Court's intervention under Section 34 is valid when arbitral award lacks evidence or deviates from contractual terms, while retention of claims based on clear factual findings is upheld.

JUDGMENT :

SANDEEP V. MARNE, J.

The Challenge

1. These are cross appeals filed under provisions of Section 37 of the Arbitration and Conciliation Act, 1996 (the Act) challenging the judgment and order dated 16 November 2005 passed by learned Single Judge of this Court in Arbitration Petition No. 449 of 2003. Arbitration Petition No. 449 of 2003 was filed by Hindustan Petroleum Corporation Limited (HPCL) challenging the award made by the Arbitral Tribunal on 4 July 2003 by which, various claims raised by the original claimant-Larsen and Turbo Limited (L&T) were granted. By the impugned order dated 16 November 2005, the learned Single Judge has set aside the award qua Claim Nos. 1, 2, 4, 9, 15, 16, 21(1), 21(3) and 21(4) awarded by the Arbitral Tribunal. The learned Single Judge has retained the award only to the extent of Claim No. 19. Accordingly, original Claimant-L&T has filed Appeal No. 26 of 2006 to the extent of setting aside the award qua Claim Nos. 1, 2, 4, 9, 15, 16, 21(1), 21(3) and 21(4) whereas the original Respondent-HPCL has filed Appeal No. 14 of 2006 to the extent of the learned Single Judge maintaining the award qua Claim No. 19.

Facts

2. A tender was floated by HPCL for executing the work of laying, testing, pre-commissioning and commissioning of 18 inch diameter and 350 kilometers pipeline from Vishakhapatnam to Vijaywada, including temporary cathodic protection and optical fiber cable work (Work). L&T submitted its bid in pursuance of the tender on 23 April 1996. HPCL issued Letter of Intent, followed by Letter of Allotment, in favour of L&T for execution of the work at a contract price of Rs. 53,64,39,858/- on 25 November 1996. The contractual date for commencement of work was 10 December 1996 and the completion date was 25 November 1997. Engineers India Limited was appointed as Engineer-in-Charge in respect of the work. On 23 September 1997, L&T applied for further extension up to 31 March 1998. The Engineer-in-Charge extended the period for completion of work up to 30 April 1998 with the consent of HPCL. L&T could not complete the work by 30 April 1998 and hence sought further extension up to 30 June 1998. The Engineer-in-Charge, however, refused to grant an extension beyond 30 April 1998. According to L&T, it released the entire pipeline from Vishakhapatnam to Vijaywada for water filling (Hydrotesting) on 10 May 1998. It is claimed by L&T that on 11 May 1998, HPCL pumped water/project through pipeline. Work Completion Certificate was issued on 20 August 1998 by HPCL.

3. In the above background, disputes arose between HPCL and L&T and L&T invoked the arbitration clause on 22 August 2000 and called upon the Marketing Director of HPCL to nominate an Arbitrator. HPCL appointed its General Manager to act as the sole arbitrator on 21 September 2000. Both the parties agreed that no oral evidence would led and that they would be represented by their functional department officers and/or law officers. The Arbitrator made the award on 4 July 2003. Out of total 30 Claims of Rs. 27,82,74,107/-, only 16 Claims were allowed for an aggregate amount of Rs. 7,43,66,444/-.

Proceedings under Section 34

4. Aggrieved by the award of the Arbitral Tribunal dated 4 July 2003, HPCL filed Arbitration Petition No. 449 of 2003 before the learned Single Judge of this Court, challenging the award under the provisions of Section 34 of t