Delhi High Court Upholds ₹1.93 Crore Arbitral Award In Favour Of BEL-ACC In Dispute With NHAI

On Tuesday 24 March, the Delhi High Court upheld an arbitral award in favour of BEL-ACC (JV) granting Rs. 1.93 crore towards revised rates, overhead losses, and additional resource deployment.

Justice Subramonium Prasad dismissed a petition filed by National Highways Authority of India (NHAI), holding that it does not warrant interference under Section 34 of the Arbitration and Conciliation Act, 1996. The Court held:

“...the findings of the learned Arbitral Tribunal demonstrate that a careful balance between the contractual provisions, the conduct of the parties, and the principles of fairness were maintained.”

The dispute arose from a contract dated 1 February 2001 between NHAI and BEL-ACC (JV) to strengthen four-lane sections of the Etawah Bypass on National Highway-2 in Uttar Pradesh, with a contract value of Rs. 69,44,17,782. The project involved two phases: (i) widening existing lanes and (ii) constructing new four-lane stretches.

During execution, changes were introduced, particularly in Phase-I. This included alterations in design and additional structures, leading to disagreements over rates and compensation.

BEL-ACC invoked the arbitration clause under Clause 67.1 of the General Conditions of Contract against NHAI through a notice dated 24 June 2004.

The award, passed by a three-member tribunal, allowed BEL-ACC's claims relating to revised rates, overhead losses and reduced productivity and additional resource deployment and granted a total sum of Rs. 1,93,19,530 along with pendente lite and future interest at 10% per annum from 24 June 2004 till the date of the award and thereafter until payment.

It however, rejected claims of compensation for work executed during the extended period, extension of time, and refund of royalty for ordinary earth.

The NHAI moved the High Court through a petition filed under Section 34 challenging the arbitral award.

Before the High Court, NHAI argued that the tribunal had awarded amounts without proper methodology, relied on its own experience rather than evidence, and granted compensation despite finding that BEL-ACC was partly responsible for delays. It contended that claims for overheads and additional costs were speculative and unsupported by records.

BEL-ACC on the other hand, argued that the award was well-reasoned and based on a detailed evaluation of contractual provisions and evidence, and that NHAI was effectively seeking a re-appreciation of facts, which is impermissible under Section 34.

The Court found no merit in NHAI's objections.

On revised rates, it held that although the tribunal did not provide a detailed mathematical calculation, the awarded amount was neither arbitrary nor significantly divergent from contractual benchmarks.

The Court noted that the tribunal had exercised independent judgment, even reducing certain claimed rates, indicating a reasoned approach rather than mechanical acceptance.

With respect to overhead losses, the Court observed that the tribunal had accounted for delays attributable to both parties and awarded compensation only for specific phases and periods. It held that such a calibrated approach did not warrant interference, especially when the tribunal had applied reductions for mitigation.

On the claim for additional resources, the Court found that the modest award of Rs. 4.10 lakh was justified in light of the tribunal's broader findings and did not suffer from any legal infirmity. It held”

“This Court is of the opinion that considering the findings returned by the learned Arbitral Tribunal on other claims as discussed above, the Award of Rs.4.10 lakhs under Claim No.5 to meet the ends of justice does not warrant any interference.”

Reiterating the limited scope of interference under Section 34, the Court emphasised that it does not sit in appeal over arbitral awards and cannot substitute its own interpretation merely because another view is possible.

Accordingly, the High Court dismissed NHAI's petition and upheld the award in its entirety.

For Petitioner (National Highways Authority of India): Advocates A. P. Singh, Varnit Vashistha.

For Respondent (BEL-ACC (JV)): Advocates Dr. Swaroop George, Sunny Thomas, Abhinandan Jain, Shivam Prajapati, Abhigyan Dwivedi, Kartikey.