IMPORTANT POINT
New grounds containing new material/facts could not have been introduced for the first time in an appeal when these were not originally raised.

JUDGEMENT

R.M. Lodha, J.

Leave granted.

2. The question presented in this appeal by special leave is : whether in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short ‘1996 Act’) from an order refusing to set aside the award, an amendment in the memorandum of appeal to raise additional/new grounds can be permitted.

3. M/s. Hindustan Construction Company Limited (respondent) and the State of Maharashtra (Irrigation Department, the Executive Engineer - appellant) entered into a contract on March 14, 1992 being ICB Contract No. II/1992 for the construction of civil work of Pressure Shafts and Power House Complex at Koyana Hydro Electric Project, Stage-IV. The contract work was completed by respondent within the extended period i.e., by March 31, 2000. However, it appears that disputes arose between the parties in respect of the work carried out by respondent in relation to (a) revision of percentages for hidden expenses, over breaks and profit for further additional cases of extract items/rate revision; (b) claim for extended stay at site; (c) revision of rate for Pressure Shaft excavation; (d) fixation of new rate on account of variation in the item of Transformer hall arch concrete; and (e) fixation of new rate on account of variation in the item of Transformer Hall excavation. These disputes were referred to the Arbitral Tribunal. The Arbitral Tribunal made award on June 26, 2003 and a signed copy thereof was forwarded to the appellant along with the letter dated June 30, 2003. By the said award the Arbitral Tribunal awarded an amount of Rs. 17,81,25,152/- to respondent and further directed that if the said amount was not paid by appellant within two months from the date of the award, then the awarded sum shall carry an interest at the rate of 15 per cent per annum from June 27, 2003.

4. Not satisfied with the award dated June 26, 2003, appellant made an arbitration application on August 22, 2003 for setting aside the award. The appellant also relied upon Sections 28, 33 and 16 of 1996 Act in assailing the award being in contravention of the provisions of 1996 Act and set up the grounds viz., (i) waiver (final bill was accepted by respondent without protest and the claims are not arbitrable); (ii) acquiescence (contract ceased to exist after accepting final payment which was made on March 30, 2001 after completion of maintenance period); (iii) delay (claims are time barred under the provisions of the Limitation Act); (iv) laches (respondent’s Arbitrator was not appointed before expiry of 30 days from the defect liability and, therefore, the claimant was not entitled to bring claim Nos. 3, 4 and 5 to arbitration) and (v) res judicata (claim No. 1 was referred to the earlier Arbitration Panel in the year 1998 and hence the said claim is barred by principles of res judicata).

5. The District Judge, Ratnagiri vide order dated June 29, 2006 rejected the application for setting aside the award dated June 26, 2003.

6. The appellant aggrieved thereby preferred an appeal under Section 37 of 1996 Act on February 6, 2007 before the High Court of Judicature at Bombay.

7. On June 23, 2008, appellant made an application before the High Court seeking amendment to the memorandum of arbitration appeal by adding additional grounds, namely, that the Arbitral Tribunal exceeded jurisdiction in awarding revision of percentage for hidden expenses over-heads and profits for further additional items (Claim No. 1); that the Arbitral Tribunal acted beyond the scope of arbitration with regard to extended stay charges (Claim No. 2); the Arbitral Tribunal exceeded jurisdiction and, in fact, committed error of jurisdiction in granting claim pertaining to revision of rate for pressure shaft excavation and mis-conducted themselves in awarding escalation considering March 2000 Indices.

8. The aforesaid application was opposed by respondent on diverse grounds, inter alia, that the additional grounds sought to be inco