Appeal against Single Judge order setting aside arbitral award regarding excise duty reimbursement. Court upheld award confirming benefit under COPA Clause 70.8 but no double benefit as Exim policy change differed from wholesale price indices. Appeal dismissed.
Appeal dismissed; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 18.01.2017
FAO(OS) 7/2017
NATIONAL HIGH WAYS AUTHORITY OF INDIA … Appellant
versus
GAMMON ATLANTA (JV)
... Respondent
Advocates who appeared in this case:
For the Appellant : Mr Ramesh Kumar For the Respondent : Mr Sumit Goel with Ms Raveena Rai
CORAM: HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE ASHUTOSH KUMAR
J U D G M E N T
BADAR DURREZ AHMED, J (ORAL)
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existing 2 lane carriage-way of NH-5 in the State of Orissa from Km. 387.700 to Km. 414.000 (Khurda-Bhubaneshwar)”. The only grievance that has been raised by the learned counsel for the National Highways Authority of India (NHAI) (the appellant herein) is with regard to the finding of the learned Single Judge in respect of claim no.1.8 which pertains to the reimbursement of excise duty under clause 70.8 of Conditions of Particular Application (COPA).
the contract were otherwise.
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“Sub-Clause 70.8 Subsequent Legislation
“ If, after the date 28 days prior to, the latest date for submission of bids for the Contract there occur in the country in which the Works are being or are to be executed changes to any National or State Statute, Ordinance, Decree or other Law or any regulation or by-law of any local or other duly constituted authority, or the introduction of any such State Statute, Ordinance, Decree, Law, regulation or by-law which causes additional or reduced cost to the Contractor, other than under the preceding Sub-Clauses of this Clause in the execution of the Contract, such additional or reduced cost shall, after due consultation with the Employer and the Contractor, be determined by the Engineer and shall be added to or deducted from the Contract Price and the Engineer shall notify the Contractor accordingly, with a copy to the Employer.
Notwithstanding the foregoing such additional or reduced cost shall not be separately paid or credited if the same shall already have taken into account in the indexing of any inputs to the Price Adjustment Formulae in accordance with the provisions of Sub-Clauses (1) to (7) of this Clause.” (underlining added)
At the time of tendering, the project in question merited classification as a
deemed export project under the export-import policy in terms of the extant Export Import (Exim) Policy. Under paragraph 10.2, the benefit of deemed export and thereby exemption from payment of excise duty was available, inter alia , to supply of goods in relation to, inter alia , infrastructure projects provided the minimum specific investment was Rs. 100 crore or more. The present project qualified for the exemption under that provision inasmuch as
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it was an infrastructure project and the minimum specific investment was more than Rs. 100 crore.
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respondent in the said letter that in view of the change, the excise duty on incorporated material was required to be reimbursed to the respondent in accordance with the provision contained in clause 70.8 of COPA.
following grounds:-
As pointed out above, disputes had arisen between the parties. The matter
went into arbitration and the Arbitral Tribunal made the award dated 05.10.2007 which was the subject matter of challenge in OMP 99/2008. The
Arbitral Tribunal in its award has examined claim no. 1.8. It had noted the contention of the parties and particularly of NHAI that the benefit of refund of terminal excise duty was available to an original supplier and that such additional cost was not to be separately paid since it had already been taken
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into account in indexing of inputs in the price adjustment formulae. The Arbitral Tribunal also noted that NHAI had taken the plea that since the respondent herein was not a manufacturer, the benefit was not available to it. However, it was specifically noted in paragraph 2.1.8.2 of the award that NHAI had not commented upon the quantum of refund claimed in the various Interim Payment Certificates (IPC) which had been referred to in the award.
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purview of clause 70.8 of COPA. Accordingly, the Arbitral Tribunal rejected claim no. 1.8.
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the case may be) consequent upon subsequent changes in legislation. The second part which is a non-obstante provision is essentially to ensure that neither the employer nor the contractor gets a double benefit. In other words if by subsequent legislation a benefit accrues to the contractor under the first part he would not be entitled to that benefit if the same is already factored in the price adjustment formulae which are given in sub-clauses 70.1 to 70.7 of COPA.
been any additional burden of payment of excise duty cast upon the respondent by virtue of the change in the Exim Policy it would certainly be covered under the first part of sub-clause 70.8 of COPA.
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already included in the price adjustment formulae.
70.3, 70.4 of COPA which read as under:-
“Sub-Clause 70.1: Price adjustment
“The amount payable to the contractor and valued at base rates and prices in the Interim Payment Certificates issued by the Engineer pursuant to Sub-Clause 60.1 hereof shall be adjusted in respect of the rise or fall in the indexed costs for labour, materials and other inputs to the Works, by the addition or subtraction of the amounts determined by the formulae prescribed in this Clause.”
Sub-Clause 70.2:
Other changes in cost
“To the extent that full compensation for any rise or fall in the costs to the Contractor is not covered by the provisions of this or other clauses in the Contract, the unit rates and prices
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included in the Contract shall be deemed to include amounts to cover the contingency of such other rise or fall in cost.”
Sub-Clause 70.3:
Adjustment formulae
The adjustment to the Interim Payment Certificates in respect of changes in cost and legislation shall be determined from the following formula:
Pn = A + b Ln + c Mn + d Fn + Bn Lo Mo Fo B3
Where:
pn is a price adjustment factor to be applied to the amount for the payment of the work carried out in the subject month, determined in accordance with Sub-Clause 60.1(d), and with SubClauses 60.1 (e) and (f), where such variations and Daywork are not otherwise subject to adjustment:
A = 0.50, b = 0.15, c = 0.25, d= 0.10
Ln. Mn. Fn. Etc., are the current cost indices or reference prices of the cost elements in the specific currency for month “n” determined pursuant to Sub-Clause 70.5, applicable to each cost element: and
Lo. Mo. Fo . Etc., are the base cost indices or reference prices corresponding to the above cost elements at the date specified in SubClause 70.5.
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The amounts, determined as payable to the contractor as a price adjustment factor in a currency or currencies other than the Indian Rupee. Will be converted from Indian Rupees to the currency or currencies of payment at the exchange rate (s), as determined by the Reserve Bank of India, on the date of the current index and not at the rate (s) established in the Appendix to Bid, if any.
Sub-Clause 70.4 Sources of Indices and Weightings
The sources of indices shall be as follows:
L shall be minimum wage for labour as published by the Orissa State Government.
M shall be the wholesale price index (All commodities) as published by the Reserve Bank of India.
F shall be the price of one litre of diesel fuel as applicable at Bhubaneswar.
Sub-Clause 70.5
Base, Current and Provisional Indices
The base cost indices or prices shall be those prevailing on the day28 days prior to the latest date for submission of bids. Current indices or prices shall
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be those prevailing on the day 28 days prior to the last day of the period to which a particular Interim Payment Certificate is related. If at any time the current indices are not available, provisional indices as determined by the Engineer will be used, subject to subsequent correction of the amounts paid to the Contractor when the current indices become available.” xxx xxx xxx xxx xxx”
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therefore the benefit could not be given under the first part of sub-clause
present case the change is not in the excise duty but in the exim policy and this change would not be reflected in the wholesale price index.
BADAR DURREZ AHMED, J
ASHUTOSH KUMAR, J JANUARY 18, 2017 kb
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2 issues framed by the court
Whether reimbursement of excise duty due to legislative change falls under Sub-Clause 70.8 of COPA without causing double benefit via price adjustment formulae.
Whether the delay in making the claim after three years disentitles the respondent from the benefit of Sub-Clause 70.8 of COPA.
Colour shows how this judgement treated each authority
National Highways Authority of India v. ITD Cementation India LimitedReferred¶49
National Highways Authority of India v. ITD Cementation India Limited : (2015) 14 Supreme Court Cases 21
2 provisions across 2 enactments
NATIONAL HIGH WAYS AUTHORITY OF INDIA
GAMMON ATLANTA (JV)
BADAR DURREZ AHMED
ASHUTOSH KUMAR
As recorded by the court registry
An appeal to a Division Bench against an order made by a single judge on the original side of the High Court.
Judgements on the same questions, provisions and authorities, from every court
