Other Damages 290118.docx

Before the Hon’ble Arbitral Tribunal comprising of Shri L. V Sreerangaraju, Shri Narendra Saigal & Shri Vaidyanathan Sivakumaran.

Reconstruction of Dry Dock and Associated North and South Wharves At Naval Dockyard, Mumbai

Statement of Defense :

Extension of time for completion of “Whole of the Works” Counter Claim – Other Damages

Submitted by

:

Director General Naval Project, Mumbai (Respondent)

Claimant

:

Hindustan Construction Company Ltd.

Introduction: 1.

Contract No. "DGNP (MB)/01 of 2009-2010 dated 31" March 2010" was

awarded to Hindustan Construction Company Ltd. (hereinafter referred to as the "Claimant") for the Reconstruction of Dry Dock and associated North and South Wharves at the Naval Dockyard, Mumbai. DGNP (hereinafter DGNP is referred to as the "Respondent') appointed M/S Royal Haskoning India Pvt. Ltd. as the "Engineer" (hereinafter referred to as the "Engineer") to administer the Contract under FlDlC Conditions of Contract for Plant and Design Build, First Edition 1999. 2.

Time for completion of the works as given in Appendix to tender is tabulated

below. Item

Sub-Clause

Time for completion of the Works

1.1.3.3

Entry

For Reference: Section

1-

30

m

length

of

274 days

completed North Wharf with Crane Rails. Section 1A- Complete length of

365 days

North Wharf. Section

2-

completed

30 South

m

length Wharf

of

365 days

with

Crane Rails. Section 2A- Complete length of

547 days

South Wharf. Section 3- Substation SS3 in

274 days

Wharf. Whole works.

1460 days

The Work Order was issued on …………….. and as per the notice of Commencement dated ….work commenced on

26 Apr 2010. Initial Work

Programme was submitted vide email dated 27 May 2010 to the Engineer, Mr. Mohammad Aslam Bijapur which is the base Programme. The schedule of completion of various sections as indicated and are as tabulated below. Section

Completion

Time

in Scheduled Completion

days

Date

Section 1

274

25 Jan 2011

Section 1A

365

26 Apr 2011

Section 2

365

26 Apr 2011

Section 2A

547

25 Oct 2011

Section 3

274

25 Jan 2011

Whole works

1460

25 Apr 2014

3.

Contractor submitted various applications for Extension of time from time to

time. Engineer Determined the EOT and revised Completion dates are tabulated below.

Section

Completion Time Scheduled

Revised

in days

Completion

Completion Date

Date Section 1

274

25 Jan 2011

25 July 2011

Section 1A

365

26 Apr 2011

23 Jan 2012

Section 2

365

26 Apr 2011

25 Jul 2011

Section 2A

547

25 Oct 2011

23 Jan 2012

Section 3

274

25 Jan 2011

25 Apr 2011

Whole of works

1460

25 Apr 2014

24 Oct 2015

Accordingly Delay Damages were adjusted against the Bank Guarantee submitted by the Claimant as per Sub-Clause 2.5 Employers Claim. However, the Contractor disputed the Determination by the Engineer and applied for Pre-Arbitral decision as per Contract.

4.

The Pre-Arbitral Authority adjudicated in the matter of Whole of the works

and awarded EOT under various heads. Accordingly the revised completion date works out to as tabulated below. Section

Section 1

Completion

Scheduled

Revised

Time in days

Completion

Completion

Date

Date

25 Jan 2011

25 July 2011

274

Remarks

Under Arbitration

Section 1A

365

26 Apr 2011

23 Jan 2012

Section 2

365

26 Apr 2011

25 Jul 2011

Section 2A

547

25 Oct 2011

23 Jan 2012

Section 3

274

25 Jan 2011

25 Apr 2011

Whole works

1460

25 Apr 2014

15 Dec 2015

5.

Under Arbitration Under Arbitration Under Arbitration Under Arbitration Disputed

However Extension of time awarded by Pre-Arbitral Authority in respect of

Sections 1, 1A, 2, 2A, 3

disputed by the Claimant which is being presently

arbitrated upon under ongoing arbitration.

6.

Incidentally, it may be stated here that the extension of time in respect of

whole of the works awarded by the Pre-Arbitral Authority has been disputed by the Claimant as well as by the Respondent. 7.

Claimant has now submitted Statement of Claim in respect of Extension of

time for completion of ‘whole of works’ for arbitration. The detailed reasons for the delay and Extension of time as brought out by the Claimant is deliberated at page 3 to page 49 of Volume 1of SOC submitted by the Claimant under covering letter HCC/CONT/DGNP/GDN/948 dated 10 Jan 2018.

8.

The

Respondent

examined

the

Claim

for

Extension

of

time

for completion of ‘whole of works’ submitted by the Claimant under covering letter HCC/CONT/DGNP/GDN/948 dated 10 Jan 2018. Responded thereon vide Statement of Defense submitted vide letter …….. dated has categorically rejected the Claim in detail and is of firm opinion that the claimant is not entitled for further any extension of time pursuant to Engineers determination given vide letter D5750 dated 06 Jan 2016. Exhibit 9.

Summarising, it may be stated here that the delays are mainly due to

Claimant’s poor planning, inadequate design, insufficient resources and frequent break down of equipment’s amongst various other reasons. It is pertinent to state here that though the latest extended date of completion as per Pre-arbitral award works out to 15 Dec 2015 till date work is still incomplete and 30 % of work still remains to be completed, thereby the respondent is facing financial losses due to delay in commissioning of the facilities. Therefore, in accordance with Clause 23(2-A) of the Arbitration and Conciliation Act, 1996 the Respondent is entitled to Counter Claim as detailed below. Consequential Damages I. II. III. IV. V. VI.

Extra cost for Project supervision Extra cost for design services Extra cost for the Respondents staff Extra cost due to delay in commissioning of the facility as envisaged in the Project. Extra cost due to delay in commencement of the works as already envisaged for the Project. Additional moving expense(Extra cost of hiring Plant & Equipment)

The detailed explanation for these financial losses incurred due to delay in completion of facility is as under. I.Extra cost for Project supervision. No extension of time for whole of the works is further entitled to the Claimant beyond 24 Oct 2015. The Claimant has further submitted its application for extension of time for whole of the works up to 30 Apr 2020 which has been

categorically been rejected vide letter D7833 dated 18 Nov 2017. So the Respondent has to further use services of the Engineer for successful completion of the Project for the further period from 24 Oct 2015 to 30 Apr 2020 i.e. the scheduled date of completion as per Claimants application. This delay in completion has caused Respondent to incur additional cost of Rs 27,61,29,164.69( Rupees Twenty Seven Crore Sixty One Lakh Twenty Nine Thousand One Hundred Sixty Four and Paise Sixty Nine Only) on account of Project Supervision for the period from 24 Oct 2015 to 30 Apr 2020. The detail breakup is as given in Exhibit …… II.Extra cost for design services Engineer’s design services are also required to be availed additionally for successful completion of the Project for the further period from 24 Oct 2015 to 30 Apr 2020. This delay in completion has caused Respondent to incur additional cost of Rs 5,35,95,615.81(Rupees Five Crore Thirty Five Lakh Ninty Five Thousand Six Hundred Fifteen and Paise Eighty One Only) on account of Engineer’s Design Services from from 24 Oct 2015 to 30 Apr 2020. The detail breakup is as given in Exhibit III.Extra cost for the Respondents staff Respondent staff will also have also be retained up to Project completion i.e, Claimants scheduled date of completion 30 Apr 2020. This delay in completion has also caused Respondent to incur additional cost of Rs……… on account of retention of Respondents staff. The detail breakup is as given in Exhibit

IV.Extra cost due to delay in commissioning of the facility as envisaged in the Project. As envisaged the Scheduled Project facility was to be utilized for the berthing of Aircraft Carrier INS Vikramaditya first of its kind in terms of size and capacity and other Naval Ships for berthing, maintenance and other associated works. But due to non-completion of this facility these Naval ships were forced to use the services

of other docks which not only imposed financial loss to the respondent but also led to consequential delay in maintenance of other Naval Ships. Thus the Dry Docking and Concurrent Work Package of INS Vikaramaditya was offloaded to M/s Cochin Shipyard at a cost of Rs. 266,79,96,245/-( Rupees Two Hundred Sixty Six Crore Seventy Nine lakh Ninty Six Thousand Two Hundred Forty Five Only ) which is incurred additionally by he Respondent. The detailed breakdown for the same is as per Exhibit…….

V.Extra cost due to delay in commencement of the works as already envisaged for the Project. Various other supplementary works to this Project were required and envisaged earlier and linked to completion of this project. One of works that was approved by the Indian Navy is “Provision of Dock Blocks and Storage Facility for INS Vikramaditya”. This work was scheduled to be taken up in Sep 2015 but was held up since the area for the same was occupied by the Claimant. On account of this delay the cost for the same is escalated by Rs. 5766000/-(Fifty Seven Lakh Sixty Six Thousand only) which will be incurred additionally due to this delay. The details of the same is as worked out in Exhibit …. VI.Additional moving expense (Extra cost of hiring Plant & Equipment As per milestone Section 1A- Complete length of North Wharf and Section 2AComplete length of South Wharf was required to be completed in all respect as per the Contract Agreement. The same were taken over on ………& ……. Respectively pending some works and crane rail. Due to non-availability of Crane rail the other hired cranes were required to be used for the maintenance and feeding of Naval ships berthed on North Wharf and South Wharf. This hiring charges for the Cranes used in absence of non-availabiity of Crane Rail for LL Cranes works out to Rs. …….. as per Exhibit ………….

10.

PRAYERS

In the light of submission made herein above and evidence placed before the learned Arbitral Tribunal, the Claimant has failed to fulfill his obligations under the Contract, by virtue of which the completion of whole of the work is delayed. Due to the prolongation of execution of the works above the determined extension of time and Project still not completed yet, the Respondent is suffering consequential losses as per the forgoing. Therefore, in accordance with Clause 23(2-A) of the Arbitration and Conciliation Act, 1996 the Respondent, humbly prays to the Learned Arbitral Tribunal to award the following in his favor and render justice a) To direct the Claimant to pay the cost incurred on I.

Extra cost for Project supervision Rs. Rs 27,61,29,164.69( Rupees Twenty Seven Crore Sixty One Lakh Twenty Nine Thousand One Hundred Sixty Four and Paise Sixty Nine Only)

II.

Extra cost for design services Rs 5,35,95,615.81(Rupees Five Crore Thirty Five Lakh Ninty Five Thousand Six Hundred Fifteen and Paise Eighty One Only)

III.

Extra cost for the Respondents staff Rs.

IV.

Extra cost due to delay in commissioning of the facility as envisaged in the Project Rs. 266,79,96,245/-( Rupees Two Hundred Sixty Six Crore Seventy Nine lakh Ninty Six Thousand Two Hundred Forty Five Only )

V.

Extra cost due to delay in commencement of the works as already envisaged for the Project Rs. 5766000/-(Fifty Seven Lakh Sixty Six Thousand only)

VI.

Additional moving expense(Extra cost of hiring Plant & Equipment)

b) Direct the Respondent to pay interest at 18% on the total amounts due under a) above from date of award till the date of payment.

c) The Hon'ble Arbitral Tribunal may please direct the Respondent to pay any other relief deemed fit and appropriate under the given circumstances of the case and the Cost of Arbitration.

Mumbai – 400023 March 2018

(Satish Chandra Mittal) Commodore Sr. DDG (DDSP) On behalf of Employer