The court emphasized the limited scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996 and the significance of specific contract clauses in determining the entitlement to recover additional costs.

YOGESH KHANNA, J.

1. The appellant assails the order dated 08.07.2016 passed by the learned Single Judge of this Court whereby the objections of the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 against the arbitral award dated 15.11.2013 were dismissed.

2. The appellant had awarded the work to the respondent, by letter of intent No.11011/9/98-C-F/Karur Bypass dated 08.07.1999 for the contract value of Rs. 34,95,72,588/-. The contract was entered into on 30.08.1999 and the entire work was to be completed within 24 months from the date of commencement of the work. Though the work started on 28.09.1999, it was completed only on 30.09.2002 with a delay of about 12 months; this delay was allowed vide three extensions given by the appellant itself.

3. In the arbitral award dated 15.11.2013 a few claims viz. claim Nos.1, 2.1, 2.2, & 4 of the respondents were partly allowed and whereas claim Nos.2.3, 2.4, and 3 were rejected. The appellant filed a petition under Section 34 of the Act and challenged the findings qua Claim Nos.2.1, 2.2 and 4, though accepted the award for claim No.1.

4. Claim No.2.1 pertains to awarding damages on account of the idling of machinery; claim No.2.2 is for the compensation of the expenses for the extended period of one year, which extensions were allowed by the appellant and claim No.4 pertains to losses incurred by the respondent on account of delay in the release of the retention money, as well as for arranging of the bank guarantee for the release of such retention money, despite there being no requirement under the contract.

5. The appellant here challenges the legality of the arbitral award and has alleged that it was the respondent who was mainly responsible for the delay in the completion of the contract and that it had only granted necessary extensions with adequate price escalations, hence the learned tribunal was wrong in allowing the claim for extra overheads and additional costs, over and above the price of the contract. On the other hand, the respondent had argued that the extensions were attributable to the appellant.

6. It was further argued by the appellant that the learned Tribunal even failed to appreciate that no notice, as was required under Clause No.53.1 of the contract, was ever given and hence the claim under Clause Nos.2.1 and 2.2, ought not to have been granted.

7. Lastly, the appellant had argued that the arbitral tribunal committed illegality in granting the claim, since it was barred by limitation. It was stated that the draft final statement, in accordance with Clause No.60.11 of the Special Conditions of the contract was submitted by the respondent on 29.01.2004 detailing the claim due to it. Accordingly, the limitation period for invoking the arbitration would commence from 29.01.2004 and run till 29.01.2007. However, the Arbitrator was appointed only on 21.04.2010 and hence, the claim was not within limitation.

8. Qua the contention that additional costs for the extended period of contract ought not to have been allowed, the arbitral tribunal found that the work was delayed on account of non-availability of land, delay in fixing alignments, existence of utilities to be removed by the appellant and additional item of works to be executed. The learned Single Judge even noted that the arbitral tribunal had examined the extensive evidence presented by the claimant to prove that the delay in execution was on account of the aforesaid reasons and that the extension was granted by the appellant to complete the project upto 30.09.2002 (12 months) in three stages i.e. firstly vide the letter dated 22.10.2001, then vide the letter dated 14.03,2002 and lastly vide the letter dated 23.10.2002. The reasons for the grant of extensions are well mentioned in the aforesaid letters as being the delay in finalising the alignment, shifting of utilities, in getting prior ‘enter upon permission’ on the land under acquisition from land owners, increase in the number of