BRIEF:

The case pertains to a dispute arising out of flooding of tunnel to the extent of more than 200 Litre per Second. The contractor contended that as per the method statement submitted by him at the time of tendering/bid proposal, they had envisaged dewatering upto 130 Litre per Second only where as in actual, inflow of water was more than 200 Litre per Second, thereby causing a Loss of Production (LOP). The contractor thus claimed a compensation of INR 3.3 Crore towards loss of production.

The claim was rejected by the Engineer-in-Charge and by the client in appeal and thereafter, was referred by the contractor to Dispute Review Board (DRB) of Three Members constitutes as per contract provisions. Our team member in his individual capacity defended the case from client’s side.

APPROACH:

At the very outset, both parties were asked to give a presentation on the claim and rebuttal, followed by discussions on contract provisions and notices served by the contractor/claimant. Then, the DRB went into the details related to actual production achieved by the contractor in different stretches and different conditions. It was difficult to measure the rate of production under envisaged flow conditions i.e., 130 Litre per second and therefore, theory of interpolation was followed with certain adjustment factor in consultation with both the parties. The DRB was convinced with the claimant that the flow conditions actually encountered were beyond the stipulated limits and therefore, could not have been foreseen by an experienced contractor. The DRB therefore, gave the decision that the claim was tenable under the provisions of the contract. However, DRB also got convinced by the arguments presented by our team member from client side that the amount claimed by claimant was exorbitant and does not reflect the correct picture. In actual, reduction in the rate of production is not only attributed to flooding of tunnel but it is also due to contractor’s own inefficiency and poor working methods.

The DRB worked out a fair compensation and awarded an amount of INR 1 Crore against claimed amount of INR 3.3 Crore towards loss of production. The award was accepted by both the parties and implemented.