The court affirmed that under Section 34 of the Arbitration and Conciliation Act, 1996, it cannot reassess the merits of an arbitral award unless it violates public policy or is patently illegal.

JUDGMENT :

1. The appellant has preferred this appeal against the order dated 03.02.2010 passed by learned Additional District Judge, [ADJ] in Arbitration Suit No. 60 of 2006, whereby the objections to the award dated 11.05.2005, filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 [“the Act”] was dismissed by the learned Arbitrator.

FACTUAL BACKGROUND

2. Shorn of unnecessary details, the appellant was awarded a contract for work as C/o NACEN at Sector-29, Faridabad, vide Agreement No. 12/EE/FCD-II/99-2000 by the respondent no. 1. The contract, valued at Rs.1,53,054/-, was to be completed on 31.10.1999. However, the work was completed on 03.04.2000, following the grant of an extension of time, [EOT] from 01.11.1999 to 03.04.2000. Upon completion, the appellant raised claims for the work done, which were disputed by the respondent no. 1. As per the agreement, the dispute was to be referred to arbitration. The appellant approached the Chief Engineer of the respondent no. 1 for the appointment of an arbitrator, but no appointment was made. Consequently, the appellant filed a suit under Sections 8 and 11 of the Act, before the Learned ADJ, Sh. D.K. Mahotra. Vide order dated 20.02.2001, the respondent was directed to appoint a sole arbitrator within 60 days and further directed the arbitrator to pass the award within 90 days.

3. Pursuant to the said order, the respondent initially appointed Sh. Y.P.C. Dangey as the sole arbitrator, who later resigned. Thereafter, Sh. A.K. Bhatnagar was appointed on 18.06.2001, but he also resigned. Subsequently, vide letter dated 10.08.2001, Sh. A.K. Singhal was appointed as the sole arbitrator, who entered the reference on 03.09.2002. The final hearing was conducted on 04.08.2004, but the award was rendered on 11.05.2005, after an inordinate delay of nine months from the conclusion of proceedings and more than four years from the court’s directions. The present appeal impugned the said award on the grounds of undue delay and bias on the part of both the respondents and the arbitrator.

ARBITRAL PROCEEDINGS:

4. In a nutshell, the appellant raised the following claims:

4.1. The appellant sought a refund of Rs.18,305/- deducted from the 3rd Running Account Bill and the 4th & final bill as compensation for project delays. The Superintending Engineer, [SE] granted an EOT till 03.04.2000, imposing a compensation of Rs.18,305/- under Clause 2. The amount was deducted in instalments, with Rs.12,000/- withheld in the 3rd RA bill and Rs.6,305/- in the 4^th and final bill. The respondents argued that the levy of compensation under Clause 2 was an “excepted matter”, meaning it was final and binding, making it non- arbitrable. The Arbitrator upheld this argument, stating that the compensation had already been deducted before the arbitration referral, and the claim could only be pursued by a competent judicial authority.

4.2. The appellant alleged that they were forced to use Hindustan Tiles, while the contract permitted equivalent brands. They also claimed entitlement to market rates since the work was delayed beyond the stipulated period. Respondents countered that the appellants never proposed an alternative brand and that no changes were made in the pattern of tiles. Additionally, the executed work (561.128 sqm) was within the 20% deviation limit, disqualifying the claim for market rates under Clause 12(A). This claim was dismissed.

4.3. The appellants alleged that they used 50mm thick tiles instead of 40mm due to unavailability in the market. Respondents denied ever allowing this substitution, and no supporting evidence was provided by the appellants. This claim was dismissed.

4.4. The Ld. arbitrator dismissed that claim for compensation for tiles cut to fit kerb stones without margins.

4.5. Appellants alleged that they had to dismantle, raise levels, and refill with additional sand and lean concrete. Respondents denied extra work but acknowledged that 144 sqm was raised using extra san