Case Title: Government of NCT of Delhi v. R.S. Sharma Contractors Pvt Ltd, OMP(COMM) 130 of 2023, Date: 16.08.2023

Facts

👉The parties entered into an agreement dated 13.09.2014 by which the respondent/contractor was entrusted with the work of widening of a bridge. The work was to be completed within 18 months. Clause 5 of the agreement provided for extension of time in certain situations where the delay was not attributable to the contractor.

👉There was a delay in the execution of the project work and certain extension of times were sought by the respondent and granted by the petitioner. It is noteworthy that the respondent had given an undertaking not to make any claims for the extended period of project. However, disputes arose between the parties w.r.t payments under the final bill. Accordingly, the respondent invoked the arbitration.

👉The arbitrator, vide the impugned award, allowed the claims of the respondent by holding the petitioner liable for the delays in the completion of the project work. The tribunal rejected the contention of the petitioner that the claims were not maintainable as the respondent had executed an NCC in favour of the petitioner forgoing its claims. The tribunal held that the NCC was executed under duress as respondent’s bills were pending and the retention money was lying with the petitioner, and it was a pre-condition to the EOT.

Sequitur by the Court:

👉The Court observed that the arbitral tribunal has categorically held the petitioner liable for causing the delay in the completion of the project work and that this finding of the tribunal remains unchallenged.

👉The Court held that issuance of NCC or other similar ‘no claim’ certificate by a party, in favour of another contracting party, by itself does not disentitle the party having a claim from explaining the circumstances in which NOC is issued. Reverse of the same is equally true. There is no absolute rule which outrightly negates the evidentiary value of NOC’s or ‘no claim’ certificate. It can’t be said that in every case NOC or ‘no claim’ certificate should be treated as unreliable evidence and the giver of the certificate enjoys some sort of immunity in law that will save his rights despite issuance of a ‘no claim’ certificate.

👉Rather, issuance of ‘no claim’ certificate must be treated as prima facie evidence against the issuer of such certificate, and a heavy burden must be cast upon him to prove that the same was not given voluntarily.

👉The Court further held that mere absence of an escalation clause would not preclude a party from claiming escalation, as a measure of damages suffered by it, if the other party is guilty of causing delays in the completion of the work. Accordingly, the Court dismissed the challenge

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