The court emphasized the limited scope of interference under Section 34 of the A & C Act, 1996 and the principle that the court should not substitute its reasoning for that of the Arbitrators, especially when the decision is reasonable.

JUDGMENT

1. In the aforesaid Petitions under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the A & C Act, 1996) has been filed to challenge the Award dated 18.11.2020 with corrections made on 12.12.2020 passed by the Majority Arbitral Tribunal.

2. The facts in brief are that Government of Andhra Pradesh awarded a contract for the project `Widening and Strengthening of the Warangal-Karimnagar-Raiputnam Road (APSH 1)' to the respondent. The respondent in turn divided the project into two parts: first section from Warangal to Karimnagar (km 06.00 to 66.00) denoted as APSH-1(a) and other from Karimnagar to Raiputnam (km 164.00 to 219.10) denoted as APSH-1(b). For the execution of the contract and works connected to the project, the respondent awarded several contracts to other agencies. The entire work of APSH-1 (a) was entrusted to the petitioner through two contracts, the breakup being, the first one for the widening and strengthening of the Road (excluding Bill No.5 - Bitumen Work & Bill No.8 - Road Furniture) dated 05.05.1998 and the second one for the asphalting work involved dated 29.08.1998. After entering into above two Contract Agreements, execution of work from both the contracts from km 6.00 to 22.00 was withdrawn from the petitioner and was given to another agency by a tripartite Agreement dated 05.08.1999. The petitioner thus, executed work only from km 22.0 onwards.

3. During the course of execution of the two contracts, disputes arose between the parties. The Contract provided for referral of disputes to a Disputes Review Board, but it was never constituted by mutual consent. The matter was referred to a Conciliator who was appointed by the Respondent vide letter dated 19.08.2003. However, the conciliation proceedings were terminated by the Conciliator on 29.08.2006. Thereafter, the Petitioner invoked Arbitration under clause (Sub Clause 67.3, Conditions of Particular Application) by its letter dated 10.05.2007 and eventually three Member Arbitral Tribunal was constituted.

4. The parties presented their Statement of Claim and Defence and led their evidence. The learned Arbitral Tribunal gave a Majority Award and a Dissenting Award by one Arbitrator dated 18.11.2020 in respect of the claims. The learned Dissenting Arbitrator awarded Compound Interest while the Majority Tribunal awarded Simple Interest. The only challenge in the present petition is grant of Simple Interest by the Majority Tribunal instead of Compound interest as awarded by the Minority Award.

5. Clause 60.8(b) of the Contract provided for two things; one for compound interest and other for the rate of interest. The grant of simple interest by Majority Award has been challenged on the ground that the finding is perverse since the respondent in its Statement of defence, had only taken an objection to the rate of interest without specifying whether it was to be compound or simple. When no objection has been raised on behalf of the respondent that this Clause was null and void as the rate of interest had not been prescribed, the compound interest should not have been denied merely because the rate of interest was not mentioned. The Majority Tribunal failed to consider the severability of the Clause and wrongly held the entire Clause as void merely because the rate of interest was not specified. In fact, the correct position of law has been narrated in the Minority Award which must prevail in the present case and the finding of the Majority Tribunal granting simple interest, must be rejected.

6. Submissions heard and the written Submissions on behalf of the Petitioner and Respondent have also been perused.

7. At the outset, it is pertinent to note that in OMP (COMM) 313/2021 the petitioner has raised a claim for the additional cost incurred in extending bank Guarantees which were illegally withheld against bridging Finances. The same is not being pressed by the Petitioner and is hereby dismissed.

8. The parties