Delhi High Court Upholds ₹1.22 Crore Award Against Delhi Tourism & Transportation Development Corporation

The Delhi High Court on 21 April dismissed Delhi Tourism & Transportation Development Corporation's challenge to a majority arbitral award in favour of contractor Gammon India Ltd in a dispute over escalation payments under a construction contract for a bridge project over the Yamuna river.

Justice Harish Vaidyanathan Shankar held that the arbitral tribunal's interpretation of the contract was a plausible one and did not warrant interference.

DTTDC had entered into the contract with Gammon India Ltd in 2008 for construction of a bridge and related infrastructure. The project comprised multiple components, including flyovers and embankments, with milestone-based timelines and an overall completion period of 42 months.

The dispute arose over the interpretation of the expression “stipulated period of completion” in the contract's escalation clause. DTTDC argued that the phrase had to be interpreted component-wise, while Gammon contended that it referred to the overall completion period of the project.

The court found that the parties' own conduct supported the tribunal's interpretation, noting that both sides had proceeded on the basis of the overall completion period for a considerable period before DTTDC later adopted a different interpretation following audit objections.

“For a considerable period, both parties proceeded on the basis that escalation under Clause 10CC was to be computed with reference to the overall completion period. Such a consistent and unambiguous course of conduct cannot be brushed aside lightly. It would be contrary to settled principles of contractual interpretation to permit a party to approbate and reprobate, accepting a particular interpretation when it suits its commercial interests and resiling from it when circumstances change. The Petitioner, having acquiesced in such interpretation for a substantial duration, cannot now be permitted to resile therefrom to suit its shifting commercial convenience,” the court observed.

Gammon invoked arbitration through a legal notice dated February 21, 2013, claiming that escalation payments had not been made in accordance with the contract due to the differing interpretations adopted by the parties.

On December 12, 2013, the tribunal delivered a 2:1 award in Gammon's favour, awarding Rs 1,22,80,984 along with pendente lite simple interest at 10% per annum from February 21, 2013 till the date of award, besides future interest subject to the terms of the award.

DTTDC argued before the High Court that the tribunal erred in interpreting the phrase “stipulated period of completion” as referring to the overall 42-month period instead of component-wise timelines. It argued that the contract structure, including milestone provisions, supported its interpretation.

Gammon argued that this was a lump-sum contract with a single tendered value, with no separate mechanism to value individual components. According to the contractor, that supported the tribunal's reading that the stipulated completion period applied to the project as a whole.

The High Court noted that the majority tribunal had closely examined the contract framework. It took into account the lump-sum nature of the agreement, the absence of separate valuation for different components, and the manner in which the parties themselves had acted during the course of the contract.

Finding that DTTDC's reading was simply an alternative interpretation, and that the arbitral tribunal's view was both reasonable and one that could legitimately be taken, the court dismissed the petition.

For Petitioner - Senior Advocate Prashanto Chandra Sen with Advocates Sriharsha Peechara, Soumit Ganguli, Rajlakshmi Singh, Vanisha Mehta, Ravicha Sharma, Shruti Agarwal & Akash Sharma

For Respondent: Senior Advocate Ashish Dholakia with Advocates Saurabh Suman Sinha, Gautam Prabhakar, Yash Bhatnagar & Ananya Narain