The main legal point established in the judgment is the importance of upholding valid claims and counterclaims while setting aside those that are not legally sustainable, and the binding nature of previous court orders in arbitration proceedings.

S. Muralidhar, J.

1. These are objections under Sections 30 & 33 of the Arbitration and Conciliation Act, 1940 (‘Act’) by the Respondent National Building Construction Corporation Ltd. (‘NBCC’) to an Award dated 30th October 2010 of the sole Arbitrator.

2. The work of widening of four lanes including strengthening of existing pavement of National Highway No. 1 from Km. 50 to Km. 74.80 (Murthal to Smalkha) in Haryana was awarded by Haryana PWD B&R (hereinafter called as ‘Clients’) to NBCC for a sum of Rs.9,43,92,969.46. An agreement dated 24th August 1987 was entered into between NBCC and the Clients. On 26th October 1987, NBCC entered into a separate contract with the Petitioner Nangia Construction India Pvt. Ltd. (‘NCIPL’) on a back to back basis whereby NCIPL was to be an associate contractor for the whole work.

3. The date of start of the contract was 1st November 1987 and the period for completion was 42 months ending on 30th April 1991. Clause 4 of the agreement dated 24th August 1987 prohibited the NBCC from subletting the whole of the work. However, NBCC entered into the agreement dated 26th October 1987 with NCIPL on back to back basis with 5% margin money for NBCC, on the terms and conditions governing the agreement between NBCC and the Clients, with certain additional terms and conditions incorporated in the agreement between NBCC and NCIPL.

4. In the agreement between NBCC and NCIPL, NBCC is referred as ‘Corporation’, NCIPL as ‘Associate Contractor’ and the Haryana PWD as ‘Clients’. The relevant Clauses of the agreement read as under:

“Clause No.4

All payments and mobilization & other advances, securities, payments for escalation, arbitration award or any other payment received by the “Corporation” from the “Clients” in connection with the said work shall be released to the “Associate Contractor” after deducting 5% margin of the Corporation within a period of 10 working days from the date of receipt of the same by National Building Construction Corporation Ltd. from the Clients. Similarly, any liabilities, recoveries, penalties, compensation etc. that may have to be paid to the “Clients” shall be borne entirely by the “Associate Contractor”. The final payment to the “Associate Contractor” shall be based on the actual quantity of the work executed and paid by “Clients” at the unit rates attached herewith as per Annexure-I after making adjustment for 5% on the gross amount as margin of the Corporation and also after deducting the intermediate payment made as above.

Clause No. 9

Before accepting the levels, measurements, payments etc. the corporation shall consult the Associate Contractor or its authorized representatives to find out whether the same are in order. Any discrepancies pointed out by the Associate Contractor or his agent shall be duly brought to the notice of the Clients by the Corporation.

Clause No. 10

In case any penalties are levied by Clients on account of delay in completion of works or any other cause the same would be borne entirely by the “Associate Contractor”.

Clause No. 13

The Corporation reserves its right to rescind this contract on account of breach of any condition(s) of this contract by the “Associate Contractor” or if the Corporation is not satisfied at any time, during the pendency of their contract with the arrangements made or being made by the “Associate Contractor” from time to time. The Corporation” shall have the right to get the balance work completed at the risk and cost of “Associate Contractor”. In case the “Associate Contractor” leaves the job incomplete, the balance of the work shall be got done at the risk and costs of the “Associate Contractor” and extra cost if any incurred by the “Corporation” shall be recoverable in full from the “Associate Contractor” by confiscating the plant and machinery and other assets or dues of the “Associate Contractor”. This will be over and above any compensations/penalty that may be levied by the Clients.

Clause No. 14

All disputes, differences o