INNOVATORS FACADE SYSTEMS LIMITED  Vs AIRPORT AUTHORITY OF INDIA -Judgment by Delhi High Court

$~10
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 25th April, 2022
+ O.M.P. (COMM) 387/2021 & I.As. 17495-96/2021
INNOVATORS FA�ADE SYSTEMS LIMITED ….. Petitioner
Through: Mr. Naresh Jain, Mr. Alok Kumar and Mr. Bhaskar Nayak, Advocates.

versus

AIRPORT AUTHORITY OF INDIA ….. Respondent
Through: Mr. K.K. Patra and Mr. Somesh Kumar Dubey, Advocates.

CORAM:
HON’BLE MR. JUSTICE SANJEEV NARULA

J U D G M E N T

SANJEEV NARULA, J. (Oral):

I.A. 17497/2021 (u/ Section 5 of the Limitation Act, 1963 r/w Section 151 of the Code of Civil Procedure, 1908 seeking condonation of delay in filing the present petition)

1. For the grounds and reasons stated therein and in view of the decision of the Supreme Court in Suo Motu Writ (Civil) No. 3/2020 titled In Re: Cognizance for Extension of Limitation, the present petition is allowed and the delay of 458 days in filing the present petition stands condoned.
2. Accordingly, the application stands disposed of.

O.M.P. (COMM) 387/2021
3. The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter �the Act�] seeks setting-aside of the arbitral Award dated 15th June, 2020 passed by Hon�ble Dr. Justice Mukundakam Sharma (Retd), former Judge of the Supreme Court [hereinafter �impugned Award�], whereby the Sole Arbitrator has partly allowed Petitioner�s (Claimant in arbitration) claims.

4. The Parties �
4.1. The Petitioner viz. M/s. Innovators Fa�ade Systems Ltd. [hereinafter �IFSL�] is engaged in business of providing fa�ade and glass elevation, glazing, structural glazing, cladding works and other kind of steel and aluminum work in the buildings.
4.2. The Respondent viz. Airports Authority of India [hereinafter �AAI�] invited tenders on 01st September, 2011 for the work of �External ACP Cladding Check in Island and Glass canopy for New Integrated Passenger Terminal Building at NSCBI Airport, Kolkata� [hereinafter �Project�]

5. The Contract �
5.1. IFSL being the L-1 bidder was awarded the Project and formal Agreement dated 14th November, 2011 [being � Agreement No. AAI/KOL-Proj/ SME(C)/ Acp-Canopy/2011-2012/1] was executed between the parties [hereinafter �Contract�].
5.2. The scheduled date of commencement of the Project was 15th November, 2011 and date of completion was 14th May, 2012.

6. The Dispute and Arbitration �
6.1. IFSL commenced the Project but could not complete the same within the stipulated timelines and requested for extension from AAI. In response thereto, AAI wrote to IFSL seeking an undertaking that it would not claim any extra/ additional amount in case extension was granted without levy of compensation. On receiving such an undertaking from IFSL, the Contract was extended.
6.2. Some of the claims of IFSL were not entertained by AAI and ultimately the matter was referred to arbitration by this Court.1
6.3. The Ld. Arbitrator, after hearing the parties and considering the material on record, passed the impugned Award on 15th June, 2020. In the said arbitration proceedings, IFSL partly succeeded.
6.4. IFSL impugns the Award qua rejection of the following claims: (a) Claim of Rs. 1,23,45,091/- towards extra aluminium consumption;2 (b) Claim of Rs. 1,23,45,438/- incurred as overhead expenses due to prolongation of Contract [10% of certified work done];3 and (c) Claim of Rs. 1,00,00,000/- towards loss of opportunity due to prolongation of Contract,4 which are taken up and analyzed separately.

CLAIM-WISE OBJECTIONS AND ANALYSIS
CLAIM NO. 3 � EXTRA ALUMINIUM CONSUMPTION
7. Mr. Naresh Jain, counsel for IFSL makes the following submissions: –
(i) The Ld. Arbitrator committed patent illegality insofar it rejected the claim of Rs. 1,23,45,091/- towards extra aluminium consumption. The Ld. Arbitrator erred in considering irrelevant facts and evidence and thus, committed a miscarriage of justice.
(ii) The Ld. Arbitrator failed to decide the controversy as to whether the claim of IFSL towards extra aluminium consumption could be treated as �additional item� and failed to interpret the terms of the Contract with respect to BOQ Item No. 1. The Bill of Quantities [�BOQ�] and tender drawings ought to be read together. At the time of bidding for the Contract, IFSL referred to the drawings (as mentioned in BOQ) and quoted its price. The tender drawings mention the usage of aluminium frame only qua portion of �Gable End Dead Wall� and not anywhere else. In such a scenario, it was natural for IFSL to conclude that aluminium frame is only required at that location and not other(s) mentioned in tender drawings.
(iii) Reliance is placed on communication dated 22nd February, 2012 written by IFSL to the Senior Manager, Engineering (Civil) of AAI highlighting that the provision of aluminium framing would incur additional/ extra cost over-and-above the BOQ rate and also the response of AAI on 23rd February, 2012.

ANALYSIS
8. Claim No. 3 pertains to extra aluminium consumption for the Project. According to IFSL, at the time of making the bid � the extra consumption could not be envisaged as the same was not borne out from the tender drawings and it was discovered later during the course of execution of the Project that extra aluminum would be required to carry out the work awarded.
9. On this aspect, the Ld. Arbitrator has taken note of correspondence exchanged between the parties as extracted in paragraph No. 30-32 of the impugned Award. The Ld. Arbitrator observed, on the basis of materials placed before him, that since AAI had clearly negatived the stand of IFSL regarding its claim of �extra item�, no justification was found on behalf of IFSL to have proceeded with the particular extra work. The findings of the Ld. Arbitrator, on this issue, are as under: –

�34. The respondent clearly negatived the claim stating that such a claim is not admissible and entertainable. It is established that not only acceptance was not accorded by the Respondent, but it also denied the responsibility of making payment of any extra item in that regard. Despite the said fact the claimant proceeded with that particular extra work and therefore the claimant cannot take up a stand that they are entitled to such a claim which was negated by the respondent in specific terms at the earliest point of time. Despite the same and the stand taken, the claimant proceeded to do the work of its own and claimed the aforesaid amount as extra item. Therefore this claim of the claimant cannot be entertained. The claimant did the work unilaterally of its own. There was no meeting of mind and agreement of the parties on that count. Consequently, the claimant cannot be held justified in claiming such amount. I also draw support of the aforesaid stand taken by me form the cross examination of the witness of the claimant when he stated this reply to question 7 and 8.
�Q.7. Is it correct that if there is any conflict between the specification in the BOQ, and in the drawing, if any, then the specification in BOQ would prevail and not what is shown in the drawings?
Ans. It is correct.
Shown paragraph 2 of the affidavit and particularly the last line of the first bullet.
Q.8 I put it to you that whatever you have started in that line/sentence is not borne out by the contractual provisions. What do you have to say?
Ans. Yes, it is correct. But this is our view point�.

35. Therefore, taking all the circumstances into consideration which are stated hereinbefore, this claim of the claimant is found to be without any merit and cannot be entertained and this claim is rejected.�

10. In the opinion of the Court, the afore-noted reasoning is found to be reasonable and borne out from the materials placed before the Ld. Arbitrator. IFSL�s counsel has justified continuation of the Project owing to contractual stipulations as provided in Clause 8.3, which reads as follows: –

�8.3 Any error in description, quantity or rate in Schedule of Quantities or any omission therefrom shall not vitiate the Contract or release the Contractor from the execution of the whole or any part of the works comprised therein according to drawings and specifications or from any of this obligations under the contract.�

11. The afore-said clause does not aid IFSL to justify the unilateral continuation of work under the impression that the same is �extra work� in relation to which separate amount will be payable to them. AAI had clearly refused the claim for the cost of alleged �extra item�/ framework usage. Therefore, if the �extra work� unavoidably entailed an increase in the cost of construction, IFSL ought to have put the operations on hold and seek requisite approval(s) from AAI. The parties perhaps then could come to an agreement regarding the performance of �extra work� and levy of additional cost thereon, if any. At this stage, after execution of the work, in light of AAI�s resolute and categorical denial of responsibility towards making payment thereon, IFSL cannot insist that the same be accepted and treated as �extra work�.

12. It is also urged by IFSL that the claim for �extra work� was never rejected. To buttress this contention, reliance is placed on the communication dated 23rd February, 2012, which reads as follows: –

�To
M/S lnnovators Facade Systems Pvt. Ltd.
204 B-65 Sector No. 1.
Shanti Nagar, Mira Road (E)
Distt. Thane 401107.

Sub: – External ACP cladding, check-in- island and Glass Canopy for New Integrated Passenger
Terminal Building at NSCBI Airport, Kolkata

Ref: Your Letter no. IFSPL\11-12\P-215\CP-05\VM
Dear Sir,

This refers to your letter cited above on the subject of providing aluminium sub frame to the aluminium composite panels (ACP). In this regard your kind attention is drawn to the provision of nomenclature of item which clearly stipulates and includes the cost of aluminium sub frame required for fixing of ACP.

Further the drawings attached to the tender documents to be read in conjunction with the relevant item of BOQ and are indicative in nature for general guidance to give a fair idea to contractor regarding site of work and does not necessarily include all the details as stipulated in BOQ.

The rates quoted against the BOQ items include the cost of material, labour, T&P and necessary statutory levies to execute the items.

Your attention is also invited to the provision of contract under clause 8.1 under conditions of Contract at page 10 of the agreement.

In view of the above your claims stated under your referred letter is not admissible.

Thanking you�
[Emphasis supplied]

13. The stand of AAI is evident from the afore-noted communication. According to them, the work is covered under the Contract and is not �extra� and thus, no implied acceptance of claim can be read into it.

14. Besides, even on construction of the terms of Contract, IFSL�s claim of �extra item� is devoid of merit. IFSL has claimed cost for providing aluminium sub frame to the aluminium composite panels (ACP). As per AAI, the nomenclature of item includes the cost of aluminium sub frame required for fixing of ACP. Although BOQ Item No. 1, provides that the tender drawings are to be preferred, however, that itself is not equivalent to the acknowledgment as an �extra item�. The Special Conditions of Contract under the head of �DRAWINGS AND DOCUMENTS� clearly provides that tender drawings accompanied in the tender document are only indicative in nature, to enable the tenderer to make an offer in line with the requirements of AAI. The tender drawings have to read in conjunction with the relevant item of BOQ. This is also the holding of the Ld. Arbitrator, to which the Court agrees. Thus, the rejection of the afore-said claim, a finding of fact, rendered on the basis of interpretation of the Contract calls for no interference and accordingly, the same is rejected.

CLAIM NO. 4 � OVERHEAD EXPENSES INCURRED DUE TO PROLONGATION OF CONTRACT, AND
CLAIM NO. 5 � LOSS OF OPPORTUNITY DUE TO PROLONGATION OF CONTRACT

15. Mr. Jain, makes the following averments: –
(i) Contract could not be completed due to delays attributed to AAI. Project was actually completed on 30th March, 2013 after seeking several extensions of the Contract period. The Ld. Arbitrator failed to ascertain the correct reasoning for delay which is germane to decide the afore-mentioned disputes.
(ii) The Ld. Arbitrator erred by not taking into consideration the fact that in general in such project, 10% indirect cost is incurred on account of overhead expenses which justified IFSL�s claim. The Ld. Arbitrator failed to appreciate that IFSL had to retain its staff and machinery for extra ten months since the site was not handed over by AAI on time. Thus, additional cost was incurred by IFSL in the form of staff salaries, charges of highly skilled professionals such as designers, technical project managers, etc.
(iii) The Ld. Arbitrator erred in not appreciating that IFSL was bound to incur some losses in terms of missed opportunities when the Project completion was delayed by ten months. IFSL was entitled to be compensated for overhead expenses loss of opportunities. Further, the Ld. Arbitrator has misinterpreted the letter dated 30th January, 2014.
(iv) Reliance is placed on Public Works Department v. M/s Navayuga Engineering Co. Ltd. & Anr.5

ANALYSIS
16. The aforenoted claims have been rejected for the same reasoning, which is borne out from paragraph No. 36 to 41 of the impugned Award, the relevant whereof read as under: –

�37. Having heard the learned counsel appearing for the parties and having gone through the records l am of the considered opinion that the letter dated 10.01.2014 written by the claimant to the respondent would debar claimant to claim such an amount as overhead expenses. Letters written by the claimant itself stated that there shall not be any additional/extra claim to the respondent other than admissible as per contract/agreement if extension of time is granted to them without any levy of liquidated damage. In terms of the said request extension of time for completion of the project was given by the respondent making it clear in the letter itself that it is also not imposing any liquidated damage for granting such extension of time. Having taken up a stand like that and obtaining such extension to complete the project without levy of liquidated damage by the Respondent the claimant cannot turn back and seek for extension on the ground that the aforesaid extension was granted on the basis of the letter written by the claimant which is obtained by force/coercion.

37. xx � xx � xx

38. I am unable to accept the contention of the claimant that any force or coercion was used by the respondent as alleged. It is established from the aforesaid correspondences between the parties that the claimant gave the aforesaid assurance on the clear terms and the same was also accepted by giving extension of time without levying liquidated damages which could have been imposed by the respondent. Further, no evidence have been led to establish force or coercion. It is settled law that fraud and coercion has to be proved and a-mere assertion of the same is not sufficient. Therefore, there is no force or coercion on the claimant to continue with the contract. In order to examine the validity of the claim, I have carefully perused the evidence of CW1. In his examination-in-chief he has nowhere stated that the claimant has suffered loss due to prolongation of the Contract. Nothing is stated as to the nature or loss suffered on this count. He has not stated at all as to how many plants, machineries etc. were used during the prolongation of the Contract nor has he stated the number of workers employed during this period. it is also not shown exactly why the extension of the Contract was granted. The Respondent did not levy any liquidated damages for the extension granted. Without any strong and cogent evidence in support of this claim, it is held that the claimant is not entitled to make this claim.

Claim No. 5

39. � On this claim I have also heard learned counsel appearing for the respondent. I have also perused the records and upon going through the same I am of the considered opinion that no evidence at all has been produced by the claimant on this count to prove that they had opportunities to bid for other projects and earn profits therefrom….�

17. The Ld. Arbitrator relied upon the IFSL�s communication dated 10th January, 2014, which reads as under: –

�M/S. Airport Authority of India.
N S.C H I. Airport
Kolkata-700 052

KIND ATTN: MR. P.D. NAPHADE (Asst. General Manager (Engg. – C)

Dear Sir.
Sub: EXTENSION OF TIME
REF: 1.AGREEMNET NO: AAI/KOL-PORJ/SME(C)/ACP~CANOPY/2011-12/01 DATED.03.10.2011
2. Your letter No: AAI/KOL/Proj/ACP-Canopy/Energy(C)/3984 Date. 08.012014

Reference in captioned above, we hereby state that there shall not be any additional / extra claim to AAI other than admissible as per as per contract/agreement if extension of time is granted to us without any levy.

Further, you are requested to kindly arrange to release all withheld amount
against EOT. Land security deposit and any other amount.

Thanks and regards.�
[Emphasis supplied]

18. And the communication dated 30th January, 2014, wherein AAI dealt with the request for extension of time for completion of work as follows: –

�To
M/S lnnovators Facade Systems Pvt. Ltd.
204 B-65 Sector No. 1.
Shanti Nagar, Mira Road (E)
Distt. Thane 401107.
Sub : External ACP Cladding, Check-in-Island and Glass Canopy for New Integrated Passenger Terminal Building at NSCBI Airport, Kolkata.

Extension of Time – Regarding.

Dear Sir(s),

Reference your letter no. IFSPL\11-12\P-215\CF-43\DS R1 dated 28/04/2013 in connection with the grant of extension of time for completion of the work “External ACP Cladding, Check-In-Island and Glass Canopy for New Integrated Passenger Termina Building at NSCBI Airport, Kolkata.”

The date of completion for the above mentioned work was 14.05.2012 as stipulated in the agreement No. AAI/Kol-Propj/SME(C)/ Acp-Canopy/2011-12/01

Extension of time for completion of the above mentioned work is granted upto 30.03.2013 without prejudice to the right of the Airports Authority of India to recover liquidated damages in accordance with the provisions of clause 2 of the said contract agreement.

Provided that notwithstanding the extension hereby granted, time is and shall still continue to be the essence of the said agreement.

Thanking you�
[Emphasis supplied]

19. Although, AAI vide communication dated 30th January, 2014 (reproduced above) observed that they have the right to recover liquidated damages in accordance with Clause 2 of the Contract; however, as already noted above, none was levied or claimed. Mr. Jain also confirms that AAI did not levy any liquidated damages. This fact is also noted by the Ld. Arbitrator. The letter dated 10th January, 2014 (as extracted above), clearly bears out that IFSL agreed not to make any �additional/ extra claim� other than those which were admissible under the terms of the Contract. They cannot be permitted to go back on their commitment.

20. Besides, the rejection of the above-noted claims is not solely on the basis of the above communication. The Ld. Arbitrator has also examined the claims on merits. As noted in the impugned Award, the Examination-in-Chief of IFSL�s witness did not reveal any details of the nature or loss sustained through prolongation of the Contract. That apart, the claim for loss of opportunity was also not supported by any evidence and neither is there any provision contained in the Contract stipulating claim towards loss of opportunity. In absence of any evidence to support its claims, the Ld. Arbitrator has rightly rejected the same. Thus, the judgment relied upon by IFSL is distinguishable on facts and inapplicable.

21. Lastly, IFSL�s grounds for challenge are essentially seeking re-appreciation of evidence placed before the Ld. Arbitrator and reversal of findings of fact, which is impermissible. It is settled law and needs no reiteration that the quality and/ or quantity of evidence falls within the exclusive domain of the Arbitrator � he is the master of the records. The Court while exercising jurisdiction under Section 34 of the Act, cannot re appreciate/ re-examine evidence and findings of facts.6

22. In view of the foregoing, the Court does not find any merit in the present petition and accordingly, the same is dismissed along with pending applications.

SANJEEV NARULA, J
APRIL 25, 2022
d.negi
(corrected and released on 05th May, 2022)
1 ARB.P. 211/2017.
2 Issue No. (v) and Claim No. 3 as per the impugned Award.
3 Issue No. (vi) and Claim No. 4 as per the impugned Award.
4 Claim No. 5 as per the impugned Award.
5 (2014) SCC OnLine Del 1343.
6 Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49 and McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181.
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