The core of the dispute revolves around a construction contract for Road Over Bridges where the appellant, C & C Constructions, claimed damages due to delays caused by the respondent, IRCON International. The case addresses the enforceability of clause 49.5 of the General Conditions of Contract, which states that contractors are not entitled to damages for employer-caused delays but can receive time extensions. The Supreme Court upheld the decisions of the lower courts, finding that the appellant was estopped from challenging the validity of clause 49.5 due to their conduct, including their repeated requests for extensions under this clause and undertakings not to claim additional compensation. The ruling also clarifies the limited scope of judicial interference in arbitration awards under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.
(A) Arbitration and Conciliation Act, 1996, Sections 16, 34 and 37 – Arbitration award – Estoppel – Appellant acted upon clause 49.5 and sought an extension of time on three occasions – The claim in the letter dated 25th January, 2017 was made by the appellant after giving solemn undertaking on 14th January, 2015 not to make any claim other than escalation in respect of delays in the completion of work – The claim made was contrary to the undertakings – By the undertakings, the appellant agreed not to make a claim contrary to what is provided in clause 49.5 – Held that by conduct, the appellant was estopped from challenging the validity of clause 49.5.
(Para 18)
(B) Arbitration and Conciliation Act, 1996, Sections 16, 34 and 37 –Arbitration award – Challenge as to – First contention raised by the appellant was that all 15 monetary claims could not have been summarily rejected by the Arbitral Tribunal exercising jurisdiction under Section 16 of the Arbitration Act, without giving an opportunity to the appellant to lead evidence and to prove that the claims were not barred by clause 49.5 – Secondly, the appellant sought to rely upon clause 49.4 – Another contention raised on behalf of the appellant was that clause 49.5 was waived by the respondent – Held that as the claims were hit by Clause 49.5 on its plain reading, there was no question of allowing the appellant to lead evidence – Clause 49.4 will apply when the delay is not due to the respondent – Admittedly, in this case, the delay was on the part of the respondent – Hence, clause 49.5 will apply and not clause 49.4.
(Para 22 and 23)
(C) Arbitration and Conciliation Act, 1996, Sections 16, 34 and 37 – Indian Contract Act, 1872, Section 23, 28 – Arbitration award – Challenge as to – New plea – Now, in this appeal, a contention has been raised that the validity of clause 49.5 ought to have been examined in the light of Sections 23 and 28 of the Contract Act, but the High Court has not examined the said issue – Careful perusal of the judgment of the learned Single Judge shows that the contention that the validity of clause 49.5 ought to be decided in the light of Sections 23 and 28 of the Contract Act was not raised before the learned Single Judge in a petition under Section 34 – The said contention was not raised even before the Division Bench in appeal under Section 37 – Therefore, it is not open to the appellant to raise the said contention in this appeal for the first time.
(Para 24)
(D) Arbitration and Conciliation Act, 1996, Section 37 – Arbitration – New plea at appellate stage – Plea of waiver – A contention was raised for the first time in appeal under Section 37 that clause 49.5 was waived by the respondent – Apart from the fact that said contention could not have been raised for the first time in appeal under Section 37 of the Arbitration Act, on the applications made by the appellant specifically invoking clause 49, the respondent granted an extension of time on more than one occasion – On this behalf, much capital was sought to be made about what is stated by the respondent in its letter dated 14th October, 2013 – By no stretch of imagination, after reading the said letter it can be inferred that clause 49.5 was waived by the respondent – In fact, the respondent stated that the claim for financial burden would have to be dealt with together with the proposal for an extension of time, and the said claim cannot be processed separately – Thereafter, on two occasions, on specific requests made by the appellant under clause 49 of the GCC, the extension of time was granted by the respondent – Except sub-clause 5 of clause 49, there is no other sub-clause which provides for grant of extension when the delay was attributable to the respondent – The extensions were granted at the instance of the appellant by invoking clause 49 – Hence, the argument of waiver of Clause 49.5 by the respondent deserves to be rejected.
(Para 25 and 26)
M/S. C & C Constructions Ltd. V. Ircon International Ltd.
Supreme Court: 2025 INSC 138: (DoJ 31-01-2025)
