Completion Certificate not conclusive for delay computation & LDs
L&T was awarded the tender of the HPCL with commencement date of 10.12.1996 and completion by 25.11.1997. First extension was granted upto 30.4.1998. However, second extension upto 30.6.1998 was refused. HPCL issued the work completion certificate on 20.8.1998.
By the Arbitral Award dated 4.7.2003, various claims of L&T were granted. However, by the judgment dated 16.11.2005, the Single Bench has rejected the Award for Claim Nos.1, 2, 4, 9, 15, 16, 21(1), 21(3) and 21(4) but retained the same for claim no.19 of L&T. Thus, the L&T filed Appeal No.26 of 2006 against rejection of other claims and HPCL filed Appeal NO.14 of 2006 against claim no.19.
In all 31 claims are described in para 19 of the DB judgment. The Division Bench in section 37 appeals has dealt in detail with each of the findings of the Arbitrator and the learned Single Bench.
HELD that in the instant case, the Arbitrator has no evidence before him and recorded few findings on total absence of evidence. The case involves element of perversity and not the exercise of re-appreciation of evidence on record. The findings would indicate that the Arbitrator has thrown the contractual clauses to the wind and awarded various by use of his so called technical knowledge. The Award was thus unsupportable and has been rightly set-aside by the Single Bench qua the claims except Claim No.19.
Claim No.19 of L&T was for releasing the withheld amount of Rs.2.52 crores towards liquidated damages. HPCL computed the liquidated damages in respect of delay from 1.5.1998 to 20.8.1998 and withheld the amount of Rs.2.52 crores. The work completion certificate was issued on 20.8.1998 and therefore, the claim was made upto the said period. The Arbitrator held that HPCL was entitled to claim liquidated damages only upto 11.5.1998 on the ground that the HPCL never disputed the factual finding that the pipeline was charged with product on 1.5.1998.
HELD that mere issuance of completion certificate on 20.8.1998 could not have been a ground for claiming liquidated damages by considering the delay period upto 20.8.1998. Thus, the learned Single Bench rightly upheld the award qua Claim No.19.
If the Award is severable, the Court can sever the invalid portion from valid portion of the award and to that extent, the modification of the Award is permissible. HELD that the principles laid down by the Supreme Court applied to the present case show that upholding the award qua Claim No.19 does not disturb setting aside of the award qua rest of the claims.
Judgment dated 8.8.2025 of the High Court of Bombay in Appeal No.26 of 2006 in Arbitration Petition No.449 of 2003 of Larsen & Tourbo Limited vs. Hindustan Petroleum Corporation Ltd and Another with Appeal No.14 of 2006 of Hindustan Petroleum Corporation Ltd Vs. Larsen & Tourbo Limited
