Arbitration and Conciliation Act, 1996 – ss. 34 and 37 – Arbitral awards – Work contract – Claims raised by the contractor under different heads alleging delays on the part of the State, referred to the arbitrator – Arbitral award in favour of the contractor under heads-loss of business, uneconomic utilization of plant and machinery, labour charges for uneconomical stoppage of work, interest on delayed payment, escalation bill, interest and costs – Award challenged by the State, whereby the District Judge set aside few of the claims – High Court modified the award – Interference with:
Held: Decision of the High Court setting aside the award with respect to claim as regards labour charges for uneconomical stoppage of workup held since the arbitrator did not even refer to the contractual provisions which prohibited such claim – Judgment of the High Court setting aside claim of interest on delayed payment awarded by the Arbitrator, as upheld by the District Judge u/s. 34 is set aside since nothing perverse in the reasoning of the Arbitrator and nor such conclusion against public policy – Judgment of the High Court in so far as it modified claim as regards interest, to the extent of rejecting pre-reference interest awarded by the arbitrator, as upheld by the District Judge u/s. 34 is set aside since the High Court had no reason to interfere with the Arbitral Award with respect to grant of pre-reference interest, since the contract between parties does not prohibit the same – Award as regards labour charges for uneconomical stoppage of work set aside and award as regards interest on delayed payment is upheld – As regards the claim of interest, the appellant entitled to claim prereference interest. [Para 10] Arbitration and Conciliation Act, 1996 – Work contract – Arbitration proceedings – Contractual clauses – Interpretation of – Claim relating to loss caused due to idle labour, machinery – High Court held that the said claim is impermissible under the contractual provisions – Correctness:
Held: Contract clauses speak for themselves – High Court did what the Arbitrator should have done and examined what the contract provides – This is not even a matter of interpretation – It is the duty of every arbitral tribunal and court alike and without exception, for contract is the foundation of the legal relationship – High Court came to the conclusion that awarding any amount towards idle, machinery, etc. is prohibited under the ‘Special Terms and Conditions’ of the Contract – Arbitrator did not even refer to the contractual provisions and the District Court dismissed the objections u/s. 34 with a standard phrase – High Court exercising jurisdiction u/s 37 did its duty and the conclusions of the High Court are correct and cannot be interfered with. [Paras 7, 7.3-7.5] Arbitration and Conciliation Act, 1996 – ss. 34, 37 – Dispute relating to work contract – Arbitral award – Arbitrator awarded interest on delayed payment of running account bills – Upheld by the District Court – However, the High Court set aside the award – Challenge to:
Held: Conclusion of the High Court, that it appears that the bills were paid soon after they were prepared or that, in that case there could not have been any claim for interest cannot qualify as grounds for interference u/s 37 – Equally, the approach of the High Court in holding that the Arbitrator neither established nor discussed the questions posed by it, not a ground to set aside the Award – Reasoning of the Arbitrator is reflected in that portion of the Award and nothing perverse is seen in it – Nor such conclusion is against the public policy – Judgment of the High Court in relation to the said claim set aside and the Award is restored. [Paras 8.5, 8.6]
Arbitration and Conciliation Act, 1996 – ss. 34, 37 – Dispute relating to work contract – Arbitral award – As regards claim relating to Interest, Arbitrator awarded interest @12% on sum awarded from the date when appellant claimed breach of contract, to the date of the Award, and further interest @ 9.25% p.a. from date of Award till actual payment – District Judge upheld the same – However, the High Court held that pre-reference interest could not have been granted for this period, and that as the Arbitrator could have granted interest only for pendent lite and post award, the Award was modified directing pendente lite interest along with post award interest – Correctness:
Held: s. 31(7) determines the grant of interest – Power of the Arbitrator to grant pre-reference interest, pendente lite interest, and post-award interest u/s 31(7) of the Act is fairly well-settled – High Court had no reason to interfere with the Arbitral Award with respect to grant of pre-reference interest, since the contract between parties does not prohibit the same. [Paras 9.4-9.6] Arbitration and Conciliation Act, 1996 – s 37(1) – Power of the Arbitrator to grant pre-reference interest, pendente lite interest, and post-award interest under – Difference in the position of law under the Arbitration Act, 1940 – Encapsulated. [Para 9.5]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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