IMPORTANT POINT
An arbitral tribunal cannot adjudicate on claims outside the scope of the arbitration agreement, and awards violating explicit contractual terms are subject to being set aside under Section 34 of the Arbitration and Conciliation Act.

JUDGMENT :

(Sabyasachi Bhattacharyya, J.) :

1. The Union of India, through the General Manager of the Metro Railway, has filed the present challenge under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”) against an award whereby several monetary claims of the claimant/respondent were allowed.

2. Learned counsel for the petitioner argues that the three-member Arbitral Tribunal decided on the validity of termination of the contract of the claimant despite such relief having not been sought by the claimant in its statement of claim. That apart, termination falls under the ‘excepted clauses’ of the contract and thus, could not have been adjudicated upon by the Tribunal.

3. Claims 1, 2, 3, 7 and 8, which were all allowed, are excepted matters as per Clause 63 of the General Conditions of Contract (GCC). While determining claim no.1, the Tribunal went into the veracity of measurements and based its award on the basis of such measurements, which falls within the excepted clauses as well.

4. The contract between the parties specifically states that no interest is payable, despite which, under claim no.11, the Tribunal granted interest to the claimant. It is argued that, as per Section 31(7) of the 1996 Act, interest cannot be granted unless agreed upon, which agreement is absent in the present case.

5. The matter of measurement with regard to the bills/termination owing to default of contractor falls under Clause 62, which is also one of the excepted matters under Clause 63 as per learned counsel for the Railways.

6. Despite there being disputes regarding payment of bills, the claimant could simultaneously have continued the work within the provisions of the contract between the parties. Clauses 39(1) and 39(2) contemplate rates for extra items of work and Clause 43(1) deals with monthly statement of claims. However, without availing of the same and despite being given repeated opportunities, the claimant abandoned the work midway, for which the termination took effect in accordance with law and the contract.

7. Although there were no monthly claims under Clause 43(i), the Tribunal went on to allow the claims of the claimant.

8. Despite it being indicated in the award that there was some duplication, the Tribunal went ahead to pass the award in favour of the claimant. It was recorded by the Tribunal in paragraph no. 8.3.2 of the award that work was abandoned by the contractor.

9. It is next argued that new claims, which were not part of the original claim, were allowed, which was contrary to the contract between the parties. Whereas claims 1, 2, 3, 11 and 12 were not part of the original claims, claim nos. 5, 6, 8, 10 were increased.

10. Clause 46(3) contemplates that on-account payments do not prejudice the final settlement.

11. The Tribunal, while deciding the counterclaim of Railways, re-wrote the contract between the parties contrary to the order passed on November 17, 2017 in APO No. 507 of 2017 arising out of AP No.934 of 2017, an application under Section 9 of the 1996 Act. Vide order dated January 15, 2020 passed in AP No. 491 of 2019, costs were awarded, to be paid by the petitioner to the State Legal Services Authority. However, the Tribunal adjusted the cost amount with the counterclaim which, according to the petitioner, was illegal.

12. Learned senior counsel appearing for the claimant/respondent submits that the Arbitral Tribunal interpreted the terms of the contract which was within its domain and not susceptible to challenge. Moreover, the views taken by the Tribunal were plausible views and, merely because another view is possible, cannot be substituted by such alternative view by this Court.

13. It is argued by the respondent that the claims allowed by the Arbitral Tribunal do not fall within the ‘excepted’ matters under Clause 63 of the GCC.

14. The amounts awarded by way of compensation for wrongful encashment of the Bank Guarantees are not ‘interest’ within the m