ABHAY S. OKA, J.

FACTUAL ASPECTS IN CIVIL APPEAL NO. 4702 OF 2023

1. The appellant- National Highways Authority of India Ltd. has been constituted under Section 3 of the National Highways Authority of India Act, 1988. On 2nd June 2004, the appellant awarded a contract to the respondent for the work of the Signature Not Verified Allahabad Bypass Project, which involved the construction of a Digitally signed by ASHISH KONDLE Date: 2024.05.07 road from km 158 to km 198 (except a bridge on the river). The 16:41:03 IST Reason:

2. The Arbitral Tribunal made an award on 30th March 2010. The summary of the award is as follows:

3. Being aggrieved by the award, the appellant filed a petition under section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Arbitration Act ’). By the impugned judgment and order dated 30th November 2011, the learned Single Judge confirmed the award in respect of Claim no.1 and Claim no.3, relying upon the decision of the High Court in the case of National Highways Authority of India v. M/s. ITD Cementation India Limited1. Regarding Claim no.2, the learned Single Judge held that the award was a majority decision of the Arbitral Tribunal based on an analysis of the material placed before the Arbitral Tribunal. Therefore, the 1 2008 (100) DRJ 431 Civil Appeal no.4702 of 2023 etc. Page 3 of 15 award for Claim no.2 was upheld. Being aggrieved by the said judgment and order, the appellant preferred an appeal under Section 37 of the Arbitration Act before a Division Bench of the Delhi High Court. By the impugned judgment, the said appeal has been dismissed. From the impugned judgment, it appears that the submissions made before the Division Bench of Delhi High Court were confined to Claim nos. 1 and 2. By the impugned judgment, the appeal preferred by the appellant was dismissed. Being aggrieved by the Arbitral Tribunal’s award and the judgments of the High Court, the appellant has preferred the present appeal. At the outset, we may note here that one of the grounds of challenge in the present appeal was that the decision of the High Court in the case of National Highways Authority of India v. M/s. ITD Cementation India Limited1 was the subject matter of challenge before this Court. We may state that by judgment and order dated 24th April 20152, the said appeal has been partly allowed by setting aside the award made on claim no.8.

SUBMISSIONS

4. The learned senior counsel appearing for the appellant pointed out that an increase in the rates of royalty on soil, sand and crushed stones which aggregates through a notification, would be adjusted as per sub-clause 70.3 (vii) of the contract, which provides for a price adjustment for all local material based on Wholesale Price Index (WPI). The learned counsel submitted that while submitting the bid, the appellant 2 (2015) 14 SCC 21 Civil Appeal no.4702 of 2023 etc. Page 4 of 15 accepted that WPI would be the only yardstick to be used in the matter of price adjustment. The learned counsel submitted that the Division Bench erroneously interpreted clause 70.8 of the agreement.

5. The learned senior counsel submitted that though the contract provided for partly fixed and partly adjustable prices, the adjustment in costs for inputs would be covered only to the extent to which they are covered by a formula in clause no. 70.3 of the agreement. She submits that the learned Single Judge and Division Bench of the High Court have failed to notice that clause 70.8 starts with a non-obstante clause. It provides that such additional or reduced costs shall not be separately paid or credited if the same has already been taken into consideration in the indexing of any inputs to the price adjustment formulae in accordance with clauses 70.1 to 70.7. She submits that in the present case, such additional costs have been dealt with in Clause 70.3 (vii). She submitted that the sales tax was not increased based on legislation. The learned senior counsel submitted that the work of embankment construction is a part of the work of clearing and grubbing, which includes backfilling up to 150 mm. She submitted that when topsoil is removed as it is unfit for construction, this activity has to be a part of clearing and grubbing. On facts, she submitted that no evidence had been placed on record to show that the Engineer had required the respondent to remove the top 150 mm of soil in all places. She submitted that the Arbitral Tribunal and the Courts must strictly interpret the contract. Just because the respondent has Civil Appeal no.4702 of 2023 etc. Page 5 of 15 incurred some expenditure, it would not amount to a liability on the appellant which is covered by clause 70.8 of the agreement. She has pointed out the factual aspects of the connecting cases.

6. The learned counsel representing the respondents in the appeals pointed out that the scope of interference in a petition under Section 34 of the Arbitration Act is narrow, and the jurisdiction of the Appellate Court under Section 37 is still narrower. The learned counsel pointed out that the impugned judgments relied upon a decision of the Delhi High Court in the case of the National Highways Authority of India v. M/s. ITD Cementation India Limited1. He submitted that the said decision had been upheld by this Court by judgment and order dated 24th April 20152 in Civil Appeal no. 9799 of 2010 and other connected cases. The submission is that the decision of this Court completely covers the respondent's claims nos. 1 and 3. The learned counsel invited our attention to the majority view of the Arbitral Tribunal on the claim regarding expenses incurred for making an embankment. It was submitted that the view taken by the majority is the view of the experts, which does not call for any interference.

CONSIDERATION OF SUBMISSIONS

7. We may note here that the impugned judgments in all connected appeals are based on the impugned judgment in Civil Appeal no. 4702 of 2023. In this case, we are dealing with concurrent findings arrived at by the Arbitral Tribunal, the learned Single Judge in a petition under Section 34 of the Civil Appeal no.4702 of 2023 etc. Page 6 of 15 Arbitration Act , and the Division Bench in appeal under Section 37 of the Arbitration Act. In this case, we are concerned with the construction of the terms of a contract between the parties. In the case of Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. 3, in paragraphs 9.1 and 9.2, this Court held thus:

minded or reasonable person could do.

It is further observed by this Court in the aforesaid decision in para 33 that when a court is applying the “public policy” test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the Arbitrator on facts has necessarily to pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It is further observed that thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score.

9.2. Similar is the view taken by this Court in NHAI v. ITD Cementation (India) Civil Appeal no.4702 of 2023 etc. Page 8 of 15 Ltd. [NHAI v. ITD Cementation (India) Ltd., (2015) 14 SCC 21 : (2016) 2 SCC (Civ) 716] , SCC para 25 and SAIL v. Gupta Brother Steel Tubes Ltd. [SAIL v. Gupta Brother Steel Tubes Ltd., (2009) 10 SCC 63 : (2009) 4 SCC (Civ) 16] , SCC para 29.

(underline supplied)

8. This Court laid down the law regarding the scope of interference in a petition under Section 34 of the Arbitration Act in the case of MMTC Ltd. v. Vedanta Ltd.4 . Paragraph 11 reads thus:

9. This Court, in the case of UHL Power Company Ltd. v. State of Himachal Pradesh5 held that the jurisdiction of the Court under Section 34 is relatively narrow and the jurisdiction of the Appellate Court under Section 37 of the Arbitration Act is all the more circumscribed. In the light of the limited scope for interference under Section 37 appeal, we will have to deal with the submissions.

10. We have carefully perused the material part of the award of the Arbitral Tribunal and the impugned judgments. For convenience, we refer to the impugned judgment in Civil Appeal no. 4702 of 2023. As can be seen from the impugned judgment, the present appellant confined the challenge only to two issues, which are set out in paragraph 2 of the impugned judgment.

“2. Learned senior counsel for the appellant submits that there are two aspects, which are required to be examined in the present appeal:

11. The Division Bench held that the imposition of a tax or upward revision of an already existing tax or levy through subsequent legislation is admittedly akin to the levy of additional royalty. The Division Bench relied upon a decision of the same Court in the case of the National Highways Authority of India v. M/s. ITD Cementation India Limited1. The Division Bench in the impugned judgment held that the claim made on account of the increase in royalty, sales tax, forest transit fee, etc., was covered in favour of the respondent by the said decision . As stated earlier, the decision in the case of the National Highways Authority of India v. M/s. ITD Cementation India Limited1 was confirmed by this Court by judgment dated 24th April 20152 with a partial modification. A perusal of the said judgment shows that the issue therein was also regarding a claim based on an upward revision of royalty. Clauses 70 to 70.8 of the agreement quoted in the judgment are identical to those in the agreement subject matter of these appeals. The argument before this Court was also the same that the WPI assessment would include a claim for enhanced royalty. In paragraph 21 of the decision, this Court dealt with the impact of clauses 70.1 to 70.7 and 70.8. In paragraph 21 of the said decision , this Court held thus :

12. There was some controversy before the Division Bench on the issue whether there was an actual increase in the sales tax. However, after perusing the circular dated 1st December 2004, the Division Bench concluded that there was an addition of 3% in the amount of sales tax, as a result of which applicable sales tax increased from 22% to 25%. In the light of the law laid down by this Court in the case of National Highways Authority of India2, the contention based on the first claim made by the respondent has no merit.

13. Now, we turn to the issue of whether the claim for the construction of embankment forms part of the activity of clearing and grubbing and was not payable as embankment work. We may note here that two expert members of the Arbitral Tribunal held in favour of the respondent on this point, whereas the third member dissented. There cannot be any Civil Appeal no.4702 of 2023 etc. Page 13 of 15 dispute that as far as the construction of the terms of a contract is concerned, it is for the Arbitral Tribunal to adjudicate upon. If, after considering the material on record, the Arbitral Tribunal takes a particular view on the interpretation of the contract, the Court under Section 34 does not sit in appeal over the findings of the arbitrator. The Division Bench has adverted to the findings recorded by the two members of the Arbitral Tribunal. After considering the view taken by the Arbitral Tribunal, the High Court observed that the real controversy was whether the work of backfilling had been done and whether the said work was liable to be excluded from the work of the embankment construction by the respondent. The Division Bench held that nothing is shown that indicates that the construction of the embankment can be said to have been done in a manner where the lower part of the embankment is made only by carrying out the activity of backfilling. The High Court also noted that the appellant sought to make deductions after initially paying the amounts for the embankment. The Division Bench was right in holding that the majority opinion of technical persons need not be subjected to a relook, especially when the learned Single Judge had also agreed with the view taken by the Arbitral Tribunal. We have also perused the findings of the majority in the Award. We find nothing perverse or illegal about it.

14. In our view, the learned Single Judge and the Division Bench of the High Court have examined the challenge to the award within four corners of limitation imposed by Sections 34 Civil Appeal no.4702 of 2023 etc. Page 14 of 15 and 37 of the Arbitration Act . The view taken by the Arbitral Tribunal, the learned Single Judge and the Division Bench cannot be found fault with.

15. Therefore, we find no merit in the appeals, and they are dismissed with no order as to costs.

….…………………….J. (Abhay S. Oka) …..…………………...J. (Pankaj Mithal) New Delhi;

May 7, 2024.