In order to claim extended stay compensation, the Claimant ought to substantiate the claim by showing the damages that it has incurred due to such delay and mere delay per se is not sufficient to claim compensation

The Delhi High Court observed that while deciding a petition under Section 34 of the Arbitration and Conciliation Act, 1996, the Courts should not re-assess or re-determine the evidence and interfere with the arbitral award until and unless there is something perverse or irrational in the arbitral award. While determining compensation claimed by the claimant due to extended stay at the site of work, it was held that this being claim of damage, proof of loss is indispensable.

The above ratio was passed by the Delhi High Court in the case of The Braithwaite Burn and Jessop Construction Company Ltd. vs. Rail Vikas Nigam Ltd. bearing O.M.P. (Comm) No. 127/2019 decided 15.04.2019.

Challenge:

The factual matrix of the case is that the Claimant has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the arbitral award dated 11.10.2018. The Petitioner and the Respondent had executed an agreement dated 04.06.2010 for fabrication, assembly and launching of triangulated open web welded steel. The stipulated period for completion of the project was nine months however, the project got delayed by 45 months.

The Petitioner alleges that the delay was attributable to the Respondent. On the other hand, the Respondent alleges that the Petitioner is accountable for not competing the project within the stipulated period. The question in dispute before the Arbitral Tribunal was the attribution of delay. The Arbitral Tribunal by its impugned order concluded that both the parties were at fault and responsible for the delay and rejected the claim of the Petitioner with respect to the extended stay compensation.

Being aggrieved by the said order of the Arbitral Tribunal, the Petitioner has moved the present Section 34 Petition.

The Petitioner has submitted that due to the prolonged stay on the project site, the Petitioner had to incur increased overheads as it had to maintain their resources until substantial completion of works and was not allowed to demobilize its resources resulting in reduced profits owing to the delays not attributable to it.

Held

The Court after considering the submissions of the parties, held that as the claim for extended period of stay is a claim of damage so it requires proof of loss. Mere delay per se is not sufficient to claim for extended stay compensation. Merely because there was delay in completing the project, the Claimant should not be allowed to claim the compensation even if the delay is not attributable to Claimant. In order to claim the extended stay compensation, the Claimant ought to furnish materials to establish the quantum of profits it expected to earn during the extended period.

The Court has further observed that the Arbitral Tribunal is the final adjudicator of the sufficiency of the evidences and his decision is not amenable to judicial review under Section 34 of the Act unless any of the grounds therein are established. The Court, further relied upon the dictum of the Apex Court in Associate Builders vs. Delhi Development Authority (2015) 3 SCC 49, and held that while deciding a petition under Section 34 of the Act, does not sit in appeal over the award to re-assess or re-appreciate evidence; and that where there is nothing perverse or irrational, the court will not interfere in the arbitral award.