1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act) challenging the award dated 16th September, 2013 in an arbitration between the parties consequent upon agreements entered into by them for construction of 3 buildings in the Special Economic Zone (SEZ).

2. The parties initially entered into a turn key contract; the petitioner was to obtain materials and construct the buildings therefrom. The parties thereafter modified that contract so that the petitioner was granted a labour contract under which the respondent was to supply the material and the petitioner as contractor, was to construct the buildings from the materials supplied. The initial contract set out the permissible wastages of various items which would be allowed to the extent mentioned therein. This was because the petitioner was to obtain the material and carry out the construction. It was, therefore, accountable for any wastage, a part of which is contractually allowed. The later contract was a labour contract and the respondent was to supply the material which was to be used by the petitioner. The petitioner had to account for the material used. The other terms and conditions of the detailed and elaborate initial contract between the parties dated 27th May, 2006 including technical specifications therein remained unchanged though the initial turn key contract was shown to have been superseded by the later labour contract, except for what it expressly contained.

3. From amongst various claims made by the respondent/claimant three claims have been granted which grant has been challenged by the petitioner who was to construct the buildings for the respondent. The claims were made under the written agreements entered into by and between the parties and have been considered by the learned arbitrator under the terms of the contract.

The claims which are granted are in respect of:

a. excess consumption of material used for construction;

b. defective work required to be rectified; and

c. refund of excess amount paid.

Clause No.1 : Re : Excess consumption of material

4. Since the claims are under the contract between the parties it would be material to see the relevant part of the contract with regard to the aforesaid aspects.

5. The initial contract is as per the tender documents notified by the respondent dated 27th May, 2006 and termed C.6.1. Under clause 1.3.39 of Chapter (I) of the Special Conditions of Contract dated 27th May, 2006 the contract rates inter-alia for cement were specified thus:

1.3.39 Contract rates will include prices for cement and steel at base rates given by the employer. Permissible wastages of cement 3%, Renf. Steel & Struct Steel 3% + Rolling Margin. Contractor shall submit the cement & steel consumption settlement with every bill/monthly.

6. Item 44 of the schedule of fiscal aspects annexed to the contract specified wastage of material inter-alia in respect of cement to be 3% and in respect of granite to be 10%. The description of the wastage of material runs thus:

44. Wastage of material : Allowable wastage on Cement 3% on Reinforcement – 3% + RM, Granite Stone 10%. If wastages goes beyond above specified limit, owner will deduct 1.5 times base rate on exceed qty. The permissible wastage was, therefore not to go beyond the % age of the contract price for the material mentioned.

7. The technical specifications and the Bill of Quantities (BOQ) are annexed as annexure 2 thereto. The consumption constants for cement concrete run thus:

CEMENT CONSTANTS

SR.NO.A PARTICULARS Cement Concrete UNITS(Nominal Mix) IN BAGS (50 Kgs)

1:4:8 Cumtr. 3.6

1:3:6 Cumtr. 4.2

8. The technical specifications with regard to the cement constants for flooring run thus:

C. FLOORING

1. Mosaic/Marble/Blue tandoor/Kotah/Granite/Cuddappah on Bed of 20 mm thick CM 1:4 & cement slurry at 4.4 kg/sqm 0.24

The specifications thus stipulated the contractual claim of how much consumption would be required for the work inter-alia of cement