KN Sathyapalan v. State of Kerala & Ors.
[(2007) 13 SCC 43], it has been held as under:
“32. Ordinarily, the parties would be bound by the terms agreed upon
in the contract, but in the event one of the parties to the contract is
unable to fulfil its obligations under the contract which has a direct
bearing on the work to be executed by the other party, the arbitrator
is vested with the authority to compensate the second party for
the extra costs incurred by him as a result of the failure of the
first party to live up to its obligations. That is the distinguishing
feature of cases of this nature and Alopi Parshad case [(1960) 2 SCR
793 : AIR 1960 SC 588] and also Patel Engg. case [(2004) 10 SCC 566].
As was pointed out by Mr Dave, the said principle was recognised by
this Court in P.M. Paul [1989 Supp (1) SCC 368] where a reference was
made to a retired Judge of this Court to fix responsibility for the delay
in construction of the building and the repercussions of such delay.
Based on the findings of the learned Judge, this Court gave its approval
to the excess amount awarded by the arbitrator on account of increase
in price of materials and costs of labour and transport during the
extended period of the contract, even in the absence of any escalation
clause. The said principle was reiterated by this Court in T.P.George
case [(2001) 2 SCC 758].
33. We have intentionally set out the background in which the

arbitrator made his award in order to examine the genuineness and/or
validity of the appellant's claim under those heads which had been
allowed by the arbitrator. It is quite apparent that the appellant was
prevented by unforeseen circumstances from completing the work
within the stipulated period of eleven months and that such delay could
have been prevented had the State Government stepped in to maintain
the law and order problem which had been created at the worksite. It is
also clear that the rubble and metal, which should have been available
Page 61 of 133
at the departmental quarry at Mannady, had to be obtained from
quarries which were situated at double the distance, and even more,
resulting in doubling of the transportation charges. Even the space for
dumping of excess earth was not provided by the respondents which
compelled the appellant to dump the excess earth at a place which was
far away from the worksite entailing extra costs for the same.
34. In the aforesaid circumstances, the arbitrator appears to have acted

within his jurisdiction in allowing some of the claims on account of
escalation of costs which was referable to the execution of the work
during the extended period. In our judgment, the view taken by the
High Court was on a rigid interpretation of the terms of contract and
the supplemental agreement executed between the parties, which was
not warranted by the turn of events.”
8.56 Also, in the case of M/s Mohan Lal Harbanslal Bhayana & Company
v. Union of India [2012 SCC Online Del 1957], it has been held as
under:
“7. A conjoint and harmonious reading of the judgments cited by both the
parties would lead us to cull out the legal proposition to the effect that
whenever there is a provision in the contract within the parameters
whereof a particular claim falls, said claim has to be adjudicated upon
within the four corners of the said contractual provision. It is for the reason
that the arbitrator has to take into consideration the provision of the
contract and he cannot travel beyond the parameters of the contract. If the
award is given outside the said contractual provision, it would amount to
exceeding the jurisdiction by the arbitrator which is not permitted. A
distinction has to be maintained between an error within the jurisdiction
and an error in excess of jurisdiction. On the other hand, if the claim does
not fall within the stipulated contractual provision but is a claim for loss
suffered which can be granted under the provisions of Sections 73 and 74 of
the Indian Contract Act, it would be permissible for the Arbitrator to award
such a claim. Keeping in view the aforesaid position in law, we have to
examine as to whether clause 10(CC) of the GCC apply to the claim as
preferred by the claimant or such a claim could be entertained under the
provisions of Section 73 of the Indian Contract Act notwithstanding
existence of clause 10(CC) of the GCC. In order to appreciate this, we may
first reproduce clause 10(CC). It reads as under:…
8. This clause clearly takes into account escalation in the prices of material
as well as compensation for escalation for labour and provides the formula
on the basis of which escalation in the prices of material and/or labour is to
be worked out. Therefore, if the claim for escalation preferred by the
contractor relates to material or labour, it would be covered by Clause
10(CC) of the GCC and the Contractor is entitled to get the claim as per the
said provision. In the present case, the claim was admittedly on account of
escalation in the prices of material and, therefore, would be covered by
Clause 10(CC) of the GCC. Identical situation arose in the case of Pt.
Munshi Ram & Associates (P) Ltd. (supra) and the learned Single Judge
held that the claim awarded as per the provisions of Clause 10(CC) of the
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GCC was justified. That was also a case where the contract prolonged
beyond the stipulated date and the contractor had given a notice to the
department to charge 40% extra over and above the quoted rates. However,
the Court held that such a claim would be permissible only in accordance
with Clause 10(CC) of the GCC. The judgments cited by learned counsel for
the appellant have no applicability. In Narain Das R. Israni (supra), claim
No. 22 was for compensation on account of factors other than covered by
Clause 10(CC) of the GCC and it was for this reason that the Court held
that award given did not suffer from any infirmity. Likewise in K.N.
Sathyapalan (supra), there was no provision at all in the contract, for any
price escalation in the original agreement and by supplemental agreement,
it was provided that no claim for escalation would be permissible. The
question was examined from that angle and it was held that such a
provision prohibiting grant of compensation would not apply in the event
when one of the parties to the contract is unable to fulfill its obligation
under the contract and the compensation was permissible under the law,
i.e., the Indian Contract Act.”
8.57 It would also be useful to take note of the judgment of the High Court
of Delhi in Rawla Construction v. Union of India ILR 1982 Delhi 44,
following discussion in the said judgment needs to be reproduced:
“(4) Now I turn to the first two claims. Counsel for the Union of India
says that under clauses 9, 11, and 63 of the Conditions of the Contract,
the contractor is not entitled to any compensation even if the delay in
the execution of the contract is caused by reason of default on the part
of the government. I cannot accept this argument. If there is delay in
the execution of the contract by reason of default on the part of the
government, none of the three clauses referred to by counsel will stand
in the way of the contractor in making a claim before the arbitrator
regarding the increase in the cost of material or expenses on account of
overheads and establishment charges. Hudson in his Building and
Engineering Contracts (9th ed. p. 492) states the principle governing
damages in these words: “WHERE the cause of delay is due to the
breach of contract by the employer, and there is also an applicable power
to extend the time, the exercise of that power will not, in the absence of
clearest possible language, deprive the contractor of his right to
damages for the breach.” Such provision as attempt to deprive the
contractor of the right to claim damages will be strictly construed
against the employer (Hudson p. 493). Because such a clause will have
calamitous consequences for the Contractor. He will have no remedy
anywhere, however outrageous the conduct or behavior of the employer
may be, however interminable the delay. (See Metro Electric Co. v.
Delhi Development Authority, AIR 1980 Delhi 266 (1) at p. 270).
(5) “THE most usual circumstances which give rise to claims are delay
in giving the contractor possession of the site, or in the supply of
drawings, or suspension of the work caused by some act or omission of
the employer, and a consequent increase of expense in the performance
of the works. The contractor will be entitled to recover damages for
delay caused by the employer notwithstanding that an extension of time
Page 63 of 133
for completion has been granted in respect of such delay.” (Emden and
Gill’s Building Contracts and Practice, 7th ed. p. 272; Halsbury Laws of
England, 4th ed. Vol. 4 para 1281 p. 653).
(6) The fact that the engineer has under the building contract, a power
to extend for any reason the date for completion of the contract, and has
so extended it, does not operate to free the employer from damages for
breach of contract (i.e. for delay by the employer) unless the contractor,
on his side also, has accepted this extension as full satisfaction in
respect of the delay. In Trollope and Sons and Colls and Sons Ltd. v.
Singar. (1913), H.B.C. (4th ed.) 849 (2), during a contract for carrying out
alterations and additions, to a dwelling-house, the contractor was
delayed by (inter alia) the non-supply of drawings and details and
essential information, and he claimed damages on these counts. The
employer denied liability and counter-claimed for damages for delay in
completion. The time for completion had been extended by the architect,
and was further extended by the arbitrator, in an arbitration which
ensued, to the date when the work was in fact completed. It was held
that this extension of time did not affect the damages claimed by the
contractor against the employer for breach of contract, by not affording
possession of the site, and by interference with the execution of the
work.
(7) The contractor’s claim was that due to prolongation of the period of
contract he had to buy construction material at higher rates because the
prices had increased and also had, incur extra expenditure on overheads
and establishment. The arbitrator found these claims partly justified.
He awarded INR 2,45,217.03 on the first claim on account of increase in
the cost of construction material. On account of expenditure on
overheads and establishment he awarded to the contractor a sum of INR
3,11,958. Both the claims were founded on the primary plea of
“prolongation of the period of contract.” This prolongation can well be
due to the default of the government. And if the arbitrator finds that
the government is to be blamed for the delay and that the contractor
could not complete the work in time because of the delay on their part,
the arbitrator, I think, is entitled to award damages on account of
increase in the cost of construction material or extra expenditure on
overheads and establishment. These are damages which the contractor
suffers because of the breach of contract by the government. The period
of performance is lengthened. It is extended beyond the time originally
fixed in the contract.
(8) If the duration of the work is prolonged, the expenses will increase.
The question then will be: Who is responsible for delay? Who is in
breach? Who is the prolonger? Neither clause 9 nor clause 11 nor clause
64 take away the arbitrator’s jurisdiction to adjudicate upon the claim
of the contractor, and award him damages for the loss sustained by the
breach. If the contractor himself is guilty of delay, the arbitrator will
dismiss the claim because no party can take advantage of his own
wrong. But if he is not at fault and the other party to the contract is in
default, the arbitrator can award damages.”
Page 64 of 133
8.58 I have given due consideration to this seminal issue. Such clauses
have come up for discussion before the judicial for a umpteen
number of times. There are few judgments which are indicative of
the proposition that in case there is a limitation of liability in the
contract, then no time related claims are maintainable and the
Learned Counsel for the Respondent referred to some of them. Let
me list some at this stage.
i) Syed Israr Masood (1981) 4 SCC 289;
ii) Associated Engineering Co. (1991) 4 SCC 93
iii) T.A. Choudhary 2004 (3) ALD 357
iv) Ramnath International (2007) 2 SCC 453
8.59 In Syed Israr Masood v. State of Madhya Pradesh (1981) 4 SCC

289,following clause came up for consideration :
“The details of quantities of forest produce announced at the timeof
auction are correct to the best of the knowledge of the Divisional Forest
Officer but are not guaranteed to any extent. The intending bidders are,
therefore, advised to inspect on the spot the contract area and the
produce they intend to bid for with a view to satisfy themselves about
its correctness. No claim shall lie against the State Government for
compensation or any other relief, if the details of the quantities are
subsequently found to be incorrect.”
Interpreting this clause, the court observed :

“10. In our opinion, while the said condition will operate to prevent the
Contractor from claiming any damages or compensation from the State
Government on the ground that the details of the quantity of the forest produce
were subsequently found to be incorrect, it will not preclude him from
repudiating the contract on its being found that there was substantial variance
between the particulars furnished at the time of the auction regarding the
quantity and quality of timber that will be available for extraction in the
concerned coupes and the quantity etc. of tree growth actually found to be
available on the site.
11. We do not, therefore, find it possible to agree with the reasons stated by the
High Court for refusing the plaintiff’s prayer for refund of the amount paid by
him by way of the first instalment of the sale price. The conclusion recorded by
the Trial Court on this issue was perfectly correct and the High Court was in
error in interfering with the said finding.”
Page 65 of 133
8.60 The Apex Court, in Associated Engineering Company v. Government
of Andhra Pradesh and Another (1991) 4 SCC 93, upheld the High
Court judgment setting aside claims, which were not supported by
the agreement between parties and that the Arbitrator travelled
outside the contract in awarding those claims. The Court held that
the High Court was right in stating that the Arbitrator acted outside
the contract in awarding those claims, while making following
observations :
“On facts, these (four) claims are not payable under the contract. The
contract does not postulate – in fact, it prohibits payment of any
escalation otherwise than in terms of the formula prescribed by the
contract. The conclusion is reached not by construction of the contract
but by merely looking at the contract.
.......................In the instant case, the umpire decided matters strikingly

outside his jurisdiction. He outstepped the confines of the contract. He
wandered far outside the designated area. He diagressed far away from
the allotted task. His error arose not by misreading or misconstruing or
misunderstanding the contract, but by acting in excess of what was
agreed. It was an error going to the root of his jurisdiction because he
asked himself the wrong question, disregarded the contract and
awarded in excess of his authority. In many respects, the award flew in
the face of provisions of the contract to the contrary.”
8.61 In T.A. Choudhary v. State of Andhra Pradesh and Others (2004) 3

ALD 357, a Division Bench of Andhra Pradesh High Court
interpreted Clause 59, which was couched in the following language:
“59. Delays and extension of time:- No claims for compensation on
account of delays or hindrances to the work from any cause whatever
shall lie, except as hereinafter defined. Reasonable extension of time
will be allowed by the Executive Engineer or by the office competent to
sanction the extension for unavoidable delays, such as may result from
causes, which, in the opinion of the Executive Engineer, are
undoubtedly beyond the control of the Contractor. The Executive
Engineer shall assess the period of delay or hindrance caused by any
written instructions issued by him, at twenty five per cent in excess of
the actual working period so logged.”
It held that the aforesaid clause prohibits claims on the above account.
It further held that the Arbitrator has travelled beyond the
jurisdiction in awarding those claims. The Division Bench held that it
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was of the view that the Arbitrator had exceeded his jurisdiction in
awarding the amount. In that basis, it held that it did not find any
illegality in the judgment of the lower Court rejecting the claim as
awarded by the Arbitrator.
8.62 The similar judicial position was followed by the Supreme Court in
Ramnath International Construction (P) Ltd v. Union of India,
(2007) 2 SCC 453, where Section 11 of the General Conditions of
Contract relating to time, delay and extension, inter-alia, provided:
“(C) No claim in respect of compensation or otherwise, howsoever

arising, as a result of extensions granted under conditions (A) and (B)
above shall be admitted.”
The Court found that Clause (C) provides that where extensions
have been granted by reason of the delays enumerated in Clause (A),
which were beyond the control of the contractor, or on account of the
delays on the part of the employer specified in Clause (B), the
contractor is not entitled to make any claim either for compensation
or otherwise, arising in whatsoever manner, as a result of such
extensions. After enumerating certain delays, sub-clause (viii) of
Clause (A) specifically mentions delay on account of any other cause
beyond the control of the contractor. The cause for delays specified
in Clause A; thus, encompass all delays over which the contractor
has no control. This will necessarily include any delays attributable
to the employer or any delay for which both the employer and the
contractor are responsible. The contract thus provides that if there
is any delay, attributable either to the contractor or the employer or
to both, and the contractor seeks and obtains extension of time for
execution on that account, he will not be entitled to claim
compensation of any nature, on the ground of such delay, in addition
to extension of time obtained by him. Thus, the Court held that the
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claims for compensation as a consequence of delays, i.e., Claim 24
and Claims 13 to 16 was barred by Clause 11(C).
8.63 It may be pointed out at this stage that on the other hand, in M/s.
Asian Techs Ltd v. Union of India & Others (2009) 10 SCC 354, the
Court, while interpreting a similar provision in the contract came to
the conclusion that notwithstanding such a clause, the Contractor
was eligible to make a claim for further amount and the Arbitrator
was within his jurisdiction to award the same. It can be argued that
this judgment did not consider either the case of Ramnath
International or other judgments referred to above. It can also be
argued that as against above, the Apex Court, in Wig Brothers
(2010) 13 SCC 377 chose to base its decision on Ramnath
International which view is reiterated by the Supreme Court in M/s.
Kss Kssipl Consortium (2015) 4 SCC 210, holding that in view of the
exclusionary clause in the said agreement, the claim for ‘extended
stay compensation’ was not an arbitrable dispute.
8.64 In Asian Techs Ltd., the Apex Court, while interpreting such a
clause took the view:
“(B) If the works be delayed:
a) By the reason of non-availability of Government stores mentioned

in Schedule 13; or
b) By reason of non-availability or breakdown of Govt Tools and Plant

mentioned in Schedule-C then, in any such event, notwithstanding
the provisions hereinbefore contained, the G.E. may in his discretion
grant such extension of time as may appear reasonable to him and
the Contractor shall be bound to complete the works within such
extended time. In the event of the Contractor not agreeing to the
extension granted by the Garrison Engineer, the matter shall be
referred to the Accepting Officer (for CWE in case of contract
accepted by Garrison Engineer) whose decision shall be final and
binding.
Page 68 of 133
(C) No claim in respect of compensation or otherwise, howsoever arising,
as a result of extensions granted under Conditions (A) and B) above
shall be admitted.
The letter dated 24.11.1988 makes it clear that the appellant was
not ready to carry out the work beyond the contracted period
otherwise than on separate work orders, and the subsequent
correspondence like the letter dated 11.10.1989 makes it clear that
it was on the specific assurance given by the respondent to the
appellant to continue the work and that the rates would be decided
across the table that the appellant went ahead with the work.
Hence, in our opinion, it is now not open to the respondent to contend
that no claim for further amount can be made due to clause 11(C)
and that the arbitrator would have no jurisdiction to award the
same.
In Board of Trustees, Port of Calcutta v. Engineers-De-Space-Age

(1996) 1 SCC 516, it was held that a clause like clause 11 only
prohibits the department from entertaining the claim, but it did not
prohibit the arbitrator from entertaining it. This view has been
followed by another Bench of this Court in Bharat Drilling &
Treatment Pvt Ltd v. State of Jharkhand & Ors in Civil Appeal No.
10216 of 2003 decided on 20th August 2009.”
8.65 However, apart from M/s Asian Techs Ltd. (supra), there are various
judgments wherein the courts have held that when the delays are
attributable to the employer, the cost escalates, and in addition, it
increases burden on overhead expenses. If the contractor is not
compensated for such escalation, it would result not only in wiping
off the margin, but losses to the contractor as well. On this
reasoning, the courts have granted compensation and/or damages
notwithstanding such clauses. In this behalf, another judgment in
State of West Bengal v. Pam Developments (P) Ltd. 2017 SCC
Online CAL 13272 may be referred to wherein the Calcutta High
Court has conducted indepth analysis of prevailing caselaw and
culled out the legal position in the following manner:
“46. A Supreme Court judgment reported at (2008) 16 SCC 128
(Associated Construction v. Pawanhans Helicopters Limited) has been
carried by the contractor for the proposition that prohibitory clauses
may operate during the stipulated period of the contract, but they may
not govern the period of extension. On similar lines, the judgments
reported at (2009) 10 SCC 354 (Asian Techs Limited v. Union of India)
and (2009) 16 SCC 705 (Bharat Drilling and Foundation Treatment
Page 69 of 133
Private Limited v. State of Jharkhand) delivered by the same bench
have been relied upon by the contractor qua the applicability of the
prohibitory or no-damage clauses during the extended period of the
contract when the delay was held by the arbitral tribunal to be on
account of the employer. In the first of such judgments, the Supreme
Court found that the award of damages in respect of the claims
prohibited under the contract was justified as “it is apparent that the
delay in the execution of the contract was solely due to the default of the
respondents.” However, the no-damage clauses in the relevant
agreement covering the “excepted matters” were equated with clauses
in some contracts prohibiting any payment on account of interest in the
court referring to the judgment reported at (1996) 1 SCC 516 (Port of
Calcutta v. Engineers-De-Space-Age). The other judgment of the same
bench covered an arbitral award that awarded substantial amounts in
respect of the claims for idle labour, business loss and delay in
communicating drawings and specifications despite prohibitory clauses
in the contract governing such heads of damages. The argument on
behalf of the award-holder in that case was that such prohibitory
clauses amount to “only a bar on the Department and not a bar on the
arbitrator in respect of the matters mentioned therein.” In support of
such contention, the judgment in Engineers-De-Space-Age was also
cited on behalf of the award-holder in such case. The employer in that
case, on the other hand, referred to a judgment reported at (2009) 12
SCC 26 (Sayeed Ahmed and Co. v. State of Uttar Pradesh). The court
held that the decision in Sayeed Ahmed and Co. was “distinguishable
because it relates to interest under the Arbitration and Conciliation Act,
1996 and was not in respect of a claim for the principal amount.” The
court then noticed Section 31(7) of the 1996 Act that permits the parties
to an arbitration agreement to “agree otherwise to the awarding of
interest by the Arbitral Tribunal”.
47. The contractor has also referred to a recent judgment reported

online at AIR 2017 SC 3336 (Assam State Electricity Board v.
Buildworth Private Limited) where a prohibitory clause on account of
escalation was cited to challenge the award of damages on such head. A
three-judge bench of the Supreme Court in that case referred with
approval to the enunciation the law in such regard in the judgment
reported at (2007) 13 SCC 43 (K.N. Sathyapalan (dead) by LRs v. State
of Kerala), that “the parties would be bound by the terms agreed upon
in the contract, but in the event one of the parties to the contract is
unable to fulfill its obligations under the contract which has a direct
bearing on the work to be executed by the other party, the arbitrator is
vested with the authority to compensate the second party for the extra
costs incurred by him as a result of the failure of the first party to live
up to its obligations.”
69. Before coming to the dictum in Sarvesh Chopra pertaining to

prohibitory or no-damage clauses in a contract, a distinction needs to be
made between a clause prohibiting payment or award of interest and a
clause prohibiting any head of claim of damages other than interest.
The basis of the distinction, as noticed in the judgment in Bharat
Drilling, can be traced to Section 31(7) of the 1996 Act. Section 31(7) of
Page 70 of 133
the Act has undergone a change pursuant to the 2016 Amendment
which has been given retrospective operation from October 23, 2015.
The amended provision is not applicable in this case. Under the original
Section 31(7) of the Act the statute conferred specific authority on the
arbitral tribunal to award interest at such rate as it deems reasonable,
but such authority of the arbitrator was subject to an agreement to the
contrary between the parties. It is, thus, that the judgments in Ambica
Construction read the authority of the arbitral tribunal to be unfettered
unless there was an express agreement to the contrary curbing the
power of the arbitrator to award interest. Thus, a clause simpliciter in
the agreement prohibiting the payment of interest without expressly
referring to the authority of the arbitrator in such regard may not be
regarded as impeding the statutory authority of the arbitrator to award
interest. Such is not the case in respect of any other prohibitory or no-
damage clause covering heads of damages other than interest. As a
consequence, the legal reasoning pertaining to the arbitrator’s authority
to award interest notwithstanding a general prohibition in such regard
in the agreement between the parties cannot guide the treatment or
interpretation of a prohibitory clause pertaining to other heads of
damages than interest. Accordingly, whether or not the dictum in
Engineers-De-Space-Age has been misread in some of the later
judgments without noticing the peculiar clause in that case, is
irrelevant in the present context.
70. Hence, at last, to the dictum in Sarvesh Chopra. As noticed above,

the judgment was rendered in a situation covered by Section 20 of the
1940 Act. Such provision required a petition to be made for the filing of
an arbitration agreement and the enumeration of the disputes proposed
to be submitted to arbitration for the court to call upon the respondent
to show cause why the agreement should not be filed. The necessity for
enumerating the disputes was as a consequence of the expression
“where a difference has arisen to which the agreement applies” in
Section 20(1) of the 1940 Act. As a result, each head of dispute had to
be assessed by the court prior to referring the matter to arbitration as
to whether it was covered by the arbitration agreement. Apart from the
fact that the ethos of the 1940 Act was more court-centric, the limited
extent of intervention as circumscribed by Section 5 of the 1996 Act did
not govern the reigning statute. Indeed, the fundamental approach to
arbitration law in this country and the philosophy governing the same
have been completely altered from what they were under the 1940 Act
to what they are under the successor statute. In the arbitration law
regime under the previous enactment, the court retained the residuary
authority to deal with such ancillary aspects that were not expressly
provided for in the statute; under the 1996 Act, the court now has only
so much authority as has been provided in the statute and nothing
beyond it. The arbitrability of the disputes raised by a petitioner in
proceedings under Section 20 of the 1940 Act had to be adjudicated by
the court and only the merits of the referred disputes adjudicated by the
arbitrator. That is no longer the case under the 1996 Act, much less the
scenario in an arbitral reference with the intervention of the Chief
Justice or his delegate under Section 11 of the present statute.
Page 71 of 133
75. However, in the present case the amounts awarded under the four
principal heads of claim despite the prohibitory clauses in respect of
such heads, do not appear to be unconscionable, far less shocking.
Cogent and acceptable reasons were furnished by the arbitrator in
respect of every head of claim awarded in favour of the contractor and
it did not call for any interference under any permissible ground in
Section 34 of the 1996 Act read with Section 28 thereof. In particular,
the tinkering with the costs awarded by the arbitrator and the rate of
interest appear to be the unkindest cuts of all. Much more than a sum
of INR 5 lakh must have been expended by the contractor in course of
the 134 sittings and no “realistic assessment” on the same lines as the
condemned “rough and ready justice” methodology could have prompted
even a paisa to be knocked off from the costs. The award of interest was,
again, within the exclusive domain of the arbitrator and subject to his
discretion as recognised in original Section 31(7) of the 1996 Act and
could not have been interfered with, without an express finding of
perversity in the exercise of the discretion by the arbitrator.”
8.66 It is pertinent to mention at this stage that the aforesaid purported

contradiction in approach in two sets of judgments was noticed by
the High Court of Delhi in Simplex Concrete Piles India Pvt Ltd v.
Union of India 2010 (115) DRJ 616 and the Court decided to follow
Asian Techs instead of Ramnath International. Following discussion
from the said judgment needs to be reproduced.
“3. The issue involved in the present case has become further complex
because of two judgments of the Supreme Court dealing with very much
these Clauses 11A to 11C. Whereas in the case of Ramnath
International Construction (P) Ltd v. Union of India, (2007) 2SCC 453,
the Supreme Court, while interpreting these clauses has held that even
if the employer/Union of India is at fault, yet, Clauses 11A to 11C bar
the entitlement of the contractor to damages, on the other hand, a recent
judgment of the Supreme Court reported as Asian Techs Ltd v. Union
of India and Others, (2009) 10 SCC 354 holds that the clauses in
question, namely, 11A to 11C, prevents only the department from
granting damages, but it does not prevent the Arbitrator from awarding
damages which are otherwise payable by the employer on account of its
breach of contract.”
“5. I would have ordinarily accepted this thorough reasoning as given in

the Award, however, the Supreme Court has in fact held just the
opposite in the judgment of Ramnath International’s case (supra), in
paragraph 12 thereof, and which reads as under:
“12. Clause (C) provides that where extensions have been

granted by reason of the delays enumerated in Clause (A) which
were beyond the control of the contractor, or on account of the
delays on the part of the employer specified in Clause (B), the
Page 72 of 133
contractor is not entitled to make any claim either for
compensation or otherwise, arising in whatsoever manner, as a
result of such extensions. After enumerating certain delays, sub-
clause (viii) of clause (A) specifically mentions delay on account
of any other cause beyond the control of the contractor. The
causes for delays specified in clause (A), thus, encompass all
delays over which the contractor has no control. This will
necessarily include any delays attributable to the employer or
any delay for which both the employer and the contractor are
responsible. The contract thus provides that if there is any delay,
attributable either to the contractor or the employer or to both,
and the contractor seeks and obtains extension of time for
execution on that account, he will not be entitled to claim
compensation of any nature, on the ground of such delay, in
addition to the extension of time obtained by him. Therefore, the
claims for compensation as a consequence of delays, that is
Claim 24 of the Hangar Contract and Claims 13 to 16 of the Road
Contract are barred by Clause 11(C). (Underlining is mine).”
As already stated above, the Supreme Court in the recent judgment of

Asian Techs Ltd.’s case (supra) has held to the contrary while
interpreting the same clauses.
“6. What should a High Court do when faced with two judgments of the
Supreme Court which apparently cannot be reconciled with respect to
its ratio ? The Full Bench of the Patna High Court in the judgment
reported as Amar Singh Yadav v. Shanti Devi and Ors ., AIR 1987 Pat
191 has held that when there are two different judgments of the
Supreme Court, then, the High Court should follow that judgment
which lays down the correct law.”
8.67 The Delhi High Court reproduced detailed discussion from the
aforesaid judgment of the Patna High Court which noticed various
judgments laying down the course of action needs to be followed by
subordinate courts/High Courts when they are confronted with two
conflicting judgments of the Supreme Court. It is not necessary to
into that discussion in detail. Suffice it to state that Delhi High
Court accepted that more popular view was that the courts must
follow the judgment which appears to them to state the law
accurately and elaborately and particularly so when the latter
decisions of the Supreme Court did not notice the earlier decision.
Page 73 of 133
8.68 It would be interesting to note that the Delhi High Court also
discussed the validity of such a clause which bars the Contractor
from claiming damages on the touchstone of Section 23 of the
Contract Act and came to the conclusion that such a clause would be
void, being violative of Section 23 of the Contract Act. Ultimately, it
concluded as under :
“19. In my opinion, if I look at the issue from both the micro and macro
positions, keeping in focus the intendment of legislation called the
Contract Act, then, the judgment in the case of Asian Techs Ltd, can be
said to laying down a law which would further the object and purpose
of the Contract Act. I must hasten to add that I am still doubtful
whether I am entitled to decide the aspect that out of two decisions of
Supreme Court, which one is to prevail, therefore, my observations are
strictly in terms of the limited parameters of the facts of the present
case required to decide the aspect of the entitlement or the
disentitlement to damages in view of the provisions of Section 55 and
73 of the Contract Act. I would, with all due respect to the learned senior
counsel for the petitioner, would not venture further and would leave it
finally for a larger Bench of this court or the Supreme Court itself to
consider whether at all there is any conflict between the judgments of
Ramnath International and Asian Techs Ltd and if there is a conflict,
the ratio of which of the two judgments ought to prevail. I am therefore,
deciding this case, to make things very clear, only on the basis of the
decision that contractual clauses which prohibit the entitlement of
rightful damages of a person is clearly hit and are void by virtue of
Section 23 of the Contract Act.”
8.69 For our purposes, it is not necessary to examine the issue from the
prism of Section 23 of the Contract Act. It is rightly contended by Ms
Arora that Asian Techs refers to the earlier judgment of the
Supreme Court in Board of Trustees, Port of Calcutta which has
categorically laid down that such clauses only prohibit the
department from entertaining the claim but do not prohibit the
Arbitrator from entertaining. Moreover, in the present case, Clause
49.5 itself talks of ‘reasonable delay’ and not when the delay in
‘unreasonable’. The judgments, which, on the basis of such clauses,
are held as not maintainable were the cases involving normal delays
and not delays to this magnitude. Whenever the court found the
Page 74 of 133
delay to be abnormal, the courts have taken the view that claim for
compensation would be maintainable notwithstanding such clauses.
8.70 As already noted above, when the delay is on the part of the
Contractor, the Engineer may allow the extension of time for
completion of the work, but at the same time, for the delay caused,
the Contractor is to pay the Liquidated Damages. On the other hand,
in case the delay in completion of the work occurs due to the fault of
the employer, the extension is to be granted, but in that event,
contractual provisions stipulate that such delay would neither affect
nor vitiate the contract or alter the character thereof nor the
Contractor shall be entitled to any damages or compensation. From
the aforesaid, it is clear that whereas the Contractor will be
punished in the form of payment of Liquidated Damages in case
Contractor is responsible for a delay, no such obligation or liability
comes on the Employer in case delay is due to the fault of the
Employer. It is apparent, therefore, the clauses relied upon by the
Respondent are tilted in favour of the employer. It is a Standard
Form Contract and all these provisions are unilaterally incorporated
by the Respondent. How such clauses are to be construed is
described in Rawla Construction Company v. Union of India 1981
SCC Online DEL 315 and Fertilizers and Chemicals Travancore Ltd.
v. Vellapally Bros Constructions (P) Ltd. 1982 SCC Online KER 281.
8.71 Keeping the aforesaid principle in mind, let us analyse the

exclusionary clauses:
a) It is to be kept in mind that when the delay occurs, that too
on account of defaults attributable to the Employer, and
because of this reason, the execution of the project is prolonged,
it entails extra expenditure in the form of idle labour and plant
Page 75 of 133
and machinery as well as rise in the cost of raw material.
Therefore, depriving altogether the Contractor of compensation
on account of the aforesaid factors, it has to be limited to those
circumstances where delay is negligible in nature. Thus, it is
necessary to give pragmatic and practical approach while
construing such a clause, keeping in mind the letter and spirit
of Section 73 of the Contract Act.
b) Here, ‘business efficacy test’ also needs to be applied. It is a

matter of common knowledge that in such large contracts, profit
margin is low, and sometimes as low as 5%. In case where the
period of delay is large, and the cost escalates which may be
much more than 5%, the Contractor cannot be made to suffer by
not getting compensated for the increase in cost and made to
pay from his pocket. That would be unreasonable and would go
against the principle of proportionality as well. In this behalf, it
may be useful to refer to the judgment of Supreme Court in
Nabha Power Ltd v. Punjab State Power Corporation Ltd (2018)
11 SCC 508, wherein the Court made the following observation:
“Parties indulging in commercial act in a commercial sense. It is
this ground rule which is the basis of the Moorcock case (1889)
LR 14 PD 64 (CA) test of giving “business efficacy” to the
transaction, as must have been intended at all events by both
business parties. The development of law saw the “five condition
test” for an implied condition to be read into the contract
including the “business efficacy” test. It also sought to
incorporate “the Officious Bystander Test” [Shirlaw v. Southern
Foundries Ltd (1939) 2 KB 206]. This test has been set out in
B.P. Refinery (Westernport) Proprietary Ltd v. Shire of Hastings
1977 UKPC 13 requiring the requisite conditions to be satisfied:
(1) reasonable and equitable; (2) necessary to give business
efficacy to the contract; (3) it goes without saying i.e., the
Officious Bystander Test; (4) capable of clear expression; and (5)
must not contradict any express term of the contract. The same
penta-principles find reference also in Investors Compensation
Scheme Ltd v. West Bromwich Building Society (1998) 1 WLR
896 and Attorney General of Belize v. Belize Telecom Ltd (2009)
1 WLR 1988 (PC).”
Page 76 of 133
We may also quote Chrisomar Corporation v. MJR Steels Pvt.
Ltd. and Anr. (2018) 16 SCC 117, in which the Supreme Court
referred to the case of Satya Jain thr. LRs and Ors v. Anis
Ahmed Rushdie thr. LRs and Ors (2013) 8 SCC 131, wherein
the principle of business efficacy has been dealt with as under :
“The principle of business efficacy is normally invoked to read a
term in an agreement or contract so as to achieve the result or
the consequence intended by the parties acting as prudent
businessmen. Business efficacy means the power to produce
intended results. The classic test of business efficacy was
proposed by Lord Justice Bowen in the Moorcock. The test
requires that a term can only be implied if it is necessary to give
business efficacy to the contract to avoid such a failure of
consideration that the parties cannot as reasonable businessmen
have intended. But only the most limited term should then be
implied – the bare minimum to achieve this goal. If the contract
makes business sense without the term, the courts will not imply
the same.”
Another case is Adani Power (Mundra) Ltd. v. Gujarat

Electricity Regulatory Commission 2019 SCC Online SC 813, in
which the Supreme Court referred to the cases of Satya Jain
thr. LRs and Ors v. Anis Ahmed Rushdie thr. LRs and Ors.
(2013) 8 SCC 131 and Nabha Power Ltd. v. Punjab State Power
Corporation Ltd. (2018) 11 SCC 508 and held as under :
“....it is well settled that the clauses in the agreement ought to
be given the plain, literal and grammatical meaning of the
expression used in the same. No doubt, that the courts will also
try to gather as to what intention the parties wanted to give
them. The principle of business efficacy could be invoked only if,
by a plain literal interpretation of the term in the agreement or
the contract, it is not possible to achieve the result or the
consequence intended by the parties acting as prudent
businessmen. This test requires that a term can only be implied,
if it is necessary to give business efficacy to the contract, to avoid
such a failure of consideration that the parties cannot as
reasonable businessmen have intended. If the contract makes
business sense without the term, the courts will not imply the
same. It is amply clear that courts can imply a clause only if it is
found that the plain and literal meaning given to the expression
used in the terms is not in a position to make out the intention
of the parties. Reading an unexpressed term in an agreement
Page 77 of 133
would be justified on the basis that such a term was always and
obviously intended by and between the parties thereto. An
unexpressed term can be implied if and only if the court finds
that the parties must have intended that term to form part of
their contract. It is not enough for the court to find that such a
term would have been adopted by the parties as reasonable men
if it had been suggested to them. It must have been a term that
went without saying, a term necessary to give business efficacy
to the contract, a term which, although tacit, forms part of the
contract.”
c) There are some more judgments which may provide guidance

in construing these kinds of clauses. In Board of Trustees of Port
of Calcutta v. Engineers-De-Space-Age, (1996) 1 SCC 516, the
Supreme Court held that such clause of the contract has to be
strictly construed for the reason that ordinarily, a person who
has a legitimate claim is entitled to payment within a
reasonable time and if the payment has been delayed beyond
reasonable time, he can legitimately claim to be compensated
for that delay whatever nomenclature one may give to his claim
in that behalf.
8.72 The Courts have found following ways to salvage the situation and
solve the problem:
a) When the contract is not completed within the stipulated
time, and fault is attributed to the Employer, the Contractor
can refuse to perform the work beyond the initial contract
period. In Asian Techs Ltd. v. Union of India (2009) 10 SCC
354, the Court found that delay in the execution of the
contract was solely due to the default of the Respondent. The
appellant was not ready to carry out the work beyond the
contracted period, otherwise that on separate work orders,
and that it was on the specific assurances given by the
Respondent to the appellant to continue the work and that
the rates would be decided across the table that the appellant
Page 78 of 133
went ahead with the work. Hence, it was not open to the
Respondent to contend that no claim for further amount
could be made due to the stipulation in the contract that no
claim for compensation consequent to grant of extension of
time would be admissible and that the Arbitrator would have
no jurisdiction to award the same. The Court found that in
the case before it, notices for claiming compensation for delay
were given by the Claimants to the Respondent from time to
time. However, the Respondent did not give any reply and
never asserted that the claim was not payable due to the
aforesaid exclusionary clause. Had it been denied by the
Respondent, the Claimants could have taken a call as to
whether it is to continue the contract or not.
b) In Bharat Drilling and Foundation Treatment Pvt Ltd v.
State of Jharkhand (2009) 16 SCC 705, the Court held that
such a clause puts a bar on the department but cannot be
treated as restrain on the Arbitrator to award compensation
as can be seen from the following discussion. Para 5 from the
judgment is extracted below:
“5. Shri Dwivedi submitted that the bar in Clause 1.21 is only a
bar on the Department and not a bar on the arbitrator in respect
of the matters mentioned therein. He further submitted that
admittedly the Department was not possessed of the land in
question nor had funds for the contract while the appellant was
asked to work and it placed the machinery, labour, etc. on the
spot which was lying idle and because of that reason he suffered
heavy losses. On the facts of the case, he submitted that the bar
under Clause 1.21 will not apply. In support of his contentions,
learned counsel for the appellant has invited our attention to a
decision of this Court in Port of Calcutta v. Engineers-De-Space-
Age [(1996) 1 SCC 516] in which it has been held that a similar
clause prohibited the Department from entertaining a claim for
interest but it did not prohibit the arbitrator from awarding the
interest.” [See also PM Pal v. UOI 1989 Supp 1 SCC 368].
Page 79 of 133
c) In some cases, the courts have held that exclusionary clause
is not applicable on the extended period but only on account
of delay in discharging particular obligation which happens
within the period of contract itself (See 2017 SCC Online
DEL 6470), TA Choudhary v. State of Andhra Pradesh (2004)
3 ALD 357 (DB).
d) As already mentioned above, a Single Bench of Delhi High

Court in Ramnath v. Asian Techs has gone to the extent that
such a clause is illegal and unenforceable as it is hit by
Section 23 of the Contract Act, being opposed to public policy.
However, it is not necessary to go that far.
8.73 When the principles of law discussed above through various

judgments are applied to the factual position at hand, the irresistible
conclusion would be that under certain circumstances, the law
permits the Arbitral Tribunal to consider the claims of the
Claimants on merits notwithstanding the so-called exclusionary
clauses.
8.74 Before adverting to discussions of the merits of the claims, it will

also be necessary to mention about the two objections which are
taken by the Respondent on the tenability of all these claims.
4. Onus to prove the quantum of claims: Whether the Claimant

has failed to discharge?
8.75 Though these contentions pertain to the merits of the claim,

however, since these are applicable to all the claims, the Tribunal is
taking note thereof at this stage, to be kept in mind while discussing
the claims. It is argued that the claims submitted by the Claimant
are merely based on assumptive calculation and no independent
Page 80 of 133
proof has been placed on record by the Claimant in the present
arbitral proceedings. The Respondent has dialated this submission
by arguing that claims can be proved by two methods: either through
the medium of leading oral evidence or by relying on the documents
of record. The Claimant in the instant case has chosen not to lead
any oral evidence during the arbitration proceedings. As for as
documents submitted by the Claimant are concerned, it is contended
that from a bare perusal of the documents placed on record, it
becomes clear that the Claimant has failed to prove any of the
grounds of compensation which have been claimed in its Statement
of Claim. The documents placed on record by the Claimant showcase
that the Claimant has failed to fulfill its contractual obligations as
provided under the Contract and by initiating the present
arbitration proceedings Claimant is only trying to put pressure upon
the Respondent so that Respondent waives off its claim for Mobilized
advance. Otherwise, the Claimant did not have any evidence to
prove its claim and accordingly, the choice of not leading any oral
evidence was made.
8.76 It is also argued that it is settled principle of law that mere

allegations made in the Statement of Claim pertaining to damages
on the alleged ground of delay, stoppage of work which was allegedly
caused due to idling of labour and machineries are not sufficient,
unless such claims are supported by proved documents.
Furthermore, if no evidence was led by the Claimant then there is
no question of granting any damages and/or claim so raised by the
Claimant. This especially applies in case of arbitral proceedings
since an arbitral tribunal is a creature of the contract and its
jurisdiction is circumscribed by the terms and condition of the
Contract.
Page 81 of 133
8.77 It is also pointed out that the Claimant has sought to rely on alleged
contemporaneous documents. However the first communication
with respect to the hindrances/ delays at project was ever issued the
Claimant vide its letter dated 18.10.2013, which was only received
by the Respondent on 23.10.2013. The time was convenient as the
NGT had passed its interim order on 21.10.2013 which was
intimated to the Claimant on 21.10.2013 by the Respondent. It is
contended that Claimant has approached this Arbitral Tribunal in
order to make profit out of the situation, as the claims have been
belatedly submitted. If there was any bonafide in the said claims of
the Claimant, it would have duly been submitted and raised at the
actual time of having incurred such an expenses.
8.78 Reliance is placed by the Respondent on the judgment in the case of

Edifice Developers and Project Engineers Ltd. v. M/s Essar Projects
(India) Ltd.( (2012 SCC Online Bom 154), wherein it has been held
by the High Court of Bombay that:
“The Arbitrator, as noted earlier, also awarded claims in respect of loss a
profit, for underutilized plant and equipment and for reimbursement
infrastructure expenses. In respect of loss of profits, the Arbitrator merely
held that a measure of 10% on the value of the remaining part of the works
contract cannot be said to be unreasonable. The Arbitrator observed that a
percentage representing 10% of the rate of profit is invariably accepted in the
construction industry. Evidently save and except for an priori assumption,
no evidence whatsoever was led before the Arbitrator in that regard. In P.R.
Shah, Shares and Stock Brokers Private Limited v. B.H.H. Securities
Private Limited the Supreme Court has held that while an Arbitral Tribunal
cannot make use of its personal knowledge of the facts of the dispute, which
is not a part of the record the Tribunal can certainly use its expert or
technical knowledge or the general knowledge about the particular trade in
deciding a matter. That is why in many arbitrations, persons with technical
knowledge are appointed since they may be well-versed with the practices
and customs in the respective fields. Arbitrator in the present case was not
an arbitrator drawn from the trade. No basis whatsoever has been indicated
in the award for accepting 10% as a measure representing loss of profits. No
material was produced before the Arbitrator on the nature of the practice in
the trade. During the course of the hearing no basis has been indicated to
the Court from the record to suggest that any practice of that nature in the
construction industry was brought to the notice of the Arbitral Tribunal. In
Page 82 of 133
the circumstances, the arbitral award to the extent that it allows the claim
for loss of profits is based on pure conjecture and in the absence of any
evidence whatsoever was correctly set aside. Similarly, in regard to the claim
for underutilized plant and equipment and for reimbursement of expenses of
infrastructure, it is evident that the Arbitrator has merely awarded a sum
which he considered to be reasonable. No evidence whatsoever was led before
the Arbitral Tribunal. “
5. Inherent contradiction in the quantum of claims raised by

the Claimant
It is argued by the Respondent that the Claimant vide its letter

dated 15.01.2016 submitted certain claims for compensation.
However, the Claimant has not preferred the same sclaim before
this Tribunal and from the perusal of letter dated 15.01.2016 and
statement of Claim filed by the Claimant, it is apparent that there
is vast difference in the amount claimed pertaining to same claim
and some of the claims are afterthought with the intention to take
advantage of the situation. The comparison of Claimant’s notice
dated 15.01.2016, notice invoking arbitration dated 03.06.2017 and
Statement of Claim, given by the Respondent, is as under:
Sl. No. Description Statement of Claim Notice dated

15.01.2016 and Notice
dated 03.06.2017
Compensation under- 6,56,69,160/- under- 5,06,01,720/-
a) for idling of utilisation utilisation (Page no.
Plant and (08.09.2012 to (08.09.2012 to 426(Ba))
Machinery 21.10.2013) 21.10.2013)
Under-utilisation 2 4,42,64,708/- [Page No. 427 (C b)]
unrecovered cost 20,23,41,835/- Idling (21.10.2013 to 11,29,19,971/-

(21.10.2013 to 15.10.2015) (Page No. 424 (c)
15.10.2015)
Sl. No. Description Statement of Claim Notice dated
15.01.2016 and Notice
dated 03.06.2017
TOTAL 26,80,10,995/- TOTAL 20,77,86,399/-
Compensation Idling 3,71,62,914/- 21.10.2013 to 2,47,45,215/-
b) towards cost of (21.10.2013 to 31.01.2015 (Page No. 421
labour 15.10.2015) (Aab))
01.02.2015 to 15.10.2015 12,02,432/-
(Page No. 421 (Ac))
TOTAL 2,59,47,743/-
Compensation 08.09.2012 to 7,77,18,414/- Overall 1,24,95,821/-
c) for Site 21.10.2013 (Page No. 427
(e))
Page 83 of 133
Overhead
Expenses
21.10.2013 to 19.01.2015 16,03,73,042/-
19.01.2015 to 15.10.2015 10,59,95,234/- Interest 6,22,34,728/-
(Interest @ 18% Page
no. 420
TOTAL 34,40,86,690/- TOTAL 7,47,30,549/-
Compensation for 08.09.2012 to 5,32,60,097/- N/A
d) Head Office and 21.10.2013
Regional Office
Overhead Expenses
(as per Emden
Formula)
21.10.2013 to 19.01.2015 8,31,68,566/-
19.01.2015 to 15.10.2015 4,51,71,895/-
TOTAL 18,16,00,558/-
Loss of Profit - 7,74,39,924/- - 20,40,00,000/-
e) (as per (Page No. 419
Hudson’s (10))
Formula)
Interest 5,94,55,800/-
(Page No. 419 (11))
TOTAL 26,34,55,800/-
Compensation N/A 1,08,22,546/- N/A 1,44,60,000
f) for Unrecovered
Cost due to fall
in market price
of
Reinforcement
Steel
Project Staff Not Claimed Not Claimed 08.09.2012 to 2,89,03,516/-
g) Idling 21.10.2013
21.10.2013 to 31.01.2015 2,36,19,630/-

01.02.2015 to 15.10.2015 42,90,590/-
(Page No.422 (Bc))
TOTAL 5,68,13,736/-
Security Staff Not Claimed Not Claimed 21.10.2013 to 1,06,16,550/-
h) idling 31.01.2015
01.02.2015 to 15.10.2015 49,65,000/-

(Page No. 424 (Dc))
TOTAL 1,55,81,550/-
Loss on account Not Claimed Not Claimed Under- 3,56,77,122/-
i) of Bank utilisation (Page No. 427
Guarantee (D))
- 2,56,43,507
Sl. No. Description Statement of Claim Notice dated 15.01.2016
and Notice dated
03.06.2017
(Page No. 425)
TOTAL 6,13,20,629/-
Loss on account Not Claimed Not Claimed - 3,70,37,978/-
j) of intertest on (Page No. 425
mobilisation (g))
advance
Loss on account Not Claimed Not Claimed - 87,50,000/-
k) of shuttering (Page No.
material 425(C))
converted into
scrap
Page 84 of 133
Loss on account Not Claimed Not Claimed 63,50,000/-
l) of theft during (Page No. 425(I)
idle period
8.79 On the aforesaid basis, it is submitted that the Claimant’s own

claims are in contradiction to its early claims. The Claimant has
consistently been escalating its claims and trying to improve its case.
8.80 This submission of the Respondent shall be considered while dealing

with the merits of the claims.
8.81 The Respondent has also made certain submissions in respect of

Demobilization from the site, which submissions, again need to be
dealt with while examining the claim of the Claimant based on idling
of the resources.
DISCUSSION ON CLAIMS: ADMISSIBILITY AND

QUANTUM:
8.82 Keeping in mind the aforesaid discussions on varied aspects, I now

proceed to discuss the claims.
8.83 Claim No.1: Compensation towards idling of Plant &

Machinery
This claim is sub-divided as Claim 1A and 1B. Claim No. 1A is for

unrecovered plant and machinery cost due to under utilization
during the first period i.e. from 08.09.2012 to 21.10.2013. Claim No.
1B covers second period when the work remained suspended because
of the order of the NGT i.e., 21.10.2013 to 15.10.2015.
Page 85 of 133
8.84 Claim No. 1A: Compensation towards idling of plant and
machinery for the period 08.09.2012 to 21.10.2013 – INR
6,56,69,160/-
This claim is towards compensation for cost resulting from under-

utilization of Plant and Machinery deployed on the ground that the
same could not be operated to the desired output on account of
various reasons not attributable to the Contractor, during the period
from mobilization of P & M on site to the date of stoppage of work by
NGT i.e., from 08.09.2012 to 21.10.2013. It is stated that the
reasons for the delay are solely attributed to the Respondent which
resulted in significant under-utilization of the P&M during this
period. The claim is quantified on the basis of dry hire costs for the
Plant and Machinery.
8.85 The number of plant and machinery deployed is arrived on the basis
of Monthly Progress Reports (Vol. C-4) and contemporaneous
correspondence submitted by the Claimant to the Employer. It is
stated that few machineries like Water Tanker, JCB, TATA Ace,
Trolley for shifting of reinforcement etc. were available throughout
the duration, however, were not recorded in MPR, as they were at
Yard and used to be deployed for different stretches of Site as per
requirement.
8.86 Computation of the amount is made on the following basis: [The

tables at Vol. C-2, Page 578-597]. For calculating the cost (dry hire
charges) of the Plant and Machinery, the Claimant has resorted to
CPWD Delhi Schedule of Rates (DSR) 2013 [Vol. C-3, Page 539-555]
and MORTH Standard Data Book [Vol. C-3, Pg 552-555], which have
been expressly referred to and made part of the contract, and was
Page 86 of 133
the basis of the bid itself. The cost is calculated in terms of machine-
months.
8.87 At Volume C-2, Page 579, Column No. 1 to 13, the number of the
respective machinery deployed has been taken from the Monthly
Progress Report of each month [Vol. C-4]. It is pointed out that the
pleading in para 7.3 of the SoC mentions the MPR showing the
utilization, which has not been specifically denied by the SDMC in
the SoD. The number of machinery deployed also corresponds with
the letters showing the utilization of mobilization advance dated
27.12.2012 [Vol. C-2, Pg 326] and 20.04.2013 [Vol. C-2 Pg 336]. The
mobilization advance was released in two tranches. Only after the
Claimant showed the proper utilization of the 1st mobilization
advance, the second tranche of the mobilization advance was
released to the Contractor. Prima facie, the Respondent was
satisfied about the utilization of the 1st mobilization advance and
that is why they proceeded to release the second mobilization
advance.
8.88 It is further contended that the number of machinery deployed also

corresponds with the contemporaneous correspondence dated
28.11.2013 [Vol. C-2, Pg 376]. Volume C-2, Page 579, Column No.
14 – Number of machinery deployed at site from 01.10.2013 to
21.10.2013 = Column No. 13 x 0.64 months, and following
illustration is given in this behalf.
8.89 Illustration: S.No. 1 i.e., Excavator (L&T) 25 FT Book [Vol. C-2,

Page 579]
• Quantity = The number of Excavator (L&T) 25 FT Boom
has been taken from the monthly Progress Report of each month
[Vol. C-4]. For October 2012, refer Col. C-4, Pg 779; the number
Page 87 of 133
of Pockelein (L&T) 25 FT Book is 2. Likewise, for November
2012, refer Vol. C-4, Pg 791; the number of Pocklein (L&T) 25 FT
Book is 1. The Respondent has denied the MPRs filed by the
Claimant as C-4 documents, even though these MPRs were
submitted during the course of execution of the work as per
Clause 8 of the Special Conditions of Contract [Vol. C-1, Pg 215].
Further, no penalty or compensation has been recovered for delay
in submitting the MPRs. However, the Respondent in paragraph
no. 6 of its Affidavit filed on 18.02.2021, has admitted that, “two
MPRs dated 03.08.2013 (pertaining to July 2013) and 05.11.2013
(pertaining to October 2013) [affirmed by the Diary No. 5550
dated 04.11.2013 as available in the original Diary Register are
available on record....”
The learned Senior Counsel for the Claimant submitted that in

order to avoid the controversy, he has referred only to the above
mentioned MPRs of july 2013 and October 2013. For July 2013,
refer Vol. C-4 Pg 897; the number of Pocklein (L&T) 25 FT Book
is 1. Likewise, for October 2013, refer Vol. C-4, Pg 936; the
number of Pocklein (L&T) 25 FT Book is 2.
It is stated that the total machine months as per Column No. 15

are 15.28 months. Source of rate considered for computation is
CPWD DSR 2013 [begins at Pg 539, refer 549, Sr.No. 0020] which
is Rs.8000 per day. Working hours have been considered as 26
days per month.
Therefore, rate per month = Rs. 8000 X 26 = Rs. 2,08,000.

Wherever the usage rates given in the SOR are inclusive of fuel
(HSR), the dry hire cost is arrived at by reducing the cost of fuel
component. The value of HSD is deducted at 30% of the total hire
Page 88 of 133
cost. Therefore, dry hire usage rate per month is computed as Rs.
1,45,600 i.e., Rs. 2,08,000 minus (-) 30% (rebate towards fuel).
Total amount claimed for Excavator (L&T) 25 FT Book = Rs.

22,24,768 [Rs.1,45,600 X 15.28 months].
8.90 During the course of arguments, the Claimant also referred to

Chart-II (filed as Annexure D), dealing with the utilization of the
plant and machinery with details of every equipment claimed under
the Statement of Claim. The Chart-II also includes the number of
equipments as per the mobilization advance utilization letter, the
MPRs for the months of July 2013 and October 2013 and
contemporaneous correspondence.
8.91 A detailed chart (Chart-III) dealing with the establishment cost

(Shuttering Material, Labour Establishments, Barricading Boards,
Quality Lab, Cement and Material Stores, Offices, Vehicles and
Jeeps) was also referred by the Claimant during the course of
arguments and the same is annexed as Annexure E.
8.92 The table dealing with the calculation for the unrecovered cost of
plant and machinery is given in Vol. C-2, page 578. It is submitted
that the work of Rs. 163.20 crore was to be completed in 18 months
whereas, work of the value of only Rs. 27.00 crore could be completed
in 13.41months. As per the Milestone, work of the value of Rs.
121.58 crore should have been completed in 13.41 months. Hence,
only 22.21% productivity has been achieved from the deployed
resources and balance 77.79% capacity of the deployed plant and
machinery remained unutilized and cost thereof is, therefore,
claimed. The under-utilization percentage of 77.79% is considered
for evaluating the unrecovered cost of plant and machinery deployed
Page 89 of 133
at site. By multiplying this percentage with the total Plant and
Machinery cost arrived [Vol. C-2, Page 579], the claim for
unremunerated cost is quantified along with interest of 12% p.a.
which comes to the tune of INR 6,56,69,160 [Vol. C-2, Pg 578].
8.93 This claim is resisted by the Respondent on the following grounds:

i) Reference is made to the exclusionary clause and
contended that the claimant is not permitted to raise such
a claim;
ii) As per the Respondent, the Claimant has failed to place

on record any reliable and independent document,
proving deployment of the relevant plant and machinery.
In fact on a detailed inspection of the issue, it will become
clear that the documents placed on record reflect a
different story. The Claimant had suffered the order
dated 26.07.2013 being passed by the Respondent
whereby it was held that the mobilization fund had not
been utilized for the purposes and in the manner as
envisaged under the Contract. The order dated
26.07.2013 has not been challenged by the Claimant and
was passed after issuance of numerous show cause notices
and following due process.
iii) Furthermore, the records make it clear that the plant and
machinery was claimed to have been purchased on buy
back basis and furthermore, the claims in respect of
payment for such purchase is also not supported by any
independent documents. Only an invoice and cheque have
been placed on record. The Claimant has not even placed
on record the final document/bill in respect of the buy
Page 90 of 133
back as to whether the plant and machinery was bought
back or not. It is accordingly clear that no evidence has
been led by the Claimant due to the said defective case
being presented by the Claimant. As per the Respondent,
the Claimant intentionally did not lead any evidence as
then it farce would have been called out by the
Respondent.
iv) Further, Claimant has failed to prove the computation

which has been done by the Claimant for the
compensation towards underutilization of Plant and
Machinery for the period of Period 1 referring to
Computation made by the Claimant at Page No. 577 of C-
3. It is submitted that there are many discrepancies with
respect to the number of specific machines and price of
machines when the comparison is made between the list
used to compute underutilization of Plant and Machinery
for period of 08.09.2012 to 21.10.2013 (at Page No. 579 of
C-3) and list provided with along with letter dated
28.11.2013 (at Page No. 376 of C-2). It is submitted that
there is a drastic difference between the “on site
machinery” which was procured using the mobilization
advance (Refer Claimant’s letter dated 27.12.2012 at page
No. 326 – 327 of C-2 and letter dated 20.04.2013 at page
No. 336 – 337 of C-2) and the “on record machinery’ which
has been used for the computation of underutilized plant
& machinery for the period of 08.09.2012 to 21.10.2013
(Refer Page No. 579 of C-3). The Respondent submitted
that it can easily be confirmed from comparing the
numbers of dumpers as allegedly procured by the
Page 91 of 133
Claimant. This is in addition to the fact that the Claimant
has not furnished any records/documents/bills to prove
that the Claimant had either hired the machines as
mentioned in the list at Page No. 579 of C-3 or purchased
the same.
v) The Claimant vide its letter dated 20.06.2013 provided

the details of machinery which was alleged to have been
procured from the mobilization advance. In the said letter
it is clearly specified that the machines were procured
under buy back arrangement for Rs. 6.52 crore. It is
pointed out that the Respondent had requested the
Claimant, vide letters dated 14.06.2013, 25.06.2013 and
10.07.2013, to submit the bills/invoices of the machinery
procured/purchased by the Claimant against the
mobilization advance which could have established that
machinery mentioned in Claimant’s letters dated
20.04.2013 & 27.12.2012 were purchased/ procured from
the mobilization advance. However, when the Claimant
did not give any heed to the Respondent’s requests, the
Respondent had to pass speaking order dated 26.07.2013
whereby it was made clear that Claimant had failed to
submit satisfactory utilization certificate as is required
under clause 10B (ii) of the Contract for releasing the 2nd
installment of the mobilization advance. Accordingly,
contractor is liable to pay back the 2nd installment of the
mobilization advance i.e. 650.00 lakh to Respondent.
vi) It is further argued that the comparison of the list
provided in Claimant’s letter dated 15.01.2016 (at page
no. 416 of C-2) with the list used for the claim makes it
Page 92 of 133
very clear that Claimant is hiding the truth and making
false allegation. Furthermore, the Claimant has also
made wrong submissions with respect to the working
hours of Plant and Machinery, failed to comply with the
Clause 8 (at page No. 215 of C-1) which deals with
monthly progress reports. Most of the Monthly Progress
Reports were belatedly produced before this Tribunal,
when most of them were never not even received by the
Respondent. It is pointed out that the Respondent had
received only two Monthly Progress Reports, however
contents of the same have been denied.
vii) It is also pointed out that Claimant vide its letter dated
15.01.2016 provided the list of machines and manpower.
In the said list at S.No (E) losses incurred due to
underutilization of establishment was claimed as an
amount of 1.24 Crore, the same amount has been now
become 7.77 crore. It is, thus, argued that the Claimant
has failed to prove its case and accordingly, Claim No. 1
on the basis of the above.
8.94 The Tribunal has considered the aforesaid submissions. Insofar as

the objection of the Respondent based on exclusionary clause is
concerned, the same has already been rejected above. Like-wise, a
finding is also arrived at to the effect that delay during this period
had occasioned due to the faults which can be attributed to the
Respondent. Thus, it remains to be considered as to whether the
Claimant has adduced satisfactory evidence to prove this claim. An
amount of INR 6,56,69,160 is claimed under Claim No. 1 for the first
Page 93 of 133
period. According to the Claimant, full plant and machinery was
deployed at the site which remained under-utilized.
8.95 It is a matter of record that that no oral evidence is produced by the

parties. The Claimant has relied upon the documentary evidence in
this behalf. In the first place, it is submitted that the Claimant was
given mobilization advance in two tranches. Second instalment of
Mobilization Advance was cleared only after the Engineer-in-Charge
satisfied himself about the proper utilization of the first Mobilization
Advance which was around INR 7.50 crore. It is also submitted that
details of utilization of the first instalment of the Mobilization
Advance was furnished to the Respondent vide letter dated
27.12.2012 (Page 326 Vol. C-2). It is also argued that even the
second Mobilization Advance was satisfactorily utilised and the
Claimant submitted proof of the same to the Engineer-in-Charge
vide letter dated 20.04.2013. This submission of the Claimant had
adequate force. When the provisions in the contract itself reflect
that Mobilization Advance given by the Respondent to the Claimant
would be utilized for the purpose of mobilizing the plant and
machinery at site and the proper utilization thereof is ensured in the
form of satisfaction of the Engineer-in-Charge, the Respondent
cannot now contend that there was under utilization of the said
advance. Thus, the Tribunal is of the opinion that by utilizing the
mobilization advance, adequate plant and machinery was brought
at the site by the Claimant, which was necessary for the execution
of the project. At the same time, it has to be kept in mind that this
plant and machinery was not purchased by the Claimant but was
taken on hire which the Claimant would have returned after the
stay order was passed by NGT. However, that aspect will have
Page 94 of 133
bearing on the question of repayment of mobilization advance which
is discussed while considering the counter-claim of the Respondent.
8.96 The Claimant has arrived at the details of deployment of plant and
machinery on the basis of monthly progress reports. These reports
are filed by the Claimant which are admitted documents. On the
basis therefore, the Claimant has calculated the cost of unutilized
plant and machinery.
8.97 Once the Claimant is able to demonstrate that there was a proper
utilization of Mobilization Advance to the satisfaction of the
Respondent, it can be concluded that the required plant and
machinery for undertaking the work of this magnitude in order to
complete it within the period prescribed in the contract, was brought
on the site. A finding is already recorded that there was slow pace
of work because of the hindrances caused by the Respondent.
Therefore, it can safely be inferred that the plant and machinery has
not been fully utilized during this period. It may also be relevant to
mention that in respect of utilization of second instalment of the
Mobilization Advance, details were provided by the Claimant vide
letter dated 20.04.2013. After this, certain queries were raised by
the Respondent vide letter dated 20.06.2013 which were replied to
by the Claimant vide its communication of the same date. The
correspondence also reveals that Respondent had given notices
dated 25.06.2013 and 10.07.2013. In its reply dated 17.07.2013, the
Claimant had explained that the machinery was taken on hire basis.
The Respondent thereafter passed speaking order dated 26.07.2013
acknowledging that the machinery was “brought” from advance
given to the Claimant. Thus, the Respondent questioned the
Claimant as to why the machinery was not purchased but taken on
Page 95 of 133
hire. There cannot be a dispute that machinery was brought at the
site. It would also be pertinent to mention that vide letters dated
29.10.2013, the Claimant mentioned about the details of the
machinery deployed at the site and reserved its rights to claim
damages on account of under-utilization of the said machinery. This
was followed by another letter dated 28.11.2013 to which the
Respondent did not give any reply thereto.
8.98 A pertinent question, however, arises as to whether the entire plant

and machinery which was initially brought on the site, remained on
site during the entire first period. It is vehemently argued by the
Respondent that no evidence to this effect has been produced. Here,
I find some substance in the argument of the Respondent. The
Claimant states that it had paid the hire charges to the tune of INR
5.39 crore. Machinery was utilized to the extent of 22.21% and
therefore, cost of unutilized machinery (77.79%) comes to INR 4.19
crore. Interest thereupon is claimed from 15.01.2016 when the plant
and machinery finally demobilized making a figure of
INR6,56,69,160 for this claim. However, the Claimant has not
produced any evidence to show the payment of hire charges.
8.99 Insofar as monthly progress reports are concerned, on the basis of

which details are derived at, it is rightly submitted by the Ld.
Counsel for the Respondent that as per Clause 8 of the contract, the
Claimant was to submit progress report on monthly basis whereas
only two reports are produced on record and calculations made on
that basis.
8.100 At the same time, it is established that due to shortage of work

available with the Claimant, there was idling of plant and
machinery at site. Therefore, the claim cannot be rejected
Page 96 of 133
altogether, more so when the Claimant has given its own basis of
calculating the same. Taking into consideration the entire
perspective, the Tribunal is of the view that granting 50% of the
amount claimed for this period i.e., INR 2,09,50,000 would be
reasonable and meet the ends of justice. The Claimant will not be
entitled to interest for the past period in view of Clause 29 of the
Contract [See:]. Moreover, it is a claim in the nature of
compensation/damages. Thus, the Tribunal is of the view that
interest should be paid from the date of the Award and payment of
interest @ 7% p.a. would be reasonable.
8.101 Claim No. 1B:
This claim is towards idling of plant and machinery for the second
period i.e., 21.10.2013 to 15.10.2015. A sum of INR20,23,41,835 is
claimed in this behalf. For calculating the cost (Dry Hire Charges of
the plant and machinery) the Claimant has resorted to trade usage
by relying upon CPWD Delhi Schedule of Rates (DSR-2013). It is
submitted that the Claimant could rely upon the same as DSR is
expressly referred to and made part of the contract itself. The
Respondent has refuted the claim by arguing that the NGT passed
the status quo order dated 21.10.2013 and the Respondent duly
conveyed to the Claimant on the very same day about the said
occurrence. Furthermore, the status quo continued till the final
order was passed. The NGT passed the final order on 13.01.2015
whereby NGT directed authorities not to proceed with any work at
the site on the basis of recommendation given by the expert
committee. Therefore, there was no reason to keep the plant and
machinery or the workforce at the site for periods 2 and 3.
Page 97 of 133
8.102 No valid proof is furnished by the Claimant to substantiate this
claim. In this behalf, it is argued that no proof has been placed on
record to confirm that the P&M and manpower were actually
deployed at the site or that the overhead expenses/ site expenses
were not duly recovered or that the Head Office and Regional Office
were being put to use for the Period 2 and 3, to the extent claimed.
It is contended that if Claimant had incurred cost in respect of any
of the above aspects, the Claimant could have submitted the service
bills of machines and wages receipts of workmen, proof of files
occupying space in the Head Office and Regional Office, in order to
prove its claim. However, Claimant has not submitted any evidence
which prove any of its claims during the Period 2 and 3 after the
NGT status quo order was passed.
8.103 The Respondent points out that the Claimant has written four
letters to Respondent asking for the foreclosure of the contract
(05.06.2014 at Page No. 397 of C-2, 21.07. 2014 at Page No. 401 of
C-2, 13 .07.2014 at Page No. Pg. 403 of C-2, 19.09.2014 at Page No.
405 of C-2.). It is submitted by the Respondent that Claimant could
have foreclosed the Contract if Claimant was expending on deployed
Plant and Machinery and manpower and the other alleged expenses
without there being any revenue arising from such deployment, in
terms of Clause 15 of the Contract. Hence, the fact that the Claimant
never exercised this right substantiates the case of the Respondent
that there was no such cost being incurred by the Claimant and that
the same as presented in the Statement of Claim are mere after
thoughts and based on the whims and fancies of the Claimant.
Page 98 of 133
8.104 It is also argued that video submitted by the Claimant shows that
Plant and Machinery was brought at the site to make fake evidence.
In this behalf, following aspects are sought to be highlighted.
(i) The same should not be taken on record as it was
filed belatedly and the Claimant has not even
bothered to comply with section 65-B of the Indian
Evidence Act, 1872 while filing the pendrive which
contain the said video.
(ii) It was contended by the Claimant that from the

video it is apparent that numerous Plant and
Machinery were duly deployed at the site. However,
on a closer look it becomes clear that:
• the condition of Plant and Machinery

appeared to not match the description on
unused Plant and Machinery lying idle at site
since 2013.
• the video also shows that the Plant and

Machinery were recently moved (right
around the time of making of the video)
because tyre marks could easily be seen in
that video.
8.105 Furthermore, if the Plant and Machinery were idling at the site for
2 (two) years then the claimant must have filed for damages which
would have caused to the idling Plant and Machinery. However
Claimant has not filed such claim in the present case. In the light
of aforesaid, it is submitted that Claimant has failed to prove that
Page 99 of 133
the Plant and Machinery was kept idle at site and video is not
reliable for any purpose.
8.106 In addition, the Respondent has also submitted that no evidence is

produced to show that the said machinery remained on site
throughout the second period viz., even after the passing of the stay
order by NGT.
8.107 Here, I find adequate force in the submission of the Ld. Counsel for
the Respondent. NGT had passed stay order on 21.10.2013 which
was communicated to the Claimant on the same day and it was
asked to stop the work. No doubt, contract was not foreclosed at that
time as it was only an interim order and nobody knew as to what
would be the final outcome. At the same time, the Claimant had
come to know that it would not be able to proceed with the work so
long as the interim order continues. As a prudent and experienced
contractor, the Claimant also knew that stay order passed on
21.10.2013 would continue at least till the next date which was a
couple of months thereafter. In these circumstances, there was no
purpose in continuing to deploy the plant and machinery at the site
during this period. During arguments, the Ld. Senior Counsel for
the Claimant accepted that the Claimant was executing other
projects as well at the time. In all probability, the Claimant either
would have diverted the plant and machinery to other site or
returned the same to the agency from which it was hired. That was
also a legal obligation of the Claimant as its duty in law to mitigate
the losses. When the Claimant came to know that stay was being
extended time and again by NGT, it would not have brought the
plant and machinery to site till the fate of the NGT proceedings was
known.
Page 100 of 133

8.108 In the aforesaid backdrop, it was all the more incumbent upon the
Claimant to produce evidence of payment of hire charges during this
period to the Agency from which the plant and machinery were
hired. No such evidence is produced. Instead, the calculations of
the claim are made on the basis of DSR-2013 without giving
satisfactory proof of making any payment. This is a significant
distinguishing feature from the first period. During the first, the
work was going on, though at a slow pace, it could be simply
presumed that the Claimant would not have removed the entire
plant and machinery from site as for the entire period, inasmuch as
any hindrance could have been removed at any time, enabling the
claimant to start the work at a particular stretch/chainage. Thus,
in the absence of any satisfactory proof, the Tribunal is not
convinced with the submission of the Claimant that it had to keep
the site mobilized and deployed throughout this period even after
the stay order of the NGT.
8.109 At the time of arguments, the Claimant produced video recording of

joint inspection dated 14.10.2015. On the basis of the said
videography, attempt of the Senior Counsel for the Claimant was to
show that labour and staff deployed at the site as well as tools and
machinery were still lying on site. The Respondent has successfully
punctured this argument by pointing out various circumstances
because of which it cannot be relied upon as a satisfactory piece of
evidence, more so, when it has not been proved.
This claim is, therefore, rejected.
Page 101 of 133

Claim No.2: Compensation towards wages of labour
incurred during the Suspension Period from 21.10.2013 to
15.10.2015 – INR 3,71,62,914
8.110 This claim is towards reimbursement of the wages incurred in lieu

of the workers / labour available at site during the period of
suspension i.e., from 21.10.2013 to 15.10.2015. The cost towards
wages paid to the workers / labour lying idle on site during the
suspension period are calculated by the Claimant by adopting the
wages given in Minimum Wages notifications applicable for the
period under consideration. The wages adopted are pertaining to
Industrial workers for construction or maintenance of Roads or
Runways or in Building operations etc. for Area ‘A’ (Delhi is
categorized as Area A).
8.111 The computation has been explained in Annexure 3 of Volume C-3,

which are as under (657-659):
Compensation towards wages of labour incurred during the
Suspension period from 21.10.2013 to 15.10.2015:
Claim Head Amt in Rs. Reference

1 Cost towards wages of Labour from 23,738,998 Annexure
21.10.2013 to 15.10.2015 3.1
2 Total 23,738,998
3 Damages for delayed payment calculated 15 Jan 2016
from
4 Damages for delayed payment calculated 30 Sep 2020
upto
5 Damages for delayed payment @ 12% from 13,423,916
15.01.2016 to 30.09.2020
# Total amount = 37,162,914
COMPUTATION OF WAGES OF IDLE LABOUR
A. From 21.10.2013 to 31.03.2014

S.No. Category Wages as Labour No.of Total Amt INR Remarks
per Min available days Mandays
Wages Act per day
1 Skilled 377 138 161 22218 8376186 As per min wages wef
2 Semi Skilled 342 90 161 14490 4955580 01.10.2013 for workers
3 Unskilled 310 86 161 13846 4292260 employed from
Page 102 of 133

17624026 Constructions of
Roads...For Area-A
B. From 01.04.2014 to 30.09.2014

Wages Act per day
Roads...For Area-A
C. From 01.10.2014 to 31.01.2015

Wages Act per day
Roads...For Area-A
D. From 01.02.2015 to 31.03.2015

Wages Act per day
Roads...For Area-A
E. From 01.04.2015 to 15.10.2015

Wages Act per day
Roads...For Area-A
Total (A + B+C+D+E) 23,738,998
8.112 The aforesaid calculations are made on the premise that minimum
number of labour was deployed at site as per the requirement; the
number was gradually reduced owing to the NGT Status Quo order,
which is reflected in letter dated 28.11.2013 as well. It is pointed
out that the number of skilled, semi-skilled and unskilled workers
is tallying completely with the claimant’s contemporaneous letter
dated 28.11.2013. The manpower is also seen to be reducing
drastically.
8.113 The Respondent has contested the said claim primarily on the
ground that no evidence is led to prove that the Claimant had
Page 103 of 133

incurred cost towards payment of workers/labour available at site
during the period of suspension of work i.e., from 21.10.2013 to
15.10.2015. It is submitted that if the Claimant had paid wages to
the labour during the said suspension period then Claimant must
have given pay/wages slip, document or PF records of the labours.
Furthermore, Claimant has not even provided the information that
labour siting at site during the suspension period was through a
contractor or was on rolling basis.
8.114 It is also argued that in terms of Regulation/Clause 7 of Contractor’s

Labour Regulation Claimant had to maintain a register of persons
employed on work on contract, maintain a muster roll and also
maintain a wage register. However in the present case Claimant has
not brought on record any such documents as per the mandate of the
Contract and claiming compensation towards cost of labour incurred
during the said suspension period. It is also submitted that the
Claimant company’s turnover for the year 2014 was around INR
2000 crore and therefore, its plea that its labour was idly sitting at
the project site, which is clearly unbelievable and unreliable.
8.115 On consideration of the respective submissions, the Tribunal is

inclined to accept the arguments advanced by the Respondent.
Claim of the Claimant towards idle plant and machinery for this
very second period when the work remained suspended due to the
orders of the NGT has already been rejected. The reason given
therein equally applies here as well. As observed there, after coming
to know of the stay order, it was neither feasible nor practical on the
part of the Claimant to keep the labour at site when the Claimant
fully knew that in view of the stay granted by NGT, no work would
be possible. It is against the principle of mitigation of losses as well.
Page 104 of 133

No doubt, the Claimant has tried to project that it had removed
much of the work-force from the site and maintained minimal
labour. However, even that plea is unacceptable in the absence of
any cogent evidence having been produced by the Claimant. The
least that was expected was to produce the Wage Register to show
that the specific work-force deployed during this period at the site
and payment of wages to them. In the absence of such a proof, this
claim cannot be allowed. It would be relevant to refer to the
judgment dated 02.07.2019 of the Delhi High Court in the case of
Union of India v. Om Construction (OMP No. 728 of 2009) and in
particular, the discussions therefrom.
8.116 Claim No.3: This claim is for compensation towards Site

Overhead Expenses and is in three parts. Claim No.3A is for the
period 08.09.2012 to 21.10.2013 (Part 1); Claim No.3B is for the
period i.e., 21.40.2013 to 19.01.2015 when the work remained
suspended and Claim No. 3C is for the period 20.01.2015 to
15.10.2015 when the contract was foreclosed.
Claim No.3A: Compensation for Site Overhead Expenses for

the period 08.09.2012 to 21.10.2013 – INR 7,77,18,414/-.
8.117 These uncovered Site Overheads for the period from 08.09.2012 to
21.10.2013 are the costs incurred for running the Project including
the costs for Employee/Staff salary and allowances, insurance
charges, Bank Guarantee charges, office maintenance, Guest House
rents, Site expenses, security expenses, vehicle running expenses
(car hire for staff) etc. The cost claimed under this head are time
related and the un-remunerated portions of these costs have been
claimed. This claim has been calculated using the universally
Page 105 of 133

accepted Emden Formula. The computation has been explained at
pages 666-667 of Volume C-3 in the following manner :
Computation of unrecovered Site Overhead Expenses for the period 08.09.2012
to 21.10.2013 as per Emden Formula:
Description Reference Value Remarks

a Percentage for Emden Formula Annexure 6.69%
4.1
b Contract price 1,632,052,681
c Contract period 18.00 Months
d Work executed 270,000,000
e Time required to execute work of Rs.27 crore As per 5.23 Months
milestone
f Actual time taken for executing Rs.27 crore 13.41 Months
(08.09.2012 to 21.10.2013)
g Additional time taken f-e 8.18
h Site overhead h=(axbxg)/c 49,645,119
i Damages for delayed payment calculated 15 Jan 16
from
j Damages for delayed payment calculated 30 Sep 20
upto
k Damages for delayed payment @ 12% 28,073,295
Unrecovered Site Overhead Expenses for (h + k)
the period 08.09.2012 to 21.10.2013 in INR 77,718,414
Site Overheads for Infra Division (excluding HO and RO Overheads)
FY 2012-13 FY 2013-14 Cumulative for FY

2012-13 to 2013-14
Site Overhead 506,700,000 724,700,000 1,231,400,000
Turnover 9,108,900,000 9,287,700,000 18,396,600,000
1 Total Turnover achieved by Infrastructure 18,396,600,000

Division in FY 2012-13 to FY 2013-14 (INR)
2 Total Site Overheads [Site Overheads are the 1,231,400,000
costs incurred for running the project including
the costs for Employee/staff salary and
allowances, insurance charges, BG charges,
office maintenance, guest house rents, site
expenses, security expenses, vehicle running
expenses (car hire for staff) etc.] incurred by
Infrastructure Division in FY 2012-13 to FY
2013-14 (in INR)
3 Site Overheads / Turnovr Ratio (in %) 6.69%
4 Percentage for Emden 6.69%
8.118 It is argued that the average yearly Site Overhead costs of the
Infrastructure Division for the FY 2012-13 to 2013-14 constituted
6.69% of the turnover achieved by Infrastructure Division. This
percentage is arrived by dividing the Total expenses incurred on Site
Overheads for Infra Division (excluding HO and RO Overheads)
from FY 2012-13 to 2013-14 with Cumulative Turnover of Infra
Page 106 of 133

Division from FY 2012-13 to 2013-14. The basis of the Turnover and
Site Overhead Expenses are the certificate issued by an Independent
Chartered Accountant regarding the same, which is placed on
record. It is argued that the certificate issued by an Independent
Chartered Accountant can be relied on in the present case, as has
been relied upon by the Supreme Court in numerous cases, like in
the case of Sri Venkateswara Syndicate v. Oriental Insurance Co
Limited & Anr [(2009) 8 SCC 507]. Mr. Datta also submitted that
the claim on account of Overheads is also corroborated by the fact
that the DSR itself contemplates a combined overhead and profit
margin of 15%. The Claimant’s combined claims under the head of
Overheads and its profits is within the range contemplated in the
DSR.
Claim No.3B: Compensation for Site Overhead Expenses :

Period of Suspension 21.10.2013 to 19.01.2015 – INR
16,03,73,042
8.119 This claim is towards compensation for unrecovered Site Overheads

for the period of suspension from 21.10.2013 to 19.01.2015 i.e., from
the date of Stoppage of works till the date of intimation by the
Employer, that competent authority is processing for closure of
contract owing to Order of NGT. Site Overheads are the costs
incurred for running the project including the costs for
Employee/Staff Salary and allowances, Site expenses, security
expenses, insurance charges, Bank Guarantee charges, Office
Maintenance, Guest House Rents, etc. The basis of the Turnover
and Site Overhead Expenses are the certificates issued by an
Independent Chartered Accountant regarding the same. The
Page 107 of 133

manner of computation of the claim for the period is the same as
Claim 3A and details are given at page 670 of Volume C-3.
8.120 Relying thereupon, it is submitted that the average yearly Site

Overhead costs of the Infrastructure Division for the FY 2013-14 to
2014-15 constituted 10.07% of the turnover achieved by the
Infrastructure Division. This percentage is arrived at by dividing
the Total Expenses done on Site Overheads by total Infra Division
from FY 2013-14 to 2014-15 with Cumulative Turnover of Infra
Division from FY 2013-14 to 2014-15. The claim is computed using
the universally accepted Emden Formula which was considered at
75% of the percentage arrived above i.e., 10.07%, which comes to
7.55%. This reduction in site overhead percentage is done in view of
the fact that after October 2013, some of the overhead costs could be
reduced by the Claimant as part of the mitigation measures.
Claim No.3C: Compensation for Site Overhead Expenses for

the period 20.01.2015 to 15.10.2015 – INR 10,59,95,234.
8.121 This claim is towards compensation for unrecovered site overheads

for the period of Suspension from 19.01.2015 to 15.10.2015. The
basis of the turnover and Site Overhead expenses are the certificates
issued by an Independent Chartered Accountant regarding the
same. The computation has been explained at page 673 of Volume
C-3. Here also Emden formula is made the basis of claim coupled
with DSR-2013.
8.122 As per the Respondent, the Claimant is not entitled for

compensation towards Site Overhead expenses. Here again, it is
emphasised that the Claimant has failed to provide any evidence to
prove that there was unrecovered site overheads during the period
Page 108 of 133

from 08.09.2012 to 21.10.2013. The Respondent has questioned the
relevance of CA certificate relied upon by the Claimant. It is argued
that the said certificate was issued only in the year 2020 and
appears to have been issued solely for the purposes of the present
proceeding. Otherwise, there is no independent evaluation in
respect of the said calculations and this certificate has not even be
issued during the currency of the Contract. It is argued that, at best,
the values in the said certificate are also based on assumptions,
which ought not to be a basis for seeking claims before this Tribunal.
Furthermore, it is not envisagable that there was an expenditure on
site overheads when the project is abandoned owing to NGT status
quo order dated 21.10.2013 and thereafter NGT final order dated
13.01.2015. Moreover, the Claimant has not placed any evidence to
establishe that Claimant had incurred site overhead expenses.
8.123 While analysing Claim No.1, the Tribunal has already stated the
manner in which period 1 and period 2 are to be dealt with. To avoid
any repetition, the same is not expressed again. It is suffice to say
the Tribunal shall proceed on that basis.
8.124 Insofar as Claim 3A is concerned, for the reasons stated while

entertaining Claim No.1A, lodging of claim for this period is held to
be justified. The question to be addressed pertains to the quantum
of claim. It is to be borne in mind that the claim is for Overhead
expenses at the Site plus cost for employee/staff salary and
allowances as well as insurance charges, Bank Guarantee charges,
Office expenses, Guest House rents, etc. The computation of the
claim is made by applying Emden formula by taking 6.69% of the
contract value, which percentage is arrived at by making
calculations at page 667 of Volume C-3. It is further stated that the
Page 109 of 133

actual work executed was to the tune of INR 27.00 crore for which
the required time as per the milestone was 5.23 months. However,
due to the delay on the part of the Respondent, actual time taken
was 13.41 months. In this way, additional time taken was 8.18
months. On this basis, Emden formula is applied, calculating the
site overhead expenses at INR 4,96,45,119. Interest on the aforesaid
amount @ 12% is claimed from 15.01.2016 to 30.09.2020 thereby
arriving at a figure of INR 2,80,73,295. In this manner, total claim
of INR 7,77,18,414 is preferred for the First period.
8.125 The objection of the Respondent is with regard to lack of evidence.

However, we have to keep in mind the nature of claim, which is for
Overhead expenses. It is a matter of common knowledge that Site
Overhead Expenses are incurred by any contractor in such projects.
Emden formula is well recognised formula for attributing Site
Overhead Expenses in such cases, which has been accepted by the
Hon’ble Supreme Court in various judgments including in the case
of McDermott and reiterated in Associated Builders.
8.126 It has been held in the case of McDermott International Inc v. Burn
Standard Co Ltd and Others [(2006) 11 SCC 181] that, claim for
Overhead costs / additional Management costs which resulted in
decrease in profits are in the nature of a claim for damages. It has
also been held that quantification of such a claim is merely a matter
of proof. The Arbitrator can use different formulae depending on the
facts and circumstances of each case. Also, it has been held that :
“106. We do not intend to delve deep into the matter as it is an accepted
position that different formulate can be applied in different
circumstances and the question as to whether damages should be
computed by taking recourse to one or the other formula, having regard
to the facts and circumstances of a particular case, would eminently fall
within the domain of the Arbitrator.
Page 110 of 133

107. If the learned Arbitrator, therefore, applied the Emden formula
in assessing the amount of damage, he cannot be said to have
committed an error warranting interference by this Court.
.......
109. Sections 55 and 73 of the Indian Contract Act do not lay down
the mode and manner as to how and in what manner the computation
of damages or compensation has to be made. There is nothing in Indian
law to show that any of the formulae adopted in other countries is
prohibited in law or the same would be inconsistent with the law
prevailing in India.
110. As computation depends on circumstances and methods to

compute damages, how the quantum thereof should be determined is a
matter which would fall for the decision of the Arbitrator. We, however,
see no reason to interfere with that part of the Award in view of the fact
that the aforementioned formula evolved over the years, is accepted
internationally and, therefore, cannot be said to be wholly contrary to
the provisions of the Indian law.”
8.127 In the case of Associated Builders v. Delhi Development Authority

[(2015) 3 SCC 49], it has been held that different formulae can be
applied in different circumstances and whether damages should be
computed by taking recourse to one or the other formula, having
regard to the facts and circumstances of a particular case, would fall
within the domain of the Arbitrator. The following paragraphs shall
be considered:
“48. The Division Bench while considering Claims 9, 10, 11 and 15
found fault with the application of Hudson’s formula which was
set out by the Learned Arbitrator in order to arrive at the claim
made under these heads. The Division Bench said that it was
not possible for the Arbitrator to mechanically apply a certain
formula however, well understood in the trade. This itself is
going outside the jurisdiction to set aside an award under Section
34 inasmuch as in McDermott International Inc v. Burn
Standard Co Ltd and Others [(2006) 11 SCC 181], it was held:
[SCC pp. 222-24, paras 104-06].
.........
105. Before us several American decisions have been referred
to by Mr. Dipankar Gupta in aid of his submission that the
Emden Formula has since been widely accepted by the American
courts being Nicon Inc. V. United States [331 F 3d 878 (Fed Cir
2003)], Gladwynne Construction Co. v. Mayor and City Council
of Baltimore [807 A 2d 1141: 147 Md App 149 (2002)] and
Charles G. Williams Construction Inc. V. White [271 F 3d 1055
(Fed Cir 2001)].
Page 111 of 133

106. We do not intend to delve deep into the matter as it is an
accepted position that different formulate can be applied in
different circumstances and the question as to whether damages
should be computed by taking recourse to one or the other
formula, having regard to the facts and circumstances of a
particular case, would eminently fall within the domain of the
Arbitrator.
49. Obviously, the Division Bench has exceeded its jurisdiction in

interfering with a possible view of the Arbitrator on facts.”
8.128 As per this formula, overheads are divided by total turnover.

Therefore, attributing 6.69% as Site Overheads would be proper. On
the application of this formula, claim appears to be justified and is
awarded in the sum of INR 4,96,45,119. The Claimant is also held
entitled to interest on the aforesaid amount @ 7% p.a. with effect
from the date of the Award.
8.129 Claim 3B (2nd period) and Claim 3C (3rd period): Claim 3B is

for the period when the work had been suspended. The Claimant’s
claim for compensation towards idling of plant and machinery
(Claim No. 1B) as well as claim for compensation towards wages of
labour (Claim No.2) for this very period have been rejected. On the
same grounds, this claim also stands rejected.
8.130 Insofar as Claim 3C is concerned, there cannot be any justification

or basis for the same. After the final order dated 13.01.2015 by NGT,
it was clearly known that the work in question cannot be executed
at all. Such a possibility could be there only if the order of the NGT
was set aside by the higher court. That did not happen. No doubt,
the Respondent took few months in deciding to foreclose the
contract, which was ultimately done on 15.10.2015. However, there
was no question of incurring any Site Overhead expenses or
attributing any such expenses in respect of this Project after the
Page 112 of 133

order dated 13.01.2015 passed by NGT. This part of the Claim is
also rejected.
8.131 Claim No.4: This claim is towards compensation for the

proportion of unremunerated Regional Office and Head Office
overheads. This claim is also segregated in three parts i.e., 4A, 4B
and 4C in respect of Period One, Period Two and Period Three
respectively.
Claim 4A: (For the period 08.09.2012 to 21.10.2013 – INR

5,32,60,097)
8.132 The manner in which this claim is calculated by the Claimant is

given hereinbelow:
8.133 This claim has been calculated using the Emden Formula. The
computation is at pages 675-676 of Volume C-3, which is reproduced
hereunder :
Computation of unrecovered HO and RO overhead expenses as per Emden Formula:
Description Reference Value Remarks

a Percentage for Emden Formula Annexure 4.59%
7.1
b Contract price 1,632,052,681
c Contract period 18.00 Months
d Work executed 270,000,000
e Time required to execute work of Rs.27 crore As per 5.23 Months
milestone
f Actual time taken for executing Rs.27 crore 13.41 Months
(08.09.2012 to 21.10.2013)
g Additional time taken f-e 8.18
h Head Office and Regional Office overhead h=(axbxg)/c 34,021,588
i Damages for delayed payment calculated 15 Jan 16
from
j Damages for delayed payment calculated 30 Sep 20
upto
k Damages for delayed payment @ 12% 19,238,509
Unrecovered HO and RO overheads in INR L = (e + f) 53,260,097
FY 2012-13 FY 2013-14 Cumulative for FY 2012-13 and

2013-14
Regional Office Head Office Regional Head Office Regional Head Office
Office Office
Page 113 of 133

Overhead 131,600,000 844,200,000 106,200,000 877,300,000 237,800,000 1,721,500,000
Turnover 9,108,900,000 25,737,100,000 9,287,700,000 26,516,900,000 18,396,600,000 5,254,000,000
1 Total turnover achieved by Infrastructure Division in FY 18,396,600,000

2012-13 to FY 2013-14 (in INR)
2 Total RO overheads incurred by Infrastructure Division in FY 237,800,000
2012-13 to FY 2013-14 (in INR)
3 Total HO overheads incurred by JMC Projects (India) Ltd in 1,721,500,000
FY 2012-13 to FY 2013-14 (in INR)
4 Total Turnover achieved by JMC Projects (India) Ltd in FY 52,254,000,000
2012-13 to FY 2013-14 (in INR)
5 HO – Overheads / Turnover ratio (in %) 3.29%
6 RO – Overheads / Turnover ratio (in %) 1.29%
7 Percentage for Emden (5+6) 4.59%
8.134 The average yearly Regional and Head Office overhead costs for the
FY 2012-13 to 2013-14 constituted 4.59% of the turnover achieved.
This percentage is arrived at by summing up the percentages i.e.,
3.29% (HO percentage) + 1.29% (Regional Office percentage).
8.135 The data has been taken from the Chartered Accountant Certificate
and also from the Annual Report (Pages 684-769, Volume C-3) of the
Claimant Company as the Claimant is a listed company. The
Revenue from operations in 2013-14 was to the tune of about INR
2658.83 crore. Notes on Financial Statements given at page 733,
Expenses accounted for in the Financial Statements and a
percentage of this is 4.59%. The CA certificate is based on the
Annual Report.
Claim 4B: (Period of Suspension – 21.10.2013 to 19.01.2015 –

INR 8,31,68,866)
8.136 This claim has also been calculated using Emden Formula. The
computation has been explained at pages 678-679 of Volume C-3 and
certificate of an Independent Chartered Accountant is also filed.
Page 114 of 133

Claim 4C: (For the period 20.01.2015 to 15.10.2015 – INR
4,51,71,895/-).
8.137 The computation has been explained at pages 681-682 and

certificate of Chartered Accountant is also filed.
8.138 The resistance of the Respondent against this claim is on the

following grounds :
i) At the outset it is stated that the Claim pertaining to
‘compensation towards unrecovered Regional office & Head
Office overheads expenses’ has been raised by the Claimant for
the very first time in the Statement of Claim. The said Claim
was not even mentioned in the notice dated 03.06.2017,
however, the Claimant has incorporated the same only in the
statement of claim. Thus it is submitted that the said claim is
even barred by limitation and Section 21 of the Act.
ii) It is submitted that for the period of 21.10.2013 to 15.10.2015

there was no work executed by the Claimant at project site due
to the NGT orders, thus Claimant could not incurred any
expenses/cost towards regional and head office. However,
Claimant has made claim for the expenditure incurred towards
Regional Office & Head Office for the said period, without
placing on record any independent documents which proved
that such expenses were incurred. Further, it is submitted that
an abandoned project cannot be compared with the cost of profit
or loss of 9 (nine) live project; as has sought to be done in its
computations by the Claimant.
8.139 It is clear from the aforesaid defence of the Respondent that insofar
as periods Second and Third are concerned, the opposition is on the
Page 115 of 133

ground that after the orders of the NGT, no such Regional Office and
Head Office overhead expenses could have been attributed to this
project. The Respondent is right in the submission which has
already been accepted while rejecting Claims No. 1 and 3 for periods
2 and 3.
8.140 So far as Claim No. 4A relating to the first period is concerned, the
Claimant has applied Emden formula and attributed 4.59% of
Regional Office and Head Office overhead expenses towards this
project. This seems to be reasonable having regard to the discussion
above while dealing with Claim No. 3A.
8.141 However, the primary objection of the Respondent is that claim is

barred by limitation. The record shows that the Claimant had
requested the Respondent vide letter dated 06.03.2016 to consider
the claims raised vide letter dated 15.01.2016 to be adjudicated by
the Disputes Resolution Committee. Thereafter, Arbitration notice
dated 03.06.2017 was sent to the Respondent. In the aforesaid
communication including arbitration notice, this claim was not
mentioned. It is raised/included for the first time in the Statement
of Claim before this Tribunal that was filed on 05.10.2020. Even if
the limitation is to be counted from the date of closure of the
contract, which happened on 15.10.2015, the claim would be clearly
time barred. This Claim No. 4A is, thus, rejected as barred by
limitation.
8.142 Claim No.5: Loss of Profit (3.63%) : INR 7,74,39,924/-
It is stated by the Claim ant that foreclosure of the Contract was on

account of a Court’s Order and was beyond the control of the
Claimant. Claimant could not get the opportunity of completing the
Page 116 of 133

balance work and earning the profit that it would have otherwise
earned by executing the work. The contract price was Rs. 163.20
crore. However, work only to the tune of Rs. 27 crore could be
completed, thereby, being a reduction of Rs. 136.20 crore in Contract
price. The Claimant, therefore, seeks compensation towards the
unrecovered profit on this amount. The claim for Loss of Profit has
been derived by following Hudson’s Formula. The computation has
been stated at pages 771 – 772 of Vol. C-3, which are as follows:
Computation of Loss of Profit
Unit Value/Figure Remarks
1 Original contract value INR 1,632,052,681
2 Value of work executed INR 270,000,000
3 Reduced contract price INR 1,362,052,681
5 %age of profit envisaged during % 3.63% Average of PBT
bidding booked by JMC
for FY 2009-10 to
2011-12
6 Loss of Profit INR 49,467,225
7 Damages for delayed payment calculated from 15-Jan-16
8 Damages for delayed payment calculated upto 30-Sep-20
9 Damages for delayed payment @ 12% 27,972,699
10 Loss of Profit including Interest in INR. 77,439,924
8.143 The percentage of profit as envisaged during bidding is 3.63%, which

is supported by the certificate of the Chartered Accountant [Pg. 660
664, Vol. C-3]. In support of its contention and claim that the
Contractor / Claimant is entitled to loss of expected profit in the
work, Mr. Datta referred to some case laws, which are as under:
i. M/s A.T. Brij Paul Singh and Others v. State of Gujarat [(1984) 4
SCC 59]
“8. …One of the heads of damages under which claim is made is “loss of
expected profit in the work”. The claim under this head as canvassed
before the High Court was in the amount of Rs 4,30,314.
9. It was not disputed before us that where in a works contract, the party
entrusting the work commits breach of the contract, the contractor would
be entitled to claim damages for loss of profit which he expected to earn
by undertaking the works contract. What must be the measure of profit
and what proof should be tendered to sustain the claim are different
matters. But the claim under this head is certainly admissible…
Page 117 of 133

10. …a Division Bench of the same High Court has accepted 15 per cent
of the value of the balance of the works contract would not be an
unreasonable measure of damages for loss of profit. We are therefore, of
the opinion that the High Court was in error in wholly rejecting the
claim under this head.
11. Now if it is well-established that the respondent was guilty of breach

of contract inasmuch as the rescission of contract by the respondent is
held to be unjustified, and the plaintiff contractor had executed a part of
the works contract, the contractor would be entitled to damages by way
of loss of profit. Adopting the measure accepted by the High Court in the
facts and circumstances of the case between the same parties and for the
same type of work at 15 per cent of the value of the remaining parts of
the work contract, the damages for loss of profit can be measured.”
ii. Dwaraka Das v. State of M.P. and Another [(1999) 3 SCC 500]
“9. The claim of the petitioner for payment of Rs 20,000 as damages on

account of breach of contract committed by the respondent-State was
disallowed by the High Court as the appellant was found to have
notplaced the material on record to show that he had actually suffered
any loss on account of the breach of contract. In this regard, the appellate
court observed:
“It is not his case that for due compliance of the contract he had
advanced money to the labourers or that he had purchased
materials or that he had incurred any obligations and on account
of breach of contract by the defendants he had to suffer loss on
the above and other heads. Even in regard to the percentage of
profit he did not place any material on record but relied upon
assessment of the profits by the Income Tax Officer while
assessing the income of the contractors from building contracts.”
Such a finding of the appellate court appears to be based on wrong

assumptions. The appellant had never claimed Rs 20,000 on account of
alleged actual loss suffered by him. He had preferred his claim on the
ground that had he carried out the contract, he would have earned profit
of 10% on Rs 2 lakhs which was the value of the contract. This Court in
A.T. Brij Paul Singh v. State of Gujarat [(1984) 4 SCC 59] while
interpreting the provisions of Section 73 of the Contract Act, 1872 has
held that damages can be claimed by a contractor where the Government
is proved to have committed breach by improperly rescinding the
contract and for estimating the amount of damages, the court should
make a broad evaluation instead of going into minute details. It was
specifically held that where in the works contract, the party entrusting
the work committed breach of contract, the contractor is entitled to claim
the damages for loss of profit which he expected to earn by undertaking
the works contract. Claim of expected profits is legally admissible on
proof of the breach of contract by the erring party. It was observed: (SCC
pp. 64-65, paras 10-11)
Page 118 of 133

“What would be the measure of profit would depend upon facts
and circumstances of each case. But that there shall be a
reasonable expectation of profit is implicit in a works contract
and its loss has to be compensated by way of damages if the other
party to the contract is guilty of breach of contract cannot be
gainsaid. In this case we have the additional reason for rejecting
the contention that for the same type of work, the work site being
in the vicinity of each other and for identical type of work between
the same parties, a Division Bench of the same High Court has
accepted 15 per cent of the value of the balance of the works
contract would not be an unreasonable measure of damages for
loss of profit.
***
Now if it is well established that the respondent was guilty of

breach of contract inasmuch as the rescission of contract by the
respondent is held to be unjustified, and the plaintiff-contractor
had executed a part of the works contract, the contractor would
be entitled to damages by way of loss of profit. Adopting the
measure accepted by the High Court in the facts and
circumstances of the case between the same parties and for the
same type of work at 15 per cent of the value of the remaining
parts of the works contract, the damages for loss of profit can be
measured.”
To the same effect is the judgment in Mohd. Salamatullah v. Govt. of

A.P. [(1977) 3 SCC 590 : AIR 1977 SC 1481] After approving the grant
of damages in case of breach of contract, the Court further held that the
appellate court was not justified in interfering with the finding of fact
given by the trial court regarding quantification of the damages even if
it was based upon guesswork. In both the cases referred to hereinabove,
15% of the contract price was granted as damages to the contractor. In
the instant case however, the trial court had granted only 10% of the
contract price which we feel was reasonable and permissible,
particularly when the High Court had concurred with the finding of the
trial court regarding breach of contract by specifically holding that “we,
therefore, see no reason to interfere with the finding recorded by the trial
court that the defendants by rescinding the agreement committed breach
of contract”. It follows, therefore, as and when the breach of contract is
held to have been proved being contrary to law and terms of the
agreement, the erring party is legally bound to compensate the other
party to the agreement. The appellate court was, therefore, not justified
in disallowing the claim of the appellant for Rs 20,000 on account of
damages as expected profit out of the contract which was found to have
been illegally rescinded.”
iii. MSK Projects India (JV) Limited v. State of Rajasthan & Anr.
[(2011) 10 SCC 573]
“39. In A.T. Brij Paul Singh v. State of Gujarat [(1984) 4 SCC 59 : AIR
1984 SC 1703] , while interpreting the provisions of Section 73 of the
Page 119 of 133

Contract Act, 1972, this Court held that damages can be claimed by a
contractor where the Government is proved to have committed breach by
improperly rescinding the contract and for estimating the amount of
damages, the court should make a broad evaluation instead of going into
minute details. It was specifically held that where in the works contract,
the party entrusting the work committed breach of contract, the
contractor is entitled to claim the damages for loss of profit which he
expected to earn by undertaking the works contract. Claim of expected
profits is legally admissible on proof of the breach of contract by the
erring party. It was further observed that: (SCC pp. 64-65, para 10)
“10. … What would be the measure of profit would depend upon

the facts and circumstances of each case. But that there shall be
a reasonable expectation of profit is implicit in a works contract
and its loss has to be compensated by way of damages if the other
party to the contract is guilty of breach of contract cannot be
gainsaid.”(emphasis supplied)”
iv. Delhi Development Authority v. J.S. Chaudhary [2011 SCC

Online Del 5098]
“38. From the aforesaid, it is clear that in case of a delayed contract

caused due to owner's breach the contractor can claim damages under
following heads: - (i) loss of profits; (ii) contribution to fixed overheads;
(iii) increase in prime cost which includes components of materials,
plant, labor and salaries and sub-contracts and (iv) increase in off-site
and on-site overheads caused due to delay in performance of contract.”
v. National Highways Authority of India v. Hindustan Construction

Company [2016 SCC Online Del 1144]
In the present case, it was held that there is no infirmity in the award,
since there was rationality in the award and percentage picked up from
Standard Data Book of MoRTH. Further, the claim for loss of earning
capacity and profit means that manpower, plant and machinery used
at site by contractor during extended period of contract disabled
contractor to use the same for another contract and it is loss of profit of
that contract which has to be recompensed.
“41. …But a claim for loss of earning capacity and profit is entirely
different. It means that the manpower, plant and machinery used
at the site by the contractor during extended period of contract
disabled the contractor to use the same for another contract and
it is loss of profit of that contract which has to be recompensed.
The majority award has extracted a quote from Hudson's
Building and Engineering Contracts as under:-
“When delay in completion of the whole project results, a

contractor will usually suffer:
a loss of the profit earning capacity of the particular contract

organization affected, due to its being retained longer on the
Page 120 of 133

contract in question without any corresponding increase in the
monetary benefit earned and without being free to move
elsewhere to earn the profit which it otherwise might do.”
42. The learned majority Arbitrators have also noted the

maintainability of such claims as per law declared by the
Supreme Court in the decision reported as 2004 (1) Arb.LR 652
(SC) Bharat Coking Coal Ltd. v. L.K. Ahuja as under:-
“It is not unusual for the Contractors to claim loss of profit

arising out of diminution in turnover on account of delay
in a matter of completion of work. What he should
establish in such a situation is that had he received the
amount due under the contract, he could utilized the same
for some other business in which he could have earned
profit.”
43. The view taken by the learned Single Judge to overrule the
majority award pertaining to claim No. 8 under dispute 8A is
accordingly overruled.”
8.144 It is argued that in the light of the above judgements, the Contractor
/ Claimant is entitled to the claim for loss of profit.
8.145 Per contra, it is argued by Mr. Sandeep Bajaj, Standing Counsel for
the Respondent, that the Claimant is not entitled for loss of profits
as no damages had been caused to the Claimant or established by
the Claimant by placing on record oral or documentary evidence. It
is submitted that reliance upon Hudson’s Formula is misconceived
as that cannot be applied in vacuum. In support of this proposition,
Mr. Bajaj has referred to the judgment in the case of “Shah
JagshiJethabhaiv. J.N. Construction” (2012 SCC Online Bom 154),
wherein it has been held by the High Court of Bombay that:
“19. It is relevant to note that the Arbitrator in a given case if pleaded

and accepted any formula, to be the foundation for grant of award, then
the Arbitrator subject to material available on record, may grant such
compensation based upon the formula, but not otherwise, because it is
necessary before awarding any damages, basically upon any such
formula, that party should be made aware in advance by the Arbitrator
that he is going to rely on such formula, so that appropriate pleading
and/or submission can be made by the parties. Therefore, in absence of
any such agreement, the Arbitrator cannot utilize any of the formulas
Page 121 of 133

available in the construction contract matters and pass such award
without any evidence and/or basic material on record.
The Arbitrator is bound to follow the basic principles of law while

granting damages, which is always subject to proof of loss and/or profit.
In case of M/s. Essar Projects Limited Vs. M/s. Edifice Developers and
Projects Engineers Limited, this court (D.K.Deshmukh J.) in
Arbitration Petition No.313 of 2007 dated th November, 2011 , relying
upon the case of McDermott International Inc. Vs. Burn Standard Co.
Ltd. And Ors . 4 held that 4 2006(2) Arb.L.R. 498 (SC) 16
arbp348.09.sxw ssm the award granting damages without any evidence,
and mainly on the basis of unaccepted formula is impermissible. There
are various such formulas available in the construction contract
matters. There is nothing on record to show that the parties have agreed
for particular formula to be the foundation of deciding their claims.”
The Respondent has also relied on the following judgments, which

state the same principle.
(a) Edifice Developers and Project Engineers Ltd v. M/s Essar Projects
(India) Ltd. (2012 SCC Online Bom 154),
(b) Tarun Mahindroo v. H.P. Power Corporations Ltd ( Himachal

Pradesh High Court) Citation : MANU/HP/1131/2019 and Arbitration
Case No. 71 of 2017
(c) Mascon Multiservice and consultants Pvt Ltd. v. Bharat Om an

Refineries Ltd (Arbitration Petition No. 1088 of 2010)
(d)Mukesh Kumar Singhal v. Nagar Palika Parishad (2006 (2) M.P.L.J.)
8.146 I have given my due consideration to the respective submissions

made by the Learned Counsel on either side. It has already been
held that during the first period when the work could be executed,
slow progress was due to the breaches on the part of the Respondent.
It is also a matter of record that after the stay order was passed by
NGT, work could not be executed and ultimately the contract had to
be foreclosed after the final judgment rendered by NGT and the
Respondent acted thereupon, accepting the said verdict. It is the
case of the Claimant that because of the aforesaid reasons, the
Claimant was precluded from carrying out the work and as it could
not execute the entire work, it has been deprived of the profits which
Page 122 of 133

could have been earned by it had it been allowed to execute the work.
As can be seen from the computation furnished by the Claimant, the
Claimant has stated that percentage of profit envisaged during the
period was 3.63%. The Claimant has claimed this percentage of
profit from the unexecuted work the value whereof is INR
136,20,52,681. In this manner, the claim for loss of profit is arrived
at INR 4,94,67,225.
8.147 It is argued by the Respondent that insofar as Respondent is

concerned, it had taken all necessary permissions before the work
could be started. If it is interdicted by the orders of the Court (NGT
in this case), the Respondent cannot be held liable. It has already
been observed above that it was the obligation of the Respondent to
ensure that project in question is not compliant of all the applicable
legal provisions including environmental law. When the finding
arrived at by the NGT is that the Project is in breach of law, the
Responsibility thereof falls on the Respondent. Moreover, the
Respondent took considerable time intaking the decision to foreclose
the contract thereby forcing the Claimant to keep clinging with the
contract unnecessarily.
8.148 I am conscious of the submission of the Respondent that the

Claimant has not produced cogent evidence in order to show the loss
of profits. However, this submission has no merit but while dealing
with this particular claim, loss of profit is well recognised mode of
compensation which a contractor can claim under these
circumstances as can be discerned from the various judgments cited
by Mr. Datta and referred to above. These judgments also show that
claim for loss of profit can be awarded even upto 15% of the contract
price depending upon the facts and circumstances of each case. In
Page 123 of 133

the present case, the claim is backed by the profits which the
Claimant has been earning in such projects and to support the same,
Balance Sheet/Final Accounts of the relevant years have been filed
supported by the certificate of an Independent Chartered
Accountant. In this scenario, various judgments cited by the
Respondent shall have no application. In M/s. Shah Jagshi Jetha
Bhai, the judgment was rendered by the High Court after recording
a finding that both the employer and the contractor were responsible
for delay inasmuch as neither the employer should be issued the
work order nor the contractor should have begun the work knowing
fully well that without the bank vacating the premises, the work was
bound to be delayed and/or disrupted. In the present case, NGT
order came, because of which the work was halted, much after the
work was allotted and execution started. Further, a specific finding
is recorded by this Tribunal that the breach is on the part of the
Respondent.
8.149 In Tarun Mahindroo v. H.P. Power Corporation Ltd [Himachal

Pradesh Arb.Case 71 of 2017], the High Court of Himachal Pradesh,
after acknowledging the case of Associated Builders v. DDA [(2015)
3 SCC 391 and McDermott International Inc v. Burn Standard Co
Ltd and Others [(2006) 11 SCC 181] passed the judgment by holding
in Para 5(ii)(c) that, “the Hundson formula cannot be applied in
vacuum. No details of any men, any material deployed on site after
August 2011 is available. No details of any material loss has been
provided.”
8.150 On the contrary, in the present case, the Claimant has produced
cogent evidence as discussed above.
Page 124 of 133

8.151 Likewise, Mascon Multi Services and Consultants Pvt Ltd was also
a case of no evidence. It is specifically argued by the Respondent
that as per the Claimant’s own showing, it had annual average
turnover for FY 2014-15 around INR 2000 crore. It means that
there were various other projects which were undertaken by the
Claimant contemporaneously with the project at hand. On this
basis, it has already been held that the Claimant’s plea cannot be
accepted that it had kept its entire machinery and labour on the site
even when it was not allowed to execute any work because of the
orders of the NGT. Even in law, it was the duty of the Claimant to
mitigate the damages. In such circumstances, average profit @
3.63% which the Claimant has shown that it has normally been
earning in other projects, cannot be allowed to that extent in the
present case. Furthermore, the Claimant is also compensated for
idle labour as well as idle plant and machinery, albeit for the first
period. Though this claim is not in the nature of duplication, this
aspect is highlighted only to show that the entire amount as claimed
by the Claimant cannot be allowed. I am of the opinion that ends of
justice would be met by awarding 50% of the amount claimed which
would come to INR 2.47 crore (Claim figure rounded). On this
amount, Claimant shall be entitled to interest @ 7% in case this
amount is not paid within three months from the date of the Award
i.e., w.e.r. 01.09.2021. Therefore, this claim is partially
awarded to the extent of INR 2.47 crore with interest @ 7%
from the date of the Award.
Page 125 of 133

Claim No. 6: Compensation for cost unrecovered due to fall
in market price of reinforcement steel (INR 1,08,22,546):
8.152 It is stated that reinforcement steel of a quantity of 831.919 MT

which was procured for use in the project could not be utilized due
to the suspension and subsequent foreclosing of the Project. There
was a drastic fall in the price of reinforcement steel during the said
period. Hence, the cost of reinforcement steel remained uncovered.
8.153 It is pointed out that the said claim was also raised before the DRC
and the same was accepted by the DRC letter dated 29.05.2017
(Pages 432-435). A sum of INR 69,13,247 was recommended by DRC
to be paid by the Respondent to the Claimant. At page 434, the DRC
recommended that “.....Concerned Division has reported that at the
time of the closure of the Contract i.e., 05.08.2015 that there was
831,9919 MT of the steel reinforcement lying at the site and the same
was returned to the contractor. The steel reinforcement was procured
by the contractor at higher rates and the market rate at the time of
submission of tenders was INR 47,500 per MT and at the time of
closure of contract, rate was INR 39,190 per MT as reported by the
concerned Division. The difference amount due to fall in market price
is to the tune of INR 69,13,247 and the contractor suffered this loss
due to stoppage of work midway on 21.10.2013 in compliance of order
of Hon’ble NGT.” It is thus argued that the Respondent has never
denied the factum of 831.9919 MT of the steel reinforcement lying
at the site and that they were procured by the Contractor at higher
rates and the market rate at the time of submission of tenders was
INR 47,500 per MT and at the time of closure of contract, rate was
INR 39,190 per MT. The Claimant has thus claimed the aforesaid
amount of INR 69,13,247 plus interest thereupon @ 12% from
Page 126 of 133

15.01.2016 to 30.08.2020, thereby making a total claim of INR
1,08,22,546.
8.154 As per the Respondent, the Claimant is not entitled to this claim. It
is submitted that the entire basis of the claim is DRC decision dated
29.05.2017. However, in the present case, the Claimant is
challenging rest of the recommendations of DRC. On that basis, it
is submitted that the Claimant cannot pick and choose to rely on the
contents of a document. On the one hand, Claimant is seeking to rely
on the DRC decision by raising the claim on the basis of the
recommendation of the DRC in the said decision and on the other
hand it is not accepting all the other findings. As per the
Respondent, in the said DRC decision it has been clearly mentioned
that the Claimant had procured the steel at higher rates. Thus by
virtue of Clause 6 of Instruction to Bidder Respondent is not liable
to pay any extra charges for reinforcement steel.
8.155 The aforesaid plea of the Respondent, to my mind, has no basis.

Once DRC, which consists of, amongst others, the Senior
Representatives of the Respondent itself have found justification in
this claim and recommended that the Claimant is entitled to the
same, the Respondent cannot shy away from making the payment
only on the ground that the Claimant has not accepted other parts
of the decision of DRC. The DRC is constituted by the Respondent
itself and Respondent is bound by its recommendations. This,
however, does not apply to the Claimant who has right to challenge
those parts of the decision which are not acceptable to the Claimant.
8.156 In any case, on an independent consideration of the claim, the

Tribunal finds that the Claimant has been able to prove this claim,
which was proved even before the Respondent inasmuch as
Page 127 of 133

concerned Division of the Respondent itself had accepted that there
was 831.9919 MT of steel reinforcements lying at the site which were
returned to the Claimant. It is further mentioned that at the time
of submission of the tender, rate of steel reinforcements was INR
47,500 per MT and at the time of closure of the contract, it was INR
39,190 per MT. On that basis, loss of INR 69,13,247 is computed.
The Claim is thus, adequately proved. Claimant is held entitled to
this Claim of INR 69,13,247 along with interest @ 7% w.e.f.
29.05.2017 when the DRC had accepted the claim but it was not paid
to the Claimant even thereafter.
Let me now advert to counter claims preferred by the Respondent.
8.157 Counter Claim No.1: This claim is for Liquidated Damages

on the ground that there was delay in executing the work on the part
of the Claimant for the period between 08.09.012 till 21.10.2013 and
therefore, the Respondent is entitled to Liquidated Damages in
terms of Clause 2 of the General Conditions of Contract. This clause
reads as under :
“Clause 2: Compensation for Delay:

If the Contractor fails to maintain the required progress in terms of
Clause 5 or to complete the work and clear the site on or before the
contract or extended date of completion, he shall, without prejudice to
any other right or remedy available under the law to the MCD on
account of such breach, pay as agreed compensation the amount
calculated at the rates stipulated below as the Superintending Engineer
(whose decision in writing shall be final and binding) may on the
amount of tendered value of the work for every completed day/month
(as applicable) that the progress remains below that specified in Clause
5 or that the works remain incomplete.
This will also apply to items or group of items for which a separate
period of completion has been specified.
i) Compensation for @ 1.5% per month of delay to be

delay of work computed on per day basis
Page 128 of 133

Provided always that the total amount of compensation for delay to be
paid under this Condition shall not exceed 10% of the best Tendered
Value of work or of the Tendered Value of the item or group of items of
work for which a separate period of completion is originally given.
The amount of compensation may be adjusted or set-off against any sum

payable to the Contractor under this or contract with the MCD. In case
the contractor does not achieve a particular milestone mentioned in
Schedule-F, or the re-scheduled milestone(s) in terms of Clause 5.4, the
amount shown against that milestone shall be withheld, to be adjusted
against the compensation levied at the final grant of Extension of Time
withholding of this amount on failure to achieve a milestone, shall be
automatic without any notice to the contractor. However, if the
contractor catches up with the progress of work on the subsequent
milestone(s), the withheld amount shall be released. In case the
contractor fails to make up for the delay in subsequent milestone(s),
amount mentioned against each milestone missed subsequently also
shall be withheld. However, no interest, whatsoever, shall be payable
on such withheld amount.”
8.158 The claim is not sustainable on two grounds. In the first instance,
it has already been held that no delay can be attributed to the
Claimant. Secondly, it was for the Superintending Engineer who
had to take a decision for imposing Liquidated Damages as per
Clause 2 of GCC, which was never done. Presumably, no Liquidated
Damages were imposed as the Respondent was convinced that there
was no fault of the Claimant. Be as it may, having failed to take any
such decision by following procedure contained in Clause 2 of GCC,
such a claim cannot be preferred before the Arbitral Tribunal. This
Counter Claim No. 1 is, therefore, rejected.
8.159 Counter Claim No.2 This claim is for refund of balance

mobilization advance of an amount of INR 7,14,22,487. It is stated
that the Claimant was given mobilization advance of INR 14.50
crore being 10% of the Contract value in two tranches. A sum of INR
8.00 crore was given on 04.12.2012 and further a sum of INR 6.50
crore was given on 31.12.2012.
Page 129 of 133

8.160 It is stated that this amount was to be adjusted from the Running
Account (RA) Bills of the Claimant. However, the Respondent could
adjust only INR 9,58,25,170, details whereof are given at Page 55 of
the Statement of Defence thereby leaving an outstanding balance of
INR 7,14,22,487. The Respondent has also claimed interest @ 10%
as per Clause 10 B of the GCC from 21.10.2013 to 20.10.2020.
8.161 It may be remarked at the outset that the Mobilisation Advance was
given as a loan by the Respondent to the Claimants to help the
Claimants in mobilising certain resources for taking up the
execution of the Contract. Such a mobilisation of these resources was
necessary for the start of the work. It is also obvious that the
contractual term which provides for such an advance to be given by
the Employer to the Contractor is to financially help the Contractor
inasmuch as it is the obligation of the Contractor to mobilise these
resources for proper execution of the Contract. It is also a matter of
record that in the normal course the Contractor is obliged to refund
the said advances by getting it adjusted against the running bills.
The Mobilisation Advance also carries interest, and the Contractor
is liable to pay that interest as well.
8.162 The Claimant has contested the Counter-claim on the ground that
mobilization advance given to it by the Respondent was utilized was
utilized to the satisfaction of the Respondent. However, this
argument need not detain us inasmuch as the terms of the
contractual provisions, the Claimant was supposed to return this
amount with interest. No doubt, after utilization of the mobilization
advance, the Claimant is prevented from executing the entire work
and had the project been completed, the Claimant would have
earned enough money to easily refund the mobilization advance.
Page 130 of 133

However, for its inability to proceed with the work, the Claimant has
been compensated by including the claims in this behalf as discussed
above. Therefore, it becomes the contractual and legal obligations
of the Claimant to repay the mobilization advance. Having said so,
the Tribunal is supposed to look into another submission of the
Claimant to contest this claim.
8.163 The Claimant has also disputed this claim on the ground that the
claim is time barred. It is submitted that this claim should have
been preferred within a period of three years from the date on which
the cause of action first arose, in view of Section 43 of the Arbitration
and Conciliation Act 1996 as per which the Limitation Act applies to
arbitrations as well. This Section also clarifies that an arbitration
shall be deemed to have commenced on the date referred to in
Section 21 of the Act. It is submitted that these counter claims are
raised for the first time in the Statement of Defence filed on
12.11.2020. Before that, this claim was not preferred. It was not
even raised before the DRC. There is a force in the submission of
the Claimant. As per the Respondent, the amount became payable
on 21.10.2013 as the interest is claimed from that date. In any case,
it can be said that when the contract was foreclosed on 15.10.2015,
the claim is preferred more than five years thereafter whereas, as
per Articles 55 and 137 of the Limitation Act, this claim should have
been raised within three years from the date on which cause of
action arose. The Counter Claim No.2 is, therefore, rejected as
time barred.
Page 131 of 133

9. SUMMARY OF THE AWARD
Claim Description Amount of Decision of the

No. claim INR Tribunal
1A Unrecovered P&M cost due to INR 2,09,50,000
under-utilization from 08.09.2012 to 6,56,69,160 awarded
21.10.2013
1B Unrecovered cost of P&M due to
idling in suspended period from 20,23,41,835 Rejected
21.10.2013 to 15.10.2015
2 Compensation towards cost of
labour incurring during suspension 3,71,62,914 Rejected
period from 21.10.2013 to 15.10.215
3A Unrecovered Site overheads during 7,77,18,414 INR 4,96,45,119
the period 08.09.2012 to 21.10.2013 awarded
3B Compensation of Site Overheads cost
during the period of suspension from 16,03,73,042 Rejected
21.10.2013 to 19.01.2015
3C Compensation of Site Overheads cost
during the period of suspension from 10,59,95,234 Rejected
19.01.2015 to 15.10.2015
4A Unrecovered HO and RO Overhead
expense due to under-utilization 5,32,60,097 Rejected
during 08.09.2012 to 21.10.2013
4B Unrecovered HO and RO Overheads
during 21.10.2013 to 19.01.2015 8,31,68,566 Rejected
4C Unrecovered HO and RO Overheads
expense due to under-utilization 4,51,71,895 Rejected
during 19.01.2015 to 15.10.2015
5 Loss of Profit 7,74,39,924 INR 2,47,00,000
awarded
6 Compensation for cost unrecovered
due to fall in market price of 1,08,22,546 INR 69,13,247
Reinforcement Steel awarded
Counter Description Amount of Decision of the

Claim No. claim INR Tribunal
1 Liquidated Damages 16,32,00,000 Rejected
2 Refund of balance Mobilization 7,14,22,487 Rejected
Amount along with interest
Since certain claims are awarded in favour of the Claimant and counter-
claims of the Respondent are rejected, there is no need for the Claimant to
keep the Bank Guarantee alive. The Bank Guarantee, which is valid till
30.06.2021, need not be extended further, the same stands discharged.
Page 132 of 133

Award - JMC Projects v. SDMC - 30.06.2021

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1. CONSTITUTION OF THE Tribunal

1.3 In the first procedural hearing held on 07.09.2020, the Learned

2.3 In the meantime, the Claimant filed an application under Section 17

3. CASE OF THE CLAIMANT

3.2 The Claimant received a Letter of Acceptance (“LOA”) dated

3.4 The reasons attributed by the Complainant for subsequent delays

3.7 Disputes arose between the Parties which were sought to be

4. CLAIMS OF THE CLAIMANT

The Claimant claims financial compensation for the suspension of

The Claimant claims a total compensation of INR 26,80,10,995 [INR

The Claims 1A and 1B as raised by the Claimant are in the following

4.2 Claim No. 2: Compensation towards cost of labour incurred

4.3 Claim No. 3: Compensation for SITE OVERHEAD EXPENSES

4.3.2 Claim No.3B: Compensation of Site Overheads cost during

4.3.3 Claim No.3C: Compensation of Site Overheads cost during

4.4 Claim No.4: Head Office and Regional Office Overhead

The Claimant claims a total amount of INR 18,16,00,558/- under the

4.4.1 Claim No.4A: Unrecovered Regional Office & Head Office

4.5 Claim No.5: Loss of Profits

4.6 Claim No. 6: Compensation for cost unrecovered due to fall

In addition to the aforementioned Claims, the Claimant submits the

5.1 In the Statement of Defence cum Counter Claim filed by the

5.1.1 The Respondent challenges the jurisdiction of the present Tribunal

5.1.6 The Respondent rejects its liability to pay interest by relying on

6. COUNTER CLAIMS OF THE RESPONDENT

Instead, the Respondent counter claims from the Claimant the

i. Refund of the mobilisation advance wrongfully not repaid by

Insofar as this counter claim of the Respondent is concerned,

ii. Liquidated Damages for delay payable under Clause 2 of

No. Date Particulars Amount Paid Gross Work

7.1 It would be apposite to take note of certain contractual provisions

7.2 The Contract Price agreed to between the parties, as stipulated in

7.3 As per the Contract Agreement, the date of commencement of work

7.4 The Contract is governed by General Conditions of Contract (GCC

“Clause 1: Performance Guarantee:

i. The contractor shall submit an Irrevocable Performance Guarantee of 5%

iv. In the event of the contract being determined or rescinded under

Clause 2: Compensation for Delay

If the Contractor fails to maintain the required progress in terms of Clause

i) Compensation - @ 1.5% per month of delay

The amount of compensation may be adjusted or set-off against any sum

Clause 3: When Contract can be determined

Subject to other provisions contained in this Clause, the Engineer-in-Charge

Clause 5: Time and Extension for Delay

5.2 If the work(s) be delayed by:

5.3 Request for re-scheduling of milestones and extension of time, to be

Clause 10B (ii) – Mobilization Advance

“Mobilization advance not exceeding 10% of the tendered value may be

Provided always that provision of Clause 10B(ii) shall be applicable only

Interest and Recovery

Clause 11: Work to be executed in accordance with specifications, drawings,

Clause 13: Foreclosure of contract due to abandonment or reduction in Scope

iv) Reasonable compensation for transfer of T&P from site to contractor’s

v) Reasonable compensation for repatriation of contractor’s site staff and

vi) Reasonable compensation for repatriation of contractor’s site staff and

The Contractor shall, if required by the Engineer-in-Charge, furnish

i) The contractor shall, on receipt of the order in writing of the Engineer-

a) On account of any default on the part of the Contractor or;

The contractor shall, during such suspension, properly protect and

a) The contractor shall be entitled to an extension of time equal to

b) If the total period of all such suspension in respect of an item or