Railways petitioned under Section 34 against an arbitral award granting enhanced quantities and damages on a centralized heating system contract. Court held the arbitrator's finding that it was an item rate contract, based on evidence including a revised approved BOQ, was not perverse or irrational; petition dismissed.
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.
$~1
UNION OF INDIA ..... Petitioner
Through: Mr. Vineet Dhanda, CGSC with Ms. Gurleen Kaur & Mr. Archit Aggarwal, Advocates.
versus
AIMCO KCM ROYALINFRA (JV) ..... Respondent Through: Mr. Amit Dubey & Mr. Sarthak Dubey, Advocates.
CORAM: HON’BLE MR. JUSTICE PRATEEK JALAN
O R D E R
% 22.02.2024
I.A. 18347/2023 ( Exemption )
Exemption allowed, subject to all just exceptions.
The application stands disposed of.
I.A. 18348/2023 ( Condonation of delay in refiling )
This is an application of condonation of three days’ delay in refiling of the petition. For the reasons stated in the application, the delay in refiling is condoned.
The application stands disposed of.
O.M.P. (COMM) 385/2023 & I.A. 18346/2023 ( stay )
Page 1 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
Manufacture, Supply, Installation and Commissioning of Centralized Heating System on Turnkey Basis in the Light Repair Bay at DEMU Car Shed, Budgam, Srinagar (J& K) ”.
| “7. | The | Claimant h | asfiled thefollowing claims before the Arbi | tral Tribunal |
|---|---|---|---|---|
| Sr. No. |
Claim No. |
Description of the Claim | Amount Claimed (in Rs.) |
|
| 1 | A | Claim on the Enhanced Quantities supplied under the Contract together with the GST paid by the Claimant on the Items |
1,89,97,307 | |
| 2 | B | Claimant claims an amount of Rs. 99,84,268/- towards damages and loss of profit |
99,84,268/- | |
| 3 | C | Claim of Post Award Interest | Not Quantified |
|
| Total | 2,89,81,575/- + Post Award Interest” |
Page 2 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
accordance with Clause 4.8, which reads as follows:
“ .... The tenderers are advised to visit the site of work and investigate the actual conditions and quantum of works. The scope of work should also be examined before formulating the rates for complete items of work. The quantities given in the detailed scope of work are approximate. No extra charges shall be paid by Railways for any item under the scope whatsoever….”
Page 3 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
the unit rate and amount was specified. On this basis, the learned Arbitrator has come to the conclusion that the contract was, in fact, an item rate contract, rather than a lump sum contract, despite the reference to “turnkey basis” in the title of the document.
“REF: AIMCO-JV-CHS-NR-08-2018 DATE: 07th JUNE 2018 To.
The Divisional Mechanical Engineer, DEMU Car Shed. Budgam, Srinagar (J&K) SUB: Re-submission of G.A. Drawings & revised BOQ for Approval .
REF: IOA NO. 143-M/1/2/M&P/CHS/Detailed Estlmate/Pt-ll DT 25.04.18 FOR CENTRALIZED HEATING SYSTEM FOR BUDGAM, SRINAGAR (J&K).
Dear Sir.
With reference to the above and joint meeting in Baroda House on 28.05.2018 and subsequent joint visit to Budgam, Srinagar, we now submit our revised GA drawings with revised BOQ for your approval.
The variation in quantities of the items occurred because of the following reasons:
1. Insulated Panels: The size of Shed is 202 meters in Length as compared to 190 meters (as mentioned in Tender). The Fall Ceilings are generally straight / plain from inside but due to your EOT Crane, we have to give slope in certain area in order to carry out maintenance of EOT Crane, resulting in increase of number of Panels. Accordingly, the quantities are increased as per the revised BOQ attached.
2. Glass Windows: The quantities for DG insulated Glass Windows are exorbitant high and we have calculated to maximum as per the requirement in Shed and accordingly it has been reduced as per the
Page 4 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
revised BOQ attached.
3. T Beam: The quantities of T Beam mentioned in Tender is not sufficient as per the changes required in the Fall Ceilings and we have to make the structure in slope which can take the load of Panels in slant way. The Panels are quite heavy in weight. Accordingly, the quantities are increased as per the revised BOQ attached
4. Flashing & Bottom: The quantities of Flashing & Bottom Channels depends on the Panels and accordingly, it has been increased as per the revised BOQ attached.
5 . Motorised Shutters: 4 Motorised Shutter of 5m x 5m were required as per the tender but during our joint visit to Budgam, it was decided jointly that 4 more Motorised Shutters of 5m x 5m in will be required in order Io control the Heating in Shed. Accordingly, the quantities as per the revised BOQ attached.
6. Heating Units: The Heating Units designed initially at Pit Level was 10 Nos and for Ground Level - 20 Nos but it was discussed and agreed in joint meeting that since the temperature in Pit Level is less in Winters comparatively to Ground Level and majority of work is being done at Pit Level for under body repairs and the Ceiling is also in slant, so the effect of Heating at Pit Level will be less. Accordingly, it has been increased as per the revised BOQ attached.
7. Control Panels: The Control Panels are designed for 10 Heating Units per Panel. For 30 Heating Units - 3 Control Panels but since Heating Units are increased, 1 more Control Panels needs to be added and fixed.
This is to inform you that we have to order the required quantities with the respective OEM’s at one time as the colour of sheets may differ as it is made in a lot and if some quantities are ordered separately, the colour of sheets differs. Therefore, the revised BOQ may be approved at the earliest keeping in mind the deadline for completion the project before November 2018. The erection / commissioning will take 3-4 months after the material is delivered at site.
The GA Drawings attached with revised BOQ is in line with the joint visit to Budgam and it is requested to kindly approve the same to enable us to proceed further.
It is also informed that the colour scheme for Walls from outside would be nearest to RAL 3016 (similar to Brick Red) and from inside, it would be nearest to RAL 7035 (similar to Gull Grey). For Fall Ceilings from inside, it would be same as Walls (RAL 7035). For Heating Units, it would be nearest to RAL 3000 (similar to Fire Red).
In any case, our final payment may be released on the basis of actual
Page 5 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
quantities delivered and installed after the joint measurement before the release of PTC .
It is further requested that the delivery period mentioned in LOA i.e., 180 days from LOA date may be amended to 180 days from the date of approval of GA drawings and revised BOQ whichever is later as we cannot proceed for execution of the project unless we get approvals from your side.
Thanking you and we look forward for your confirmation at the earliest. Yours faithfully,
For AIIMCO KCM ROYALINFRA (JV), Sd/DEEPAK AGGARWAL (AUTHORISED MEMBER) MOB: 9810018900 CC: The CME/IT 4 EnHM/HQ, Northern Railway Headquarters, Baroda House, New Delhi.”
[Emphasis Supplied.]
“(vii ) A drawing no. A 101-2018 was prepared by the Claimant and submitted to the Respondent on 07.06.2018 for approval. This
1 In the award, the petitioner is referred to as “Respondent” and the Respondent herein as “Claimant”.
Page 6 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
drawing was approved by DME/Northern Railway Budgam . Division Mechanical Engineer (DME)/Budgam is the representative of the Respondent and the senior most officer of the Northern Railway at Budgam. DME/Budgam was supervising the execution of the Contract.
The drawing No. A 101-2018 was approved by DME/Budgam on 12.06.2018. This drawing had the quantities of the items, which are required to be executed for the successful completion of the work.
The Respondent in its Affidavit dated 11.05.2023 has submitted that the drawings were never approved/communicated by the authority who executed the original contract and further amended the contract on 22.07.2019. The Respondent contended that the contentions/averments of the Claimant that tentative approval of drawing by consignee [DME] is not sustainable as it was not approved by the competent authority. The competent authority in this contract was clearly mentioned in the tender document.
The Arbitral Tribunal has examined the above plea of the Respondent. During the arbitral proceedings, the Respondent has not produced any drawing other than drawing No. A 101-2018. Does it mean that that the competent authority has not approved any drawing? If the drawing approved by DME was not final as DME/Budgam was not competent authority than why did DME/Budgam signed the drawing and issued to the Contractor? There was no answer to this question from the Respondent.
Further, in this case, CME (IT & EnHm)/Northern Railway of the Respondent's organisation was the authority who signed the Contract Agreement. Thus, the contention of the Respondent is that the said drawing was not approved by CME (IT & EnHM). But no drawing has been ever approved by CME (IT & EnHM) in this contract. Then, how was the work allowed to be executed without the approved drawing? If the work was executed without approved drawing then how were payments to the Contract passed and paid? There is no answers to these questions.
Further, if the Contractor is being allowed to execute the work without any approved drawing, then whether the field engineers, who supervised the execution of work, have been held responsible? Answer is no.
Thus, I find the argument of the Respondent, that the drawing has not been approved by CME (IT & EnHM) and the Claimant is
Page 7 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
entitled for the payment of enhanced quantities of some items executed, hollow and hence unacceptable.
The Drawing No. A 101-2018 has been filed by the Claimant before the Arbitral Tribunal. This drawing has the signature of SSE/DEMU/Budgam, AME/DEMU/Budgam and DME/DEMU/Budgam. Since the Respondent has not issued any other drawing and the Respondent has allowed the Claimant to execute the work as per this drawing, hence the plea of the Respondent that the approval to the said drawing was tentative, is not acceptable .
(viii) The Drawing has clearly stipulated the provision of total 40 Nos. of heating units. The drawing stipulates that 20 Nos. heating units will be provided at the PIT LEVEL and 20 Nos. of heating units to be provided at the GROUND LEVEL.
Further, it is mentioned that total of four Control Panels will be provided. It is mentioned that One Control Panel to be provided for TEN AHU. The drawing shows the location of T-BEAMS. It is mentioned that 408 pieces of 3 M long T-Beam are to be provided to execute the contract work. Thus, as per the drawing the requirement of 1224 RMT of T-Beam is there.
(ix) The Claimant, during the arbitral hearing, submitted that the contract work has been executed as per the drawing the same has not been denied by the Respondent. Execution of the work as per the drawing has resulted in the execution of the quantities more than envisaged originally in the contract agreement.”
[Emphasis Supplied.]
Page 8 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
Page 9 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
could have been executed. He has undertaken a site visit in which the work is found to have been executed in accordance with the revised contract, and the materials installed.
PRATEEK JALAN, J
FEBRUARY 22, 2024 ‘pv’/
Page 10 of 10
O.M.P. (COMM) 385/2023
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 26/02/2024 at 15:23:32
1 issue framed by the court
Whether the arbitral award granting payment for enhanced quantities in a turnkey contract is challengeable under Section 34 Arbitration and Conciliation Act, 1996.
1 provisions across 1 enactments
Union of India
AIMCO KCM ROYALINFRA (JV)
Prateek Jalan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
