Arbitration and Conciliation Act, 1996: ss.34 and 37 – Contract awarded for maintenance of road for Rs.5.26 crores – The rate of maintenance of the road was accepted at Rs.1,000 per km p.m. – Maintenance contract was valid up to 31.07.2010 – Contract was meant for only 3364 PCUS per day – Dispute arose when contractor was required to incur additional expenditure on maintenance due to diversion of traffic from Palwal Aligarh Road to the present road and heavy traffic of 24418 PCUS per day started plying on the road which damaged the road – Contractor claimed the amount towards additional expenditure for maintenance – Arbitrator awarded Rs.1.51 crores taking loss at Rs.45,000 per km per month (claim Nos.1 and 8) – Case on behalf of the State-appellant was that in the statement of claim, the claimant claimed an amount of Rs.1.03 crores under claim Nos. 1 and 8 and, therefore award was in excess of amount claimed – Held: No substance in this contention – The statement of claim submitted by contractor specifically stated thatamount of Rs.1.03 crores was worked out up to May, 2007 and details of expenditure beyond May,2007 will be submitted during the course of hearing – Therefore,amount awarded by the arbitrator cannot be said to be in excess of the claim – So far as the submission on behalf of the appellant that the arbitrator exceeded the scope of reference while awarding an amount beyond 19.05.2007-the date on which the High Court appointed the sole arbitrator is concerned, same has no substance – Case of appellant that Arbitrator ought to have restricted the claim either up to 06.03.2006-the date on which the contractor invoked the arbitration clause or 23.04.2007, the date on which the High Court appointed the sole arbitrator or at least up to 19.05.2007-the date on which the arbitrator entered into reference cannot be accepted since the award made by the arbitrator was till the traffic was diverted which was up to January, 2008 – Therefore, the arbitrator was justified in awarding the amount beyond the said periods and till the additional traffic was diverted – Third submission on behalf of the appellant was that by awarding Rs.45,000 per km per month, the arbitrator has rewritten the contract with respect to the amount payable than what was specified in the contract – At the time when contract was entered into the mutually agreed, the rate fixed was Rs.1,000 per km per month and the estimated traffic was 3364 PCUS per day – Cause of action arose subsequently due to diversion of traffic from Palwal Aligarh Road and plying of more heavy vehicles due to which the contractor was required to incur additional expenditure for maintenance of the road – Therefore, the contractor was entitled to the loss on account of the additional expenditure incurred for maintenance of the road – By no stretch of imagination, it can be said that there was rewriting the terms of the contract as submitted on behalf ofthe appellant – However, arbitrator ought not to have awarded an amount of Rs.45,000 per km p.m. beyond the time period of additional traffic – Arbitrator has awarded the loss/amount at Rs.45,000 per km per month up to 31.05.2010 i.e. till the end of the contract which is wholly impermissible diversion of the additional traffic ceasedto exist w.e.f. January, 2008 – Therefore, the arbitrator ought not to have awarded any amount beyond the above time periodbeyond January, 2008 – To that extent the award passed by the arbitrator can be said to be perverse and to that extent the present appeals are required to be allowed.
Partly allowing the appeals, the Court
HELD: 1.1 When the statement of claim submitted by the contractor is seen, it is specifically stated by the claimant that the amount of Rs.1,03,50,263/- has been worked out up to May, 2007 and the details of expenditure beyond May, 2007 will be submitted during the course of hearing. It is specifically stated that expenditure incurred up to May, 2007 works out to Rs.1,03,50,263/-. Therefore, the amount awarded by the Arbitrator cannot be said to be in excess of the claim. [Para 9.1][302-B-C]
1.2 The Arbitrator has awarded the loss/amount at Rs.45,000/- per km per month up to 31.05.2010 i.e. till the end of the contract which is wholly impermissible diversion of the additional traffic ceased to exist w.e.f. January, 2008. Therefore, the Arbitrator ought not to have awarded any amount beyond the above time period beyond January, 2008. To that extent the award passed by the Arbitrator can be said to be perverse and to that extent the present appeals are required to be allowed. [Para 9.5][303-D-E]
ONGC Ltd. v. Off-Shore Enterprises Inc., (2011) 14 SCC 147; Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49 : [2014] 13 SCR 895; J.C. Budhraja v. Chairman, Orissa Mining Corpn. Ltd. & Anr. (2008) 2 SCC 444 : [2008] 1 SCR 821; Indian Aluminium Cables Ltd. v. Haryana State Electricity Board, 1996 (5) SCALE 708; MSK Projects India (JV) Ltd. v. State of Rajasthan & Anr. (2011) 10 SCC 573 : [2011] 9 SCR 402; Satyanarayana Construction
Company v. Union of India and Others (2011) 15 SCC
101 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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