Case Note & Summary
The dispute arose from a tripartite concession agreement dated 27.11.2009 executed between the Government of Rajasthan, Jaipur Development Authority, and Rohan Rajdeep Rajasthan Infra Project Limited, a special purpose vehicle, for construction, operation, and maintenance of an alternate route to Ghat Ki Guni through a tunnel in Jhalana Hills, Jaipur on Build-Operate-Transfer basis. The project was awarded pursuant to Notice Inviting Tender dated 04.08.2009, amended on 17.08.2009, with a pre-bid meeting on 08.09.2009 and letter of agreement of award dated 13.10.2009. The approved project cost was Rs.150 crores with IRR of 20.33%, concession period of 13 years 05 months 20 days. The actual commencement date was 15.12.2010 against proposed 01.12.2009, and actual completion date was 31.01.2013 against stipulated date 14.06.2013. The respondent claimed that the Detailed Project Report supplied by the department was fundamentally defective, leading to inadequate natural overburden over tunnel tubes, necessitating revised alignment and cost escalation. It relied on surveys conducted in December 2009 and February 2010, communications dated 28.04.2010 and 12.05.2010, and approval of revised alignment on 20.10.2010. It also cited the debarment of the consultant associated with the earlier DPR and termination of the Project Head as administrative recognition of defects. Further, the presence of Baba Balaknath Samadhi at chainage 0+650 allegedly compelled additional revisions. The respondent filed statement of claim dated 15.02.2019 seeking Claim No.1 of Rs.175.67 crores for increase in project cost, Claim No.2 of Rs.188.02 crores for loss of toll, Claim No.3 of Rs.40.71 crores for compensation of toll loss due to delay in achieving COD, and Claim No.4 of Rs.8.49 crores for revenue loss from denial of right of way for advertisements. The arbitral tribunal allowed Claim No.1 in toto, partly allowed Claim No.2 (Rs.12.20 crores for traffic leakage through old GKG road and Rs.1.68 crores for demonetization), allowed Claim No.4, and rejected Claim No.3, resulting in total award of Rs.198.04 crores plus costs of Rs.23,66,061, with pre-award IRR @20.33% per annum and post-award interest @12% per annum after 90 days. A corrigendum award dated 31.07.2023 under Section 33 deleted the total award amount and made the award without an upper cap by adding compounded IRR @20.33%. Execution proceedings sought recovery of Rs.544.43 crores, and the executing court directed issuance of warrant of recovery under Order XXI Rule 30 CPC on 09.01.2026; execution was stayed by the High Court on 22.01.2026. The appellants challenged the arbitral award and the Commercial Court's dismissal of their Section 34 petition dated 27.01.2025. The High Court's final decision is not available in the provided excerpt.
Headnote
A) Arbitration - Section 34 Challenge - Scope of Interference - Arbitration and Conciliation Act, 1996, Sections 34, 37 - Appeal directed against dismissal of objections to arbitral award; Court to examine whether Commercial Court properly applied limited grounds for setting aside award and whether arbitral findings on cost escalation were perverse (Paras 1-8). B) Arbitration - Corrigendum Award - Correction of Clerical Errors - Arbitration and Conciliation Act, 1996, Section 33 - Corrigendum deleted total award amount and made award without upper cap by adding compound IRR; issue whether this exceeded Section 33 power (Paras 6-7). C) Contract Law - Concession Agreement - Interpretation and Risk Allocation - Tripartite Concession Agreement dated 27.11.2009 - Dispute regarding defective DPR, revised alignment, and cost escalation; respondent claimed DPR defects necessitated redesign; question whether risk allocated to concessionaire or authority (Paras 8.1-11). D) Execution - Recovery Proceedings - Order XXI Rule 30 of Code of Civil Procedure, 1908 - Execution sought Rs.544.43 crores based on award; High Court stayed execution (Paras 7-8).
Issue of Consideration
Whether the Commercial Court erred in dismissing the Section 34 objection petition; whether the corrigendum award dated 31.07.2023 exceeded the scope of Section 33 of the Arbitration and Conciliation Act, 1996; whether the arbitral award granting cost escalation, toll loss compensation, and compounded IRR is sustainable
Law Points
- Limited grounds for setting aside arbitral award under Sections 34 and 37 of Arbitration and Conciliation Act
- 1996
- correction of clerical errors under Section 33 of Arbitration and Conciliation Act
- scope of judicial interference with arbitral award
- interpretation of tripartite concession agreement
- risk allocation in public-private partnership BOT project
- execution proceedings under Order XXI Rule 30 of Code of Civil Procedure
- 1908
