An arbitrator's jurisdiction is limited by the terms of the contract between the parties. Where the contract plainly bars a party from making a claim, it is impermissible to make an award in respect thereof and the court is entitled to intervene.

P. VENKATARAMA REDDI, J.

( 1 ) THIS appeal under Section 39 of the Arbitration Act is directed against the judgment and decree passed by the II Addl. Judge, City Civil Court/ Hyderabad in O. P. No. 124/84 which is an application Hied under Sections 30 and 33 of the arbitration Act by respondents 1 and 2 herein objecting to the award dated 1-10-1983 made by the arbitrator. The impugned judgment is a common judgment ni the aforesaid O. P. and O. S. No. l514/83 filed by the arbitrator under section 14 (2) of the Act. The arbitrator-a retired Chief Engineer was appointed by the Court on an application under Section 8 of the Arbitration Act. The award was partly set aside in so far as Claim No. 3 was concerned and the rest of the award was made the Rule of the Court. The Court awarded interest at 6% per annum from the date of decree till the date of realisation.

( 2 ) THE details relating to the disputed claims are: claim No. 2: Payment for the extra leads for rubble, sand and metal. Amount of claim: Rs. 14,69,423/ -. and the claim was partly allowed for Rs. 10,63,651/ -. Claim No. 3: Payment of escalation charges: As against the claim of rs. 47,00,000/-, the amount partly allowed was Rs. 4,60,419/ -. Interest was allowed at 8. 25% from 22-10-1982 i. e. from the date of entering upon reference.

( 3 ) THE learned Addl. Judge City Civil Court upheld the objection of the government in regard to the award of escalation charges holding that the agreement did not contain a clause providing for escalation of rates. Thus, the award was set aside in so far as Claim No. 3 is concerned. The contractor has therefore come up in appeal which is C. M. A. No. 1156/89. In that appeal, the state Government has filed a Memo of Cross-Objections questioning the judgment in so far as it affirmed the award on Claim No. 2 including interest thereon from the date of reference.

( 4 ) WE will first take up Claim No. 3 which is the subject-matter of C. M. A. No. 1156/89.

( 5 ) NOW, before proceeding further, certain undisputed facts may be stated, tenders were called for for construction of Kalyani Dam including masonry spillway and Gravity Dam near Tirupathi. Pursuant to Tender notification, tenders were received by the respondents in April, 1972. The period of currency of tenders was extended upto 30-9-1972. After the tender was accepted, the site was handed over to the contractor on 22-1-1973 even before a formal Agreement was concluded. The stipulated period of completion of the work was three years from the date of handing over of the site. The Agreement was executed on 18-4-1974 preceded by certain K2-agreements for a portion of the work. The contract was treated to have been closed by the Government on 20-3-1976 and no further work was executed beyond that date.

( 6 ) WE will now take up Claim No. 3. The contractor s case is that there was abnormal delay in finalising the tender, handing over of the site and concluding the Agreement. The tenders were quoted and accepted on the basis of the standard Schedule Rates (S. S. R.) of 1970-71 and he cannot be compelled to work as per the good old rates based on S. S. Rs. of 1970-71. There was a steep escalation in costs of material and labour and the respondent was althrought representing to the Department for payment of extra rates which was not rejected.

( 7 ) THE case of the respondent was that the contractor was bound by the terms of the agreement and there was no provision for payment of extra rates during the currency of the contract period or the extended period. The contractor ought to have anticipated the escalation in costs and quoted his rate accordingly. In fact, a certain percentage over and above the Standard Schedule Rate was quoted by the contractor. There was no hindrance to carry out the work as the site was handed over in January, 1973 and the non-conclusion of the Agreement could not have come in the way of progress of the work.

( 8 ) RELYING upon certain observations of the Supreme Court i

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